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.
Dragon Naturally Speaking Professional v.15 Software 2018-12-19 11:00 RFQ 1660216
Invitation for the provision of security services at head office for the department of social development 2019-01-29 14:00 NW/DSD/08/2018
Supply and Delivery Of Cabinet Five Drawer Shelf 2018-12-17 12:00 Q06.12.18
TRACK-IT Software Renewal 2018-12-18 12:00 Q09.12.18
Re-Supply and Delivery of 400lt Skid Unit Complete with Motor and Hose Reel. 2018-12-18 12:00 Q08.12.18
Videography and Photography Services for Cross Over 2018-12-20 12:00 Q07.12.18
Supply and Delivery of 6m Steel Container to Fairview 2018-12-18 12:00 241/2018/19
Supply and Delivery of Traffic Uniforms for Traffic and Law Enforcement Officers 2019-01-15 12:00 08/2/16/41
Supply and Delivery of Traffic Signal Materials (Until June 2020) 2018-12-20 10:00 CES 34/2018
Supply and Delivery of Road Traffic Signs (Until 30 June 2020) 2018-12-20 10:00 CES 33/2018
Invitation for the provision of security services at Dr. Kenneth Kaunda District for the Department of Social Development 2019-01-30 11:00 NW/DSD/06/2018
Invitation for the provision of security services at Dr Ruth Segomotsi Mompati District for the Department of Social Development 2019-01-31 11:00 NW/DSD/05/2018
Supply & delivery of toolboxes. 2018-12-20 10:00 DIE0015186
Supply & delivery of fluke clamp 375. 2018-12-20 10:00 DIE0015182
Appointment of a Service Provider to Design, Manufacture and Delivery of Two (02) Fire Trucks for a period of Eighteen months (18) for The North West Province and Maintenance of Three (03) years after delivery. 2019-01-31 11:00 CS&TM 07/18/19
Provision for municipal finance management programme 2019-01-14 12:00 GTLM/FS06/2018/2019
Supply and delivery of ready mixed, concrete 2019-01-14 11:00 FIN/SC/C1/09/2018
Supply and delivery of cement products, kerbs, etc 2019-01-14 11:00 FIN/SC/CP/09/2018
Supply and delivery of crushed stone, crusher sand, slurry seal 2019-01-14 11:00 FIN/SC/S1/09/2018
Upgrade of Rosendal Chlorine Station. (Supply and Install Chlorine Dosing Equipment) 2018-12-18 11:00 FQ/SM: 86/19

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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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