Issue Date: 
Monday, April 25, 2016

Tenders and subcontracting

Did you know tenders and subcontracting go hand in hand. In fact, subcontracting part of a tender is so common in South Africa that there are specific rules regulating subcontracting in executing tenders especially Government tenders.
According to Investopedia subcontracting is the "practice of assigning part of the obligations and tasks under a contract to another party known as a subcontractor". Subcontracting is especially prevalent in areas where complex projects are the norm, such as construction and information technology. Subcontractors are hired by the project's general contractor, who continues to have overall responsibility for project completion and execution within its stipulated parameters and deadlines.

It is important to know that in South Africa there are two major rules when it comes to subcontracting if awarded a Government tender. According to the Preferential Procurement Regulations, 2011:

  • Section 11(8) states that a company must not be awarded points for B-BBEE status if they are sub-contracting more than 25% of the contract to any other enterprise who does not qualify for the same amount of points that the tenderer qualifies for.  That is, unless the intended subcontractor is an exempted micro enterprise that has the capability and ability to execute the sub-contract.
  • Section 11(9) states that a company awarded a contract may not sub-contract more than 25% of the value of the contract to any other enterprise who does not have an equal or higher BBBEE status level. That is, unless the contract is subcontracted to an exempted micro enterprise that has the capability and ability to execute the sub-contract.

Simply put, these two sub-sections of the Regulations clearly indicate that you cannot subcontract more than 25% of the contract value to another party if that party does not have at least the same or a higher B-BBEE Status Level as you. The Office of the Chief Procurement Officer is watchful for discrepancies like this and if you are found to be in contravention of these regulations you stand the chance of losing the contract or having your existing contract cancelled.  You may also be liable for costs incurred by the Government Entity in executing the contract.

If you are going to subcontract less than 25% of the value of the contract you are safe and wont need to be concerned about the B-BBEE Status Level of the subcontractor.
Subcontracting doesn't need to be difficult but if you want to know more about subcontracting and other important tender response information we recommend you attend the How-to-Tender workshops.

Email werner@how2tender.com for more information.

www.how2tender.com

Title Closing Date Tender No.
Supply: 210 Units sets administration high capacity 2017-10-03 11:00 ZNQ 770/ 17/ 18
Minor repairs and refurbishment of JF Mati senior secondary school in Mdantsane NU 9, East London. 2017-10-16 12:00 CDC/ 321/ 17
Supply: 200 units sets infusion y type 2017-10-03 11:00 ZNQ 769/ 17/ 18
Supply: 115 Units catheter urethral foley 2 way latex 3ml 8fg 2017-10-03 11:00 ZNQ 731/ 17/ 18
Industrial stove (3 plate with oven) 2017-10-03 11:00 ZNQ NO.2511/ 08/ 17
CapeNature seeks the services of a skilled project management team and contractor to construct a recreational area including a swimming pool and shaded lapa at the Grootvadersbosch Nature Reserve. The contractor must have a minimum level 3GB for the installation of the required pool and recreational area. 2017-10-20 11:00 WCNCB 01/ 09/ 2017
Supply: 372 boxes test kit syphilis IPR 2017-10-03 11:00 ZNQ 845/ 17/ 18
Steel staff lockers (as per spec) 2017-10-03 11:00 ZNQ NO.2510/ 08/ 17
Supply: 40 Units hospital standard bed with mattresses 2017-10-03 11:00 ZNQ 846/ 17/ 18
Request for information (RFI) for the supply and installation of digital voice recording system at all control centres at EMS: 3 year contract 2017-10-16 11:00 ZNB 5135/ 2017- H
Supply: 108 pairs stockings anti embolism thigh high medium 2017-10-03 11:00 ZNQ 775/ 17/ 18
Supply: 150 pairs stockings anti embolism thigh high x large 2017-10-03 11:00 ZNQ 776/ 17/ 18
Supply: 6360 units nebulizer aerosol child 2017-10-03 11:00 ZNQ 835/ 17/ 18
Supply: 1100 pkts electrodes E.C.G adult pkt/50 2017-10-03 11:00 ZNQ 834/ 17/ 18
Supply and deliver 10L Buckets plastic. Green, Yellow, Blue, Red and White Colours. QTY: 32 Units 2017-10-06 11:00 ZNQ: 593/ 17- 18
Supply and deliver SHE Bins 10L. QTY: 48 Units 2017-10-06 11:00 ZNQ: 591/ 17- 18
CapeNature seeks the services of a skilled project management team and contractor to construct a recreational area including a swimming pool and shaded lapa at the Algeria campsite in the Cederberg Wilderness. The contractor must have a minimum level 3GB for the installation of the required pool and recreational area. 2017-10-20 11:00 WCNCB 02/ 09/ 2017
Supply & delivery of plumbing material 2017-09-29 11:00 ZNQ 276/ 17/ 18
CapeNature requires the services of an experienced Contractor to design, supply building material, and construct for the Upgrade of Tierkloof bushcamp at Gamkaberg Nature Reserve. 2017-09-22 11:00 WCNCB 03/ 09/ 2017
Supply: 5030 units nebulizer aerosol adult 2017-10-03 11:00 ZNQ 833/ 17/ 18

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Functionality and Tenders

In all competitive bids (tenders) you as the bidder will have to respond to Functionality. You will need to score a set minimum number of points, measured as a percentage, on Functionality of a competitive bid (tender) in order to advance to the next phase of evaluation in the tender process.

Usually Organs of State evaluate competitive bids (tenders) as follows:

  • The tender response is evaluated on Functionality where the bidder must score points out of a maximum of 100 points.
  • A threshold of between 65 to 75 out of 100 points... Read More
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