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.
Information on Water Treatment System 2019-03-01 10:00 CORP 4647
Consulting engineering services for the routine road maintenance of national route N2 section 10 km 73.40 to section 11 km 71.74 and national route R75 section 1 km 0 to section 2 km 25.93 and national route R335 section 1 km 0 to km 30.12 2019-02-04 10:00 X.003-031-2019/1F
Panel of professional services (civil, building, mechanical, electrical and environmental) for a period of three (03) years 2019-02-08 12:00 T32/2018
The Replacement and Maintenance of Signages at O R Tambo International Airport (ORTIA) for A Period Of 60 Months 2019-01-31 11:00 COR5652/2018/RFP
Supply and Delivery of Stationery for SABC Offices at Auckland Park on an “as and when” Requiredd Basis, for a Period of Three (3) Years 2019-01-11 12:00 RFP/LOG/2018/19
Maintenance of Electricals and HVAC Controls Systems 2019-02-01 11:00 ORT5749/2018/RFP
Replacement of TVOB camera equipment. 2018-12-18 12:00 RFP/TVO/2018/76
Supply and Delivery of 10 X 290 2wd Sunroof 60 Kw Tractors for Zululand District Municipality 2018-12-19 12:00 ZDM 111/2018
An Enabling Agreement (EA) for Design, Supply, Delivery, Installation, Commissioning, Training, Support and Repairs of Operational Technology (OT) Voice and Regional Operational Voice Control System on an "as and when required" basis for a period of 5 (Five) years. 2019-02-07 10:00 CORP4640
Refurbish Fit and Install Lime Feeder Machine at Withoogte Purification Plant 2018-12-19 12:00 6/5/2/387
Eskom to conduct tests at the supplier's laboratory for determination of the current withstand of medium voltage overhead line hardware over period of three (3) years on an "as and when required" basis 2019-02-08 10:00 CORP 4609
Appointment of service provider to upgrade and installation of a security systems at Council for Geoscience Head Office. 2019-02-08 11:00 CGS-2018-041A
Request for proposal for pilot project for leak detection on Rand Water pipelines using satellite technology 2019-02-08 12:00 RFP00552/18
Compilation of the 2017/2018 MIG Annual Report 2018-12-20 12:00 RFQ/501
Request for proposal for development of economically viable solutions for the handling, disposal and reuse of water treatment residue at Rand Water 2019-02-08 12:00 RFP00553/18
Copper Tube 28mm Class 2, Sabs 460 2018-12-21 11:00 SQ12181326
Couplings 15 Mm X 20 Mm Reducing Male I.T.C. Cobra Or Q D-2rxs - Sans 10525/1 Approved. 2018-12-21 11:00 SQ12181326
Elbow 3/4" X 22mm X 90 Deg. Male I.T.C. D8xs (Sabs Approval Required On Coupling) 2018-12-21 11:00 SQ12181326
Developing, hosting and managing Black Umbrellas virtual incubation platform 2019-01-21 17:00 No reference supplied
Coupling 15 Mm Straight C.T.C. D-1xs (Sabs Approval Required On Coupling) -Sans 10525/1 Approved 2018-12-21 11:00 SQ12181326

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