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: Coats 2017-10-31 10:00 GA11800128
Supply: 5kg x coir 6mm buffered 2017-10-23 16:00 GC11800274
Supply: Gift packs senior event 2017-10-24 15:00 GF11800343
Supply: Refreshments-Scottsdene 2017-10-23 15:00 GF11800342
Supply & delivery of Mobile toilet on trailer 2017-10-26 10:00 DSC0017395
Erf clearing and removal of illegal dumping and nuisance on overgrown properties, within City of Cape Town - (Eastern - AREA 2) 2017-10-31 12:00 SC11800020
Supply: Asphalt; wearing course; hot mix 2017-10-20 14:00 GE11800581
Supply: Industrial standard bolted shelving grey 2017-10-23 14:00 GE11800582
Supply & delivery of sand in the Drakenstein Area 2017-10-26 10:00 DIC0022926
Supply: 65mm c300 carbon/silicon/viton 2017-10-23 14:00 GE11800584
Supply: 8mm quick coupler 90degr connector 2017-10-23 14:00 GE11800585
Tenders are invited for the B and C SERVICE 2017-10-27 11:00 CSQ10171137
Tenders are invited for the Weeding of Flower Beds at Humewood 2017-10-27 11:00 CSQ10171144
Supply: Steel plate 2017-10-23 14:00 GE11800586
Tenders are invited for the Weeding of Flower Beds at Buffelsfontein and Commercial Road 2017-10-27 11:00 CSQ10171144
Tenders are invited for the Weeding of Flower Beds at Ibhayi area and Victoria Park 2017-10-27 11:00 CSQ10171144
Supply: Hydrostatic pressure transmitter 2017-10-23 14:00 GE11800587
Tenders are invited for the Weeding of Flower Beds at Settlers Freeway 2017-10-27 11:00 CSQ10171144
Tenders are invited for the Weeding of Flower Beds at Cape Road and St Georges Park 2017-10-27 11:00 CSQ10171144
Supply Rolamatic filters 1500 fibre gl 2017-10-26 14:00 GE11800588

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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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