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.
Request for proposals for the long term lease and development of Erf 1015 City and Suburban. 2018-11-30 10:30 RFP 32/2018
Request for proposals for the long term lease and development of Remainder of Erf 5100 Johannesburg. 2018-11-30 10:30 RFP 31/2018
Request for proposals for the long term lease and development of Erven 171 – 178 Marshalltown. 2018-11-30 10:30 RFP 30/2018
Request for proposals for the long term lease and development of Erven 326 and 327 Berea. 2018-11-30 10:30 RFP 29/2018
Request for proposals for the long term lease and development of Erf 527 Yeoville and Remainder and portion 1 of Erf 528 Yeoville. 2018-11-30 10:30 RFP 28/2018
Request for Request for proposals for the long term lease and development of Erf 776 Turfontein. 2018-11-30 10:30 RFP 27/201
Request for proposals for the long term lease and development of Erven 1633, 1637, 1638, 1639 and 1640 Turfontein. 2018-11-30 10:30 RFP 26/2018
Request for proposals for the long term lease and development of Erf 737 Yeoville. 2018-11-30 10:30 RFP 25/2018
Request for proposals for the long term lease and development of Erven 1864 and 1865 Johannesburg. 2018-11-30 10:30 RFP 24/2018
Request for proposals for the long term lease and development of Erf 2252 Johannesburg. 2018-11-30 10:30 RFP 23/2018
Request for proposals for the long term lease and development of Erven 1905-1907 and 4734 Johannesburg. 2018-11-30 10:30 RFP 22/2018
Queenstown SA Police Station: Repairs & renovations & newly build accommodation. 2018-10-18 11:00 PE15/ 2018
The Supply and Delivery of Dry Rations, Coffee, Tea and Cooking Oil to the Department of Defence (West Coast area). 2018-10-25 11:00 SPSC- B- 012- 2018
The Supply and Delivery of Dry Rations, Condiments, Pickles and Herbs and Spices to the Department of Defence (West Coast area). 2018-10-25 11:00 SPSC- B- 011- 2018
The Supply and Delivery of Dry Rations, Juices Dried Fruit & Veg, Canned Fruit & Veg, Canned meat etc to the Department of Defence (Cape Metropole Area). 2018-11-22 11:00 SPSC- B- 019- 2018
The Supply and Delivery of Wet Rations, various dairy products to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 018- 2018
The Supply and Delivery of Wet Rations, frozen vegetables to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 017- 2018
The Supply and Delivery of Wet Rations, fresh fruit and vegetables to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 016- 2018
The Supply and Delivery of Wet Rations, various meat (fresh and frozen) to the Department of Defence (Cape Metropole Area). 2018-11-08 11:00 SPSC- B- 014- 2018
The Supply and Delivery of Dry Rations, Baking goods, Essence, Pudding, Jelly and Sugar to the Department of Defence (West Coast area). 2018-10-25 11:00 SPSC- B- 010- 2018

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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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