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.
Request for proposals for the long term lease and development of Erf 1015 City and Suburban. 2018-11-30 10:30 RFP 32/2018
Request for proposals for the long term lease and development of Remainder of Erf 5100 Johannesburg. 2018-11-30 10:30 RFP 31/2018
Request for proposals for the long term lease and development of Erven 171 – 178 Marshalltown. 2018-11-30 10:30 RFP 30/2018
Request for proposals for the long term lease and development of Erven 326 and 327 Berea. 2018-11-30 10:30 RFP 29/2018
Request for proposals for the long term lease and development of Erf 527 Yeoville and Remainder and portion 1 of Erf 528 Yeoville. 2018-11-30 10:30 RFP 28/2018
Request for Request for proposals for the long term lease and development of Erf 776 Turfontein. 2018-11-30 10:30 RFP 27/201
Request for proposals for the long term lease and development of Erven 1633, 1637, 1638, 1639 and 1640 Turfontein. 2018-11-30 10:30 RFP 26/2018
Request for proposals for the long term lease and development of Erf 737 Yeoville. 2018-11-30 10:30 RFP 25/2018
Request for proposals for the long term lease and development of Erven 1864 and 1865 Johannesburg. 2018-11-30 10:30 RFP 24/2018
Request for proposals for the long term lease and development of Erf 2252 Johannesburg. 2018-11-30 10:30 RFP 23/2018
Request for proposals for the long term lease and development of Erven 1905-1907 and 4734 Johannesburg. 2018-11-30 10:30 RFP 22/2018
Queenstown SA Police Station: Repairs & renovations & newly build accommodation. 2018-10-18 11:00 PE15/ 2018
The Supply and Delivery of Dry Rations, Coffee, Tea and Cooking Oil to the Department of Defence (West Coast area). 2018-10-25 11:00 SPSC- B- 012- 2018
The Supply and Delivery of Dry Rations, Condiments, Pickles and Herbs and Spices to the Department of Defence (West Coast area). 2018-10-25 11:00 SPSC- B- 011- 2018
The Supply and Delivery of Dry Rations, Juices Dried Fruit & Veg, Canned Fruit & Veg, Canned meat etc to the Department of Defence (Cape Metropole Area). 2018-11-22 11:00 SPSC- B- 019- 2018
The Supply and Delivery of Wet Rations, various dairy products to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 018- 2018
The Supply and Delivery of Wet Rations, frozen vegetables to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 017- 2018
The Supply and Delivery of Wet Rations, fresh fruit and vegetables to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 016- 2018
The Supply and Delivery of Wet Rations, various meat (fresh and frozen) to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 014- 2018
The Supply and Delivery of Dry Rations, Baking goods, Essence, Pudding, Jelly and Sugar to the Department of Defence (West Coast area). 2018-10-25 11:00 SPSC- B- 010- 2018

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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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