Issue Date: 
Tuesday, November 1, 2016

When Must I Sub-Contract?

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting. The Draft Preferential Procurement Regulations, have been gazetted and are currently up for review. However, these Regulations are the major cause for the confusion. Many entrepreneurs ask whether they should sub-contract or not whilst responding to a tender.

The Draft Preferential Procurement Regulations stipulates the following: 

  1. For contracts above R30 million, the tenderer MUST sub-contract a minimum of 30% of the value of the contract to –
    • One or more of the categories:
      • EME’s (Exempt Micro Enterprises) or QSE’s (Qualifying Small Enterprises) owned by black people who are female;
      • EME’s or QSE’s owned by black people from the ages 14 to 35;
      • EME’s or QSE’s owned by black people;
      • EME’s or QSE’s owned by black people with disabilities)
    • One or more Exempt Micro Enterprises (EME’s) or Qualifying Small Enterprises (QSE’s); or
    • One or more small businesses, as defined in the National Small Business Act.
  2. If a successful tenderer sub-contracts to another person without disclosing it in its tender documents, the organ of state must penalise the tenderer 10% of the value of the contract, unless the tenderer submits a satisfactory reason for failing to make the disclosure.

The Regulations are very clear because its states “the tenderer MUST sub-contract…..”. Thus, once the Regulations are finally gazetted then all contracts with a value of R30 million and above will have to comply with this Regulation. Remember that currently (as of 31 Oct. 16) the Regulations are not finalized yet.

Until such time that the Regulations are finalized the answer is easy whether or not to sub-contract – look at the scope of the tender or the special conditions. Somewhere in the tender document it will stipulated whether or not the tenderer will have to sub-contract.  Follow those rules. If the tender document doesn’t contain any sub-contracting instructions (at this stage) then it is not necessary to do so.

The fact is that the tender document will dictate what you should or should not do. Read the tender document carefully and follow the instructions to the point.

To learn more about this and all the other new developments regarding tenders, attend one of the How-to-Tender workshops.

Learn to earn

www.how2tender.com

Title Closing Date Tender No.
Supply paper towel - type: interfold 2017-12-15 15:00 GB118A0592
Hire of digger loader 2017-12-20 09:00 WJ11800280
Hire of digger loader 2017-12-20 09:00 WJ11800279
Cleaning services at transport management centre / disaster risk management buildings, City of Cape Town. 2017-12-20 12:00 SC11800080
Audit Services of NIM Projects 2017-12-17 12:00 43093
Provision of transaction advisory services to INSETA 2017-12-18 11:00 RFQ/2017/56
Supply Pre-printed stock stationery- book pediatric 2017-12-15 11:00 GM11800520
Hire of digger loader 2017-12-20 09:00 WJ11800281
The appointment of a service provider to conduct enumeration services for Komatiland Forests for a period of three (3) years 2018-01-25 11:00 RFB 072/2017
Construction Of Dakota Pilot Street 2018-01-25 12:00 164/2017
Construction Of Cessna Street 2018-01-25 11:00 165/2017
Bid for the supply and delivery of 6 cubic metre skip bins for Midvaal Local Municipality 2018-01-26 10:00 8/2/4/121
Request for Proposals for the Appointment of a Service Provider to Assist with the Insurance Broking Service for I’ts Requirements in Respect of I’tsshort Term Insurance Portfolio (Non – Motor) 2018-01-25 10:30 A748
Supply Plants 2018-01-12 16:00 GC11800395
Supply and deliver liquid petroleum gas 2017-12-15 16:00 GC11800396
Bid for the supply and delivery of uniform and protective clothing for the Waste and Environmental Management Section of Midvaal Local Municipality. 2018-01-26 10:00 8/2/4/122
Construction of Luthuthu Community Hall with a CIDB Grading of 4 GB or Highe 2018-01-15 12:00 068/2017/18
Construction Of Mkhuhlu & Mthonjaneni Streets 2018-01-26 11:00 161/2017
Supply & delivery of PE 100 class HDPE pipes & fittings 2018-01-30 10:00 SAZ RME 3001/2017
Travel Agency Services from date of Award to 30 December 2018 2017-12-14 12:00 6/5/2/350

Pages

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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