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.
Provision of a manufacturing facility in zone 1A of The Elidz. 2018-08-21 12:00 EB/ASP2/03/18/Z1A
Construction of Izixhotyeni Access Road. 2018-08-21 12:00 MNQ/SCM/04/18-19
Construction of Dyam-Dyam Access Road. 2018-08-21 12:00 MNQ/SCM/05/18-19
Construction of Lower Toboshane Access Road. 2018-08-21 12:00 MNQ/SCM/06/18-19
Supply and delivery of various valves on an as and when required basis for a period of five (5) years. 2018-08-22 14:00 MAT00312
Design, Manufacture, FAT, Delivery of new 400V AC Unit Boards System and Associated Equipment to Site, Offloading, Rigging, Erection, Installation, Site Testing and Commissioning for Units 1 - 4 at Drakensberg Power Station. 2018-08-23 10:00 E/LH3681
Completion of Libode Social Development Offices – including remedial works. 2018-08-23 11:00 SCMU5-18/19-0016
Provision of professional services in consortium/joint venture or multi-disciplinary practice for SCM offices. 2018-08-23 11:00 SCM/18-100/S
Provision of professional services: Review and development of an automated fare collection system (AFC) tender including contract management for the NMBM Integrated Public Transport System. 2018-08-23 11:00 SCM/18-230/S
Installation of street light furniture and maintenance. 2018-08-23 11:00 SCM/18-207/CSCM/18-207/C
Completion of Monti Ntlozelo (Electrification). 2018-10-05 11:00 MBIZ LM 0004 ENG
Provision of banking services. 2018-09-20 12:00 MBIZ LM 06/03/18/LT/ BTO
Manufacturing and Installation of Bus Shelters and the Construction of Bus Stops and associated civil works. 2018-08-20 12:00 T/ING/024/2018
General Building Maintenance Services at various Central Grid Substations on an as and when required basis for a period of three (3) years. 2018-08-24 10:00 CORP4493
Request for proposals for the appointment of a service provider to render Cleaning Services to the Unemployment Insurance Fund. 2018-08-27 11:00 UIF2/2018
Geotechnical Drilling for Foskor’s north and south Pyroxenite Pits 2018-08-20 11:00 T144/18
Appointment of a service provider to lease commercial office accommodation to SASSETA for a period until 31st March 2020 with an option to re-new 2018-08-24 11:00 RFP/SASSETA/1718006/01
Supply of Fbo (Vebeo) Fitting Kits for Bt 1064 Project Currently Running at Transnet Locomotive Business in Durban for a period of three (3) years "as and when required" 2018-08-21 10:00 TE 18 DBN 6GM 05118
Upgrade to microsoft skype for business 2018-08-21 11:00 FSCA2018/19-T009
Road condition data (Paved and Upaved) including instrumental /Automated Road Survey Data, Traffic Data and Bridge Conditions for Vhembe District 2018-08-21 12:00 RAL/C750E/2018

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