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.
Procurement of Hp Servers For Mfd/Goaml/Postilion/Gis Projects IT Infrastructure/17/18 2017-11-16 11:00 RFP20
Supply and delivery of software 2017-10-19 11:00 GK11800232
Water riticulation rehabilitation - Vosburg 2017-11-17 12:00 C00010N
Provision of services for the supply and installation of Soalar Photovoltaic (PV) Roof top systems to the CSIR 2017-11-17 16:30 CSIR RFP 3157/17/11/2017
Supply and delivery of Christmas lights 2017-10-20 11:00 275866
Supply and delivery of Spares 2017-11-21 10:00 PSCED0084
Supply: Supply and delivery of full hd smart tv 2017-10-19 11:00 GK11800230
Montagu Hospital - General Repair and Renovations 2017-11-23 12:00 WCGH 001-2017
Supply: Pickhead - type: diamond and chisel 2017-10-19 12:00 GD11800366
GIS Software License 2017-10-20 12:00 128/2017-2018
Supply: Bowsaw, rake 2017-10-19 12:00 GD11800368
Supply and delivery of office furniture & electrical appliances. 2017-10-23 11:00 275082
Supply: Drill bit, cutterbelt, wheel, allen key 2017-10-19 12:00 GD11800367
Supply: Hydraulic soil pipe cutter 150mm-500mm 2017-10-24 12:00 GD118S0371
Supply: 246l clay pipe cutter 2017-10-19 12:00 GD11800370
Supply of parts for saber 1.5 bush cutters 2017-10-19 12:00 GD11800369
Ecosystem Restoration - Rondevlei, Pelican Park, Strandfontein Birding Area and Sandwolf Nature Reserves 2017-10-30 14:00 SQ11800174
Supply, delivery and erection of Street Names in Kimberley 2017-10-23 11:00 Q013/2017/2018
Leasing of hawker stands at the beach fronts in the George Municipal Area for a period of one year from date of appointment 2017-10-27 12:00 COM001/2017
Replace existing curtains at Langa Civic Hall 2017-10-27 14:00 SB11800323

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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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