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.
The appointment of a service provider to render project management services in the implementation of training, mentorship and placement of graduates in farms funded by the national skills fund. 2018-11-16 11:00 4.4.12.4/ 14/ 18
Appointment of a Service Provider to undertake a comprehensive refurbishment of a 13m fibreglass coastal research vessel, including the provision of a dolly, routine and unforeseen maintenance and modifications to the vessel over a period of three (3) years 2018-11-19 11:00 NRF/ SAIAB/ 2019- 006
Appointment of a panel of service providers to supply and deliver 50ppm diesel in the ports of Mossel Bay, Cape St. Francis, Port Elizabeth, East London, Durban and Richards Bay to fuel two coastal research vessels and vehicles for a period of five (5) years 2018-12-05 11:00 NRF/ SAIAB/ 2019- 002
Repairs and upholstery of chairs - 29 chairs 2018-10-26 11:00 ZNQ 61/ 08/ 2018
Welkom Department of Rural Developement and Land Reform (Drd & Lr): Lejweleputswa District: Alternative Office Accommodation and Parking Facilities (1557.50m² and 20 Parking Bays) 2018-11-13 11:00 BL18/ 064
Invitation to service providers to submit proposals for acquisition of a service provider to provide project management services to the Enterprise Project Management office for a period of 12 months /or 785 Hours, whichever comes first. 2018-11-19 11:00 CIPC BID NUMBER: 13/ 2018/ 2019
Bethlehem Department of Rural Developement And Land Reform (Drd & Lr): Thabo Mofutsanyane District: Alternative Office Accommodation And Parking Facilities (1994.17m² and 25 Parking Bays) 2018-11-13 11:00 BL18/ 063
For sale of: removal and recycling of cardboard and waste paper 2018-10-26 11:00 ZNQ 64/ 08/ 2018
FICKSBURG: SOUTH AFRICAN SOCIAL SECURITY AGENCY (SASSA): New Office Accommodation and Parking Facilities (561.01m² and 20 Parking Bays) 2018-11-13 11:00 BL18/ 065
Appointment of a service provider at the Independent Communications Authority of South Africa for provision of storage facilities on an 80/20 PPPFA 2000, Preferential Procurement Regulation: 2017 2018-10-26 11:00 ICASA 21/ 2018
Invitation to bidders to submit proposals for the appointment of a group risk insurance/assurance provider for all CIPC employees. 2018-10-22 11:00 CIPC BID NUMBER: 17/ 2018/ 2019
Invitation for an open tender for the Supply of Telephone Management System and Maintenance of Voice Over Internet Protocol (VOIP) At Aidc’s Multiple Sites 2018-11-15 11:00 AIDC T10/ 2018
Staff lockers (ABS Plastic) 3 tier x40 2018-10-30 11:00 ZNQ 744/ 18
Request for proposal for air quality monitoring in The Coega Special Economic Zone (SEZ). 2018-11-12 12:00 CDC/ 446/ 18
Fridge tags 2018-10-31 11:00 ZNQ: 303 / 2018/ 19
Construction of Sidewalks on P483 in the Amajuba District. Tenderers must be registered as 3CE with the CIDB ,Department of Transport’s Vukuzakhe Emerging Contractors Database and also be registered with the National Treasury’s Centralized Supplier Database (CSD).Target designated group: Women. The duration of the project will be stipulated in the tender document. 2018-11-15 11:00 C253/ 1819/ SW/ 561
Construction of Sidewalks on P41 in the Amajuba District. Tenderers must be registered as 3CE with the CIDB ,Department of Transport’s Vukuzakhe Emerging Contractors Database and also be registered with the National Treasury’s Centralized Supplier Database (CSD).Target designated group: Open. The duration of the project will be stipulated in the tender document. 2018-11-15 11:00 C253/ 1819/ SW/ 563
Consultancy Services for Implementation of a Contract Management System 2018-11-16 15:00 AUC/OLC/C/325
The Province of KwaZulu-Natal, Department of Transport, invites tenders from Established Contractors, experienced in Bridges, and earthworks construction, for the construction of the Extension of Kwasitholane River Bridge No. 3527.The duration of the project will be 4 months. 2018-11-15 11:00 ZNT3507/ 18T
Provision of Security Services at RTI Mkondeni DLTC. 2018-11-21 11:00 ZNB1432/ 17T

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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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