Issue Date: 
Monday, May 16, 2016

Functionality in Tenders Part 1

The Preferential Procurement Policy Framework Act 2011, establishes the rules according to how Government Entities must evaluate tenders. The Preferential Procurement Regulations of 2011 takes it a step further and gives guidance on how to specifically award points according to certain criteria such as B-BBEE and Price.

Government Entities have developed a system called “Functionality” or “Technical Criteria” to enhance the system and to ensure that the companies with the best ability are evaluated according to the Regulations. This is a safety measure built into the system to keep the companies with limited ability but with the lowest price from winning a tender. Private Sector Entities have also adopted the same system, although slightly modified. For a better understanding, we will name Government Entities and Private Sector Entities together as Procuring Entities.

It is fair that a Request for Quotation or Competitive Bid (Tender) is awarded to the company with the best ability.

Otherwise no contract awarded will be executed correctly, according to specifications and delivered on time.

An Company’s ability to execute a Request for Quotation or Competitive Bid is measured through its ability to perform and deliver. This ability is measured in many different ways but most of the common areas are:

  • Experience;
  • Human Resources;
  • Financial Resources; and
  • Goods or Services delivery capability

The first three are easy to understanding and easy to approve. It is the fourth item, Goods or Services delivery capacity, which many companies struggle with. Procuring Entities must ensure that when procuring goods and/or services from an company that it will be done:

  • Timeously;
  • Correctly as per specifications; and
  • Continuously.

This can only be proved if a company has the necessary infrastructure to deliver the goods and/or services required.

We strongly believe that going forward Procuring Entities will be strict in ensuring that contracted companies have the ability to deliver.

The above mentioned criteria will be discussed in detail during the next few of articles to follow.

To receive proper training in the business of responding to quotations and competitive bids you should attend the How-to-Tender workshop (

Earn to learn!

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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