Issue Date: 
Thursday, October 31, 2019

Sub-contractors versus Consortiums and Joint Ventures

By Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

The Preferential Procurement Regulations, 2017 states that, if it is feasible, 30% of all Government Contracts above R30 million must be sub-contracted to specific categories of SMME’s.  These SMME’s include, but are not limited to, black female owned and black youth owned businesses.

To help with the confusion that arises from whether one must form a Joint Venture, Consortium or sub-contractor/contractor relationship when responding to a tender it is always good to understand the definition of these types of business relationships:

  • A sub-contractor/contractor relationship arises when a main contractor hires or employs additional businesses or persons outside of the main contractors own business to do work or to deliver services as part of a larger project.  The important thing to remember is that the main contractor is in charge and must ensure that the project is executed and completed as stipulated in the contract.
  • A consortium is an association of two or more individuals, companies, or organisations with the objective of participating in a common activity, such as responding to a tender, or pooling their resources to achieve a common goal.  Within the consortium, each participant retains their separate legal status and the consortium’s control over each participant is limited to activities involving the joint endeavour, particularly the division of profits.  A consortium is formed by contract.
  • A Joint Venture can be described as a business enterprise where two or more participants come together to share their expertise to win a specific contract for a set period.  A Joint Venture is a separate entity and is not part of the individual participant’s own enterprise.  Therefor a Joint Venture must have its own set of rules by which it is managed, and this is called a Joint Venture Agreement.

To become a sub-contractor, you will have to have a running business.  Main contractors will only use dependable sub-contractors with a proven track record.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops presented in Johannesburg, Pretoria, Durban, Port Elizabeth, and Cape Town.  Book and pay online at https://howtotender.co.za/tender-expert-form/

Contact us at wernervr@howtotender.co.za should you require more information.

You can also purchase a Tender Manual (Handbook) on our website https://howtotender.co.za/ which is a step by step guide how to respond to a South African Tender.  It includes examples of completed SBD forms.

Title Closing Date Tender No.
Purchase of earth moving equipment 2020-05-05 11:00 AHT23827
Appointment of a panel of electrical contractors (CIDB grade 3EP to 9 EP) to provide electrical construction services to the Alfred Duma Local Municipality for a period of one year 2020-04-16 11:00 EES 01/2020
Invitation for Service Providers to Provide Short Term Insurance for uMgungundlovu District Municipality 2020-04-23 12:00 09/2020
Supply and delivery of Refuse Skip Loader Truck for Makhado Local Municipality 2020-05-08 12:00 15 of 2020
Request for Proposals for the Placement on the Municipal Panel of Professional Civil, Structural, Mechanical and Electrical Engineering Consultants for a period of thirty-six (36) months 2020-04-24 12:00 UGU-07-1540-2020
Provision of Services: Taking of Water and Sewage Samples, Analysing, and Monitoring it in Botrivier, Caledon, Tesselaarsdal, Genadendal, Grabouw, Greyton, Riviersonderend and Villiersdorp for the Period From 01 July 2020 To 30 June 2023 2020-04-24 12:00 ENG 01/2020/21
Re-advert: Procurement of Service Provider for Enhancement of the APRM Electronic Questionnaire Tool for the African Peer Review Mechanism (APRM) 2020-04-28 11:00 APRM/001B/SIDA/EQT/2020
Supply and Installation of Artificial grass in various parks in Hermanus for a contract period ending 30 June 2020. 2020-04-03 12:00 SC2080/2020
Supply and Delivery of Sewing Equipment 2020-04-03 12:00 FWQ201/2019
Supply and Delivery of Cable 2020-04-03 12:00 FWQ204/2019
Supply and Delivery of Sewage Mixers 2020-05-08 12:00 FWQ207/2019
Supply and Delivery of a Soft Starter Water Pump Station Alwyndal 2020-05-08 12:00 FWQ208/2019
Installation of Perimeter Fence at Polokwane Traffic Station 2020-04-30 11:00 PUDP 758
Supply, Delivery and Installation of General Steelworks and Fittings 2020-04-30 12:00 TDR125/2019
Appointment of Contractors in the Built and Environment for construction Rivoni School for the blind for the Limpopo Department of Education 2020-04-30 11:00 LDE/IA/B18/2019/20
Supply and Delivery of Manhole Rings and Covers 2020-04-09 12:00 TDR120/2019
Supply and Delivery of Chemical Cleaning Product for use in the Wastewater Systems 2020-04-09 12:00 TDR121/2019
Supply and Delivery of a Cobra Safe MLP System with Various Components and Cobra Brass Fittings 2020-04-09 12:00 TDR123/2019
Appointment of panel of contractors for urban / rural stormwater maintenance 2020-05-04 12:00 13/2020
Supply and Delivery of Various Water Fittings 2020-04-09 12:00 TDR122/2019

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