Issue Date: 
Monday, November 23, 2015

4 REQUIREMENTS FOR START-UPS

In the tender process it is essential that an enterprise has experience in the industry that it wants to tender in. In fact, the more experience the enterprise has, the better its chances of being awarded a tender.

Can a startup enterprise be awarded a tender? The answer to this question can only be made by the Organ of State that has issued the tender. But, there are definitely some things that a startup can do to ensure that it subscribes to the minimum requirements of a tender.

These minimum requirements are:

1.    A tax clearance certificate.
2.    A B-BBEE certificate.
3.    Company registration documents.
4.    Bank account detail.

The reason a start-up enterprise must comply with the four minimum requirements above is that the Organ of State must verify that an enterprise is legitimate. The Preferential Procurement Policy Framework Act necessitates Organs of State to comply with these minimum requirements.

It is also crucial for an enterprise to have some kind of B-BBEE credentials because the enterprise's B-BBEE score is used to calculate the enterprise's Preferential Points. Without these points it will be difficult for an enterprise to get passed the evaluation stage of any tender process, not even to mention the adjudication stage. No points will result in losing the tender. The good news is the Start-up Enterprises automatically qualifies as a Level four Contributor to B-BBEE.

Tenders are evaluated on Functionality first and then on Price and finally, B-BBEE. Usually the enterprise must score between 70 to 75 points on Functionality to advance to the next phase of evaluation. This is exactly where startup enterprises fail. The entrepreneur does not realize that if you respond to a tender you must have some expertise of the product you want to deliver. This little point in the tender process is much of an enterprise's downfall.

So how does an enterprise, especially a startup enterprise, overcome this problem? The logical answer would be to join forces with an enterprise that has the necessary expertise and that comply with the Functionality of a specific tender. Finding enterprises that will go into a joint venture can be difficult but if the startup enterprise can bring some special skills to the joint venture it will be easier to find a partner.

The Government is set on developing SMME's and the Gauteng Government's aim is to award at least 30% of all tenders to SMME's.  This is good news for startup enterprises because they are seen as a SMME's!

When Must I Sub-Contract?

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting. The Draft Preferential Procurement Regulations, have been gazetted and are currently up for review. However, these Regulations are the major cause for the confusion. Many entrepreneurs ask whether they should sub-contract or not whilst responding to a tender.

The Draft Preferential Procurement Regulations stipulates the following: 

  1. For contracts above R30 million, the tenderer MUST sub-contract a minimum of 30% of the value of the... Read More
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