Issue Date: 
Tuesday, August 7, 2018

Local content calculation in tenders

The National Government has introduced "designated sectors" which are sectors, sub-sectors or industries that have been designated by the Department of Trade and Industry in line with national development and industrial policies for local production, where only locally produced services, works or goods or locally manufactured goods meet the stipulated minimum threshold for local production and content1.

What is Local Content and how must we apply it in our tender responses?

Local Content is Local Value Added in South Africa by South African recourses. Where a tender response contains a combination of local and imported goods and/or services, the tender price must be separated into its local and imported components as per the Standard Bidding Document 6.2

Where it becomes tricky is Annexure C, D and E that needs to be completed before Standard Bidding Document 6.2 can be completed. Because little of tender responders read the tender document very carefully this requirement is overlooked. This makes it very difficult to complete Standard Bidding Document 6.2.

It is important to know the sequence in which these annexures must be completed. Completing it in the wrong sequence is going to lead to much frustration on the side of the bidder.

Please remember that you as bidder will be contractually required to maintain records to certify imported content, for example, invoice of materials, expenditure records and income statements.

It must be emphasized that when you respond to a tender you must ensure you know which goods and/or services you can claim as Local Content. Be aware that certain tenders will exclude cost such as the following from Local Content:

  • finance charges;
  • property; and
  • deployment fees of the operations contractor.

The designated sectors together with its minimum thresholds can be found at: http://www.thedti.gov.za/industrial_development/ip.jsp.

There is an increase in the drive from National as well as Provincial Government to promote Local Content. This drive is not a South African initiative but a world wide trend. In a South African context it is good because it stimulates internal growth of the economy.

Local Content is a difficult item in any tender. Many bidders don't know whether or not it is applicable to them. We understand the Local Content criteria and documents.

If you want to know more about Local Content contact us to find out when our next Local Content workshop is taking place in your area.
werner@how2tender.com

This article was written by Werner van Rooyen, Director of HowToTender which specializes in tender consulting and tender training. (04/05/2018)

1.  Definition of "designated Sectors" as per SBD document 6.2.

Title Closing Date Tender No.
Supply: Tools and equipment 2018-10-17 12:00 GD11900441
Timber 2018-10-18 14:00 PNQ2 TIMBER
Sale of institutional zone 2 property: Erf 10046: Beaufort West 2018-10-26 14:00 Notice No. 100/2018
Supply: Hardware items 2018-10-18 12:00 GG11900591
Alien and unwanted vegetation clearing and cleaning, grass cutting of open erven inclusive of all illegal dumping 2018-10-24 11:00 FQ/SM: 46/19
Supply, delivery and installation of play equipment in various parks in Stellenbosch (WC 024) 2018-10-25 00:00 FQ/SM : 42/19
Pattern Making Training 2018. 2018-10-17 11:00 7G‐128
Supply, delivery and installation of palisade fencing: parks and cemeteries in Stellenbosch (WC 024) 2018-10-25 11:00 FQ/SM: 43/19
Supply and delivery of Structural Fire Fighting Suits with a 100% Local Content as and when needed until 30 October 2019 2018-10-24 11:00 FQ/SM : 32/19
Remove, Supply and Install of up to 100 Wayfinding Signs (refer detailed appendix 1). 2018-10-19 14:30 WO.477043
Supply, delivery and Off-Loading of Garden Equipment 2018-10-24 11:00 FQ/SM : 34/19
Supply and delivery of Uniform for Law Enforcement 2018-10-25 11:00 FQ/SM 48/19
Sale of vacant residential erven and business zone 1 properties in Merweville 2018-10-26 14:00 Notice No. 98/2018
Bulk meter replacements and telementry installations on an as and when basis for a period of 36 months. 2018-11-20 10:30 JW 13901
MBDA seeks suitable service providers to quote for Plastic Recycle Bins with Lids 2018-10-22 11:00 BDA1018626
The MBDA seeks quotes for: 1 * Windows 10 Pro 64GB,14"-Core i7 6820HQ-8GB RAM-500GB HDD, Intel Graphics 530,TPM Security Chip and Backlight 1 * Backpack for laptop 2018-10-22 11:00 BDA1018625
Supply and Deliver Riot Shields Protection 2018-10-22 11:00 GQ10181960
Linbro Water Upgrades. 2018-11-20 10:30 JW 13899
Supply and Deliver Deluxe Riot Helmets 2018-10-22 11:00 GQ10181960
Supply and Deliver Deluxe Body Protection 2018-10-22 11:00 GQ10181960

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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:

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