Must I Have Specific Experience To Tender?
Recently we received the following question via email: "I am interested in registering a CC, specifically to apply for government tenders. Now, I don't have any experience in business let alone in tendering, so I want to find out if one can be awarded a tender if he/she does not have specific experience?"
Unfortunately you cannot register a CC (Closed Corporation) in South Africa anymore - you will have to register some other juristic person such as a private company.
The tender processes in South Africa are governed by:
- The Preferential Procurement Policy Framework Act;
- Preferential Procurement Regulations, 2017;
- National Treasury's Supply Chain Regulations;
- General Procurement Guidelines.
According to these Acts and Regulations, Competitive Bids - as tenders are legally called in South Africa - must be evaluated on either the 90/10 or 80/20 Preference Points Scoring System. All Government tender responses must be evaluated on one of these two systems if it has passed the Functionality test.
The Functionality test determines if a bidder has the capabilities to execute the contract or not. During the Functionality test the bidders are tested on various aspects of the contract to establish the extent of their capabilities.
Bidders are mostly tested on the following criteria during the Functionality test:
1. Experience: the Procuring Entity - either Public or Private Sector - wants to know how many years' experience the bidders has in order to execute the contract;
2. Human Resources: the bidder must indicate if it has the human manpower, with the necessary experience and expertise to successfully comply with the requirements of the contract;
3. Financial capabilities: Procuring Entities are hesitant to award a contract to anyone who doesn't have the required capital available in order to successfully execute the contract.
4. Other functionality criteria: usually the Procuring Entity will require other Functionality criteria that are specific to the goods or services that they want to procure. For example: if the Procuring Entity needs a construction company, the bidder will have to be registered with the Construction Industry Development Board or CIBD for short. If the bidder is not registered with the CIBD then the bid response will be marked as non-responsive.
During the Functionality test bidders will score points on the different Functionality criteria. Each Functionality criteria will have a weighting in points. The weighting of each functionality criteria will be dependent on the importance of the criteria in the contract. Thus you will find that Experience can have a higher score than Human resources and so on and so on. All competitive bids will have a minimum number of points that needs to be scored by the bidder in order to progress to the next phase of evaluation namely the Preference Points Scoring system. Only those bidders that reach the minimum threshold, which can be anything between 60 and 90 points out of a possible 100 points, will advance to the next phase.
To answer the question if you will be awarded a tender if you have no experience is simple: NO, you would not be awarded the tender. The Procuring Entity must apply the abovementioned Acts and Regulations in evaluating bid responses and by applying these Acts and Regulations the Procuring Entity will automatically disqualify bid responses that do not have the necessary experience.
There are some Government Entities that have committed themselves to procure a certain percentage of goods and services from start-up enterprises (businesses with no or little experience). But these bids are hard to find and there are many businesses that respond to these bids. This means that your chances of being the successful bidder are very slim.
We suggest that you find something that you are good at and start a small business. Start doing business and once you has gained some experience you start responding to quotations and bids.
We further encourage you to get proper training in the art of responding to quotations and competitive bids by attending training sessions such as our How-to-Tender workshop (www.how2tender.com). During this workshop you will learn all you need to know to respond to tenders correctly and hopefully successfully.
This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd. which specializes in tender consulting and tender training.