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.
Appointment of a Supplier for the Bioremediation at the pniel wwtw 2018-12-18 11:00 FQ/SM: 88/19
Construction of toilet top structures in Kutlwanong, Kagisho & Phomolong Phase 1 2019-01-28 11:00 INFRA/CE/T2/2018
Tenders are invited to Supply,Install and Deliver eight(8) Gun Safes 2018-12-18 11:00 CSQ12181511
Supply and Deliver Coin Counter Equipment 2018-12-18 11:00 GQ12182007
Repair and resurface of various roads in central business district of Upington 2019-02-01 14:00 TN099/2018
Supply and Deliver Note Counters Equipment 2018-12-18 11:00 GQ12182007
Appointment of consulting engineering firm for the planning, design and project management of water services for Hakskeen Pan 2019-02-01 14:00 TN100/2018
Terms of Reference for Consultant Gender Programme Expert Consultancy Services for Launching the AU Strategy for Gender Equality and Women’s Empowerment 2018-12-21 17:00 AUC/WGDD/C/252
For the supply and installation of HV Surge arresters. 2019-02-05 10:00 KBY/54341
Supply & deliver Tinned Wire Copper 1.6mm fusewire. 2018-12-18 11:00 SQ12181328
Supply & deliver Circuit Breakers 40amp 240volt,5ka CURVE 2 SFM1-G3 complete.no shrouds 2018-12-18 11:00 SQ12181328
Supply & deliver Energy Saving Flourescent Tubes T5 28W/840 1149MM long, Cool White. Osram, Phillips or approved equal. 2018-12-18 11:00 SQ12181328
Supply and deliver 667/TZ/30937/000 EFC Modules 128M Signal Controller -Siemens or approved equal 2018-12-18 11:00 GQ12182003
Supply and deliver Hydraulic Breakers- LH270 Atlas Copco or approved equal 2018-12-18 11:00 GQ11182001
Rental of a digger loader (6-7 ton) for a the month of December 2018 and January 2019 2018-12-18 11:00 292257
Rental of bull dozer for the months of December 2018 and January 2019 2018-12-18 11:00 292038
Rental of light delivery vehicles (engine capacity 2000 cc) for January and February 2019 2018-12-18 11:00 292218
Rental of light delivery vehicles (engine capacity 1400 cc) for January and February 2019 2018-12-18 11:00 123456
Rental of a rear end loading (REL) refuse compactor - 19 m3 (double axle) refuse compactor truck, for December 2018 and January 2019 2018-12-18 11:00 234567
Rental of landfill compactor for December 2018 and January 2019 2018-12-18 11:00 345678

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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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