Issue Date: 
Tuesday, July 31, 2018

3 Sub-contracting rules to be aware of when responding to tenders

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting, due in large part to The Preferential Procurement Regulations, 2017 that has been implemented on the 1st of April 2017. Many entrepreneurs ask us whether they should sub-contract or not, in responding to a tender and how and where do they get onto the sub-contracting lists.

There are 3 sub-contracting rules in the Preferential Procurement Regulations 2017 that Organs of State can/must apply when issuing tenders to the general public.

The first Regulation is Regulation 4 which state inter alia: if an Organ of State decides to apply pre-qualification criteria to advance certain designated groups that Organ of State must ADVERTISE the tender with a specific tendering condition that certain bidders can or may respond.

The second Regulation is Regulation 9 which state inter alia: if it is feasible to sub-contract for a contract above R30 million, an Organ of State must apply sub-contracting to advance designated groups.

The designate groups mentioned in both Regulation 4 and 9 are Black Owned Enterprises with 51% or more black ownership and any of female Black owned, youth black owned, black people with disabilities owned or black military veterans owned enterprises.

The third sub-contracting rule has to do with sub-contracting after the award of the tender. Regulation 12 states inter alia: (3) a person awarded a contract may not subcontract more than 25% of the value of the contract to any other enterprise that does not have an equal or higher B-BBEE status level of contributor than the person concerned, unless the contract is subcontracted to an EME that has the capability and ability to execute the subcontract.

The tender document will dictate how you should or should not sub-contract. Read the tender document carefully; follow the instructions precisely and to the point. Organs of State are applying these Regulations rigorously and failing to comply will lead to your tender response being disqualified.

Tender trends and Regulations are changing frequently. To keep up to date with these changes we recommend attending one of our How-to-Tender workshops that are presented across South Africa. Tender Workshop dates are published on our website at www.how2tender.com or for more information on the How-to-Tender workshops please email us at werner@how2tender.com

This article was written by Werner van Rooyen, Director of HowToTender which specializes in tender consulting and tender training.

Title Closing Date Tender No.
Appointment of a service provider at the Independent Communications Authority of South Africa for restoration of Pinmill Farm Premises on an 80/20 PPPFA 2000, Preferential Procurement Regulation: 2017 2018-10-26 11:00 ICASA 20/ 2018
The Financial Intelligence Centre request for information for a contract management tool. 2018-11-10 11:00 National: Financial Intelligence Centre: Supply Chain Management
The Financial Intelligence Centre request proposals from service providers for procurement of an Automated Web Search Application for use by the Financial Intelligence Centre. 2018-11-09 11:00 FIC/ RFB/ WEBSEARCH/ 1/ 0004/ 2018/ 19
Invitation to an Open Tender for the Appointment of Panel of Contractors to Assist AIDC With Various Infrastructure And Maintenance Projects for a period of 3 years 2018-11-09 11:00 AIDC T05/ 2018
Appointment of an Organisational Development (OD) consultant to conduct an organisational structure review for Dube Tradeport Corporation. 2018-11-12 11:00 DTP/ RFP/ 24/ COR/ 09/ 2018
Appointment of a service provider to conduct a feasibility study, develop business plan and financial model for the maintenance, repair and overhaul (MRO) facility at DTPC. 2018-11-12 11:00 DTP/ RFP/ 30/ IFR/ 10/ 2018
Dishwasher soap dispenser 2018-10-30 11:00 PSH 960/ 1819
Appointment of service provider for the provision of quality control specialist services to DTPC BID Committees for a period of two (2) years. 2018-11-12 11:00 DTP/ RFP/ 28/ CEO/ 10/ 2018
The appointment of a service provider to conduct three (3) climate change risk and vulnerability assessments as well as three (3) climate change response plans over a period of seven (7) months. 2018-11-08 10:00 5/ 2/ 2/ 1- RDLR 0045(2018/ 2019)
Western Cape: DOD: Saldanha Military Academy: replace fire alarm system Appointment of : Mechanical Engineer 2018-11-09 11:00 CPTC003/ 18
Storage container 60lt. 2018-10-30 11:00 PSH 958/ 1819
Appointment of a service provider(s) for the provisioning of routine (preventative) and breakdown maintenance of medium capacity cyanoacrylate fuming cabinets, bench top discharge cartridge case fingerprint enhancement systems, bench mounted class 1 laser viewing boxes, small capacity desktop fingerprint development cabinets and shoe impression tyre track systems: Division: Forensic services for a period of three (3) years. 2018-11-20 11:00 19/ 1/ 9/ 1/ 144TP (17)
The appointment of a service provider to outsource the management, operating and maintenance services of three Messerschmitt-Bolkow-Blohm Bo 105 helicopters to be used by the department of environmental affairs for fire-fighting duties; planning and mapping work; anti-poaching work; surveillance; search and rescue; monitoring and evaluation; compliance and enforcement; Advocacy and extension services; and the taking of teams to inaccessible areas for the control of invasive species. 2018-11-09 10:00 E 1481
Establishment of the Ekurhuleni Construction Eco-system and Multipurpose centre, The Ekurhuleni PoP Up Centre 2018-11-15 11:00 GEP004/ Popupcentre/ 18
Provision for three (03) panel of travel management services. 2018-11-09 11:00 Ingwe/ 03/ 2018
Request for quotation: installation and internet telephony communications system. 2018-10-26 11:00 RFQ: NSF
King Williams Town Magistrates Court: Security Measures and Airconditioning. 2018-12-04 11:00 PE21/ 2018
The appointment of a service provider to develop a national buffering mechanism policy for world heritage sites in South Africa for the period of eight (8) months. 2018-11-09 11:00 E1482
SAPS: Mbekweni Police Station: Construction of Ablution Facilities 2018-11-09 11:00 CPT1012/ 18
Request for proposals to appoint a service provider to render psychosocial support to identified learners in the Frances Baard District for a period of 36 months for Northern Cape Department of Education. 2018-11-09 11:00 NC/ DE/ 003/ 2018- 2019

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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