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.
Provision of Office Accommodation: Beaufort West Satellite Office for a leased period of 5 years.(Leases ranging from seven to ten years will also be considered). 2018-10-26 11:00 38/ 2018
Provision of Office Accommodation: Vredendal Local Office for a leased period of 5 years.(Leases ranging from seven to ten years will also be considered). 2018-10-26 11:00 37/ 2018
Provision of Office Accommodation: Carletonville Satellite Office for a leased period of 5 years. 2018-10-26 11:00 46/ 2018
Provision of Office Accommodation: Wolmaranstad Satellite Office for a leased period of 5 years. 2018-10-26 11:00 50/ 2018
Provision of Office Accommodation: Pretoria Local Office for a leased period of 5 years. 2018-10-26 01:00 52/ 2018
KwaZulu-Natal: Department of Public Works: eThekwini Regional Office: Mayville Offices–South Wing: Upgrade of Air Conditioning System 2018-10-26 11:00 ZNTD 03279W
KwaZulu-Natal: Department of Public Works: eThekwini Region: Durban: Installation of 800KVA standby generator for the Mayville Complex and Relocation of the existing 400KVA to iLembe District Office. 2018-10-29 11:00 ZNTD 04430W
Appointment of a panel of service providers to undertake building maintenance and roof repair work for the KZN Department of Human Settlements on a rotational basis for a period of 2 years. 2018-10-24 11:00 ZNB17/ 2017/ 18HSE
Appointment of a panel of service providers to undertake land clearing work / field maintenance for The KZN Department of Human Settlements on a rotational basis for a period of 2 years. 2018-10-25 11:00 ZNB19/ 2017/ 18HSE
Appointment of a service provider to conduct wellness screening and related support services for employees within the employ of the Kwazulu-Natal Legislature. 2018-10-24 11:00 KZNL 17/ 2018
Supply, delivery and off-loading perishable provisions. 2018-11-06 11:00 LMN 06/2018 LIMPOPO
Consultancy Services - Designing a Programme for Renewable Energy Development in African Island States (REAIS) 2018-11-02 15:00 AUC/IED/C/378
Painting of palisade fencing at Ezamokuhle 1, Ezamokuhle 2, Grootdraai and Kendal ambient air quality sites using Cowrie Gold Colour Powder Coating Paint. 2018-11-01 10:00 ERIC1107
Supply and delivery of laboratory chemicals, reagents, glassware and consumables as and when required for a period of five (5) years. 2018-10-31 10:00 ERIC0588
Provision of Facility Management Services to Eskom Real Estate in the Free State Operating Unit for 3 years (NONE TECHNICAL) Cleaning & Gardening. 2018-11-15 10:00 MdB18/24
Request for information on multiple gauge coach bogie. 2018-11-27 10:00 TE18-BFX-05G-06843
Vat Review. 2018-11-06 12:00 VDM/FIN/11/09/2018/01
General medical practitioner (36 months). 2018-11-19 12:00 ULM-INFR009/19
The maintenance, repair and testing of earth equipment's for various zones within the Limpopo Operating Unit on an "as and when" required basis for a period of thirty-six (36)months. 2018-10-24 10:00 PTB1362
Supply and maintenance of printer machines. 2018-10-24 12:00 MN06/2018-19

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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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