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 and Delivery of Wet Rations, fresh fruit and vegetables to the Department of Defence (Grahamstown area). 2018-08-02 11:00 SPSC- B- 097- 2017
Supply and Delivery of Wet Rations, bread and rolls to the Department of Defence (Grahamstown area) 2018-08-02 11:00 SPSC- B- 096- 2017
Supply and Delivery of Dry Rations, Soups, Spreads and Preserves to the Department of Defence (Easter Cape region) 2018-08-30 11:00 SPSC- B- 108- 2017
Supply and Delivery of Dry Rations, Coffee, Tea and Cooking Oil to the Department of Defence (Easter Cape region). 2018-08-30 11:00 SPSC- B- 111- 2017
Supply and Delivery of Dry Rations, Condiments, Pickles and Herbs and Spices to the Department of Defence (Easter Cape region) 2018-08-30 11:00 SPSC- B- 110- 2017
Supply and Delivery of Dry Rations, Baking goods, Essence, Pudding, Jelly and Sugar to the Department of Defence (Easter Cape region) 2018-08-30 11:00 SPSC- B- 109- 2017
Supply and Delivery of Wet Rations, various meat (fresh and frozen) to the Department of Defence (Grahamstown area) 2018-08-02 11:00 SPSC- B- 095- 2017
Supply and Delivery of Dry Rations, Pasta, Rusks and Biscuits Porridges and Cereals to the Department of Defence (Easter Cape region) 2018-08-30 11:00 SPSC- B- 107- 2017
Hire of Office Accommodation: A lettable area sufficient to accommodate 154m2 of assignable office space plus to a maximum of 25% of non-assignable office space, plus 20 secure undercover bays and 1 wash bay is required 2018-04-26 11:00 ZNT 2708 W
Supply and Delivery of Wet Rations, various dairy products to the Department of Defence (Mthatha area) 2018-07-19 11:00 SPSC- B- 093-2017
Hire of Office Accommodation: A lettable area sufficient to accommodate 298m2 of assignable office space plus to a maximum of 25% of non-assignable office space, plus 6 secure undercover bays, 16 open bays and 1 wash bay is required 2018-04-26 11:00 ZNT 2761 W
Department of Agriculture: Hire of Office Accommodation: Ixopo: A lettable area sufficient to accommodate 524m² assignable plus to a maximum of 30% of non- assignable space 21 undercover bays, 10 lock-up bays and 10 open bays. 2018-04-26 11:00 ZNT 2750 W
Supply and Delivery of Wet Rations, frozen vegetables to the Department of Defence (Port Elizabeth area) 2018-08-16 11:00 SPSC- B- 104- 2017
Appointment of a Service Provider to design, maintain a mobile office and clinic solution on a three year lease basis for Compensation Fund (CF). 2018-04-26 11:00 TCF 11: 2017/2018.
Invitation to South African Universities to Express Interest in Aquaculture Research Collaboration for a Maximum Period of 5 Years. 2018-04-30 11:00 None provided
Procurement of a property developer for the Better Living Model Exemplar Project in Cape Town 2018-05-21 11:00 RFP 001/18 TPW
Installation and maintenance of meters 150MMØ and larger. 2018-04-26 11:00 SCM/17-111/S
Clearing of Municipal and Private erven for a contract period ending 30 June 2021. 2018-04-26 12:00 SC 1853/2018
Provision of Multi-Functional Office Machines for a contract period ending 30 June 2021. 2018-04-26 12:00 SC 1870/2018
Provision of Hygiene Services for a contract period ending 30 June 2021. 2018-04-26 12:00 SC 1871/2018

Pages

Tender adjudication process

The SBD/WCBD6.1 document must form part of all bids invited.  It contains general information and serves as a claim form for preference points for Broad -Based Black Economic Empowerment (B -BBEE) Status Level of Contribution, and explains how tenders or bids are decided.

The document says:

  • The bidder obtaining the highest number of points will be awarded the contract.
  • Preference points shall be calculated after prices have been brought to a comparative basis.
  • Points scored will be rounded off to two decimal places... Read More
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