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 Supplier for the Bioremediation at the pniel wwtw 2018-12-18 11:00 FQ/SM: 88/19
Construction of toilet top structures in Kutlwanong, Kagisho & Phomolong Phase 1 2019-01-28 11:00 INFRA/CE/T2/2018
Tenders are invited to Supply,Install and Deliver eight(8) Gun Safes 2018-12-18 11:00 CSQ12181511
Supply and Deliver Coin Counter Equipment 2018-12-18 11:00 GQ12182007
Repair and resurface of various roads in central business district of Upington 2019-02-01 14:00 TN099/2018
Supply and Deliver Note Counters Equipment 2018-12-18 11:00 GQ12182007
Appointment of consulting engineering firm for the planning, design and project management of water services for Hakskeen Pan 2019-02-01 14:00 TN100/2018
Terms of Reference for Consultant Gender Programme Expert Consultancy Services for Launching the AU Strategy for Gender Equality and Women’s Empowerment 2018-12-21 17:00 AUC/WGDD/C/252
For the supply and installation of HV Surge arresters. 2019-02-05 10:00 KBY/54341
Supply & deliver Tinned Wire Copper 1.6mm fusewire. 2018-12-18 11:00 SQ12181328
Supply & deliver Circuit Breakers 40amp 240volt,5ka CURVE 2 SFM1-G3 complete.no shrouds 2018-12-18 11:00 SQ12181328
Supply & deliver Energy Saving Flourescent Tubes T5 28W/840 1149MM long, Cool White. Osram, Phillips or approved equal. 2018-12-18 11:00 SQ12181328
Supply and deliver 667/TZ/30937/000 EFC Modules 128M Signal Controller -Siemens or approved equal 2018-12-18 11:00 GQ12182003
Supply and deliver Hydraulic Breakers- LH270 Atlas Copco or approved equal 2018-12-18 11:00 GQ11182001
Rental of a digger loader (6-7 ton) for a the month of December 2018 and January 2019 2018-12-18 11:00 292257
Rental of bull dozer for the months of December 2018 and January 2019 2018-12-18 11:00 292038
Rental of light delivery vehicles (engine capacity 2000 cc) for January and February 2019 2018-12-18 11:00 292218
Rental of light delivery vehicles (engine capacity 1400 cc) for January and February 2019 2018-12-18 11:00 123456
Rental of a rear end loading (REL) refuse compactor - 19 m3 (double axle) refuse compactor truck, for December 2018 and January 2019 2018-12-18 11:00 234567
Rental of landfill compactor for December 2018 and January 2019 2018-12-18 11:00 345678

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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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