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

Title Closing Date Tender No.
Construction of Moreri Access Road in Tseoge in Kagisano Molopo Local Municipality 2017-12-14 12:00 KMLM2018-011
The Breede Valley Municipalities invites tenders for the: Upgrading of basket rooms at the swimming pool in Greystreet, Worcester. 2017-12-14 11:00 BV 667
Invitation too Bidder/s for the provisioning of Endpoint Protection Solution which entails design, implementation, maintenance and support services for a period of three (3) years 2017-12-19 11:00 DIRCO 07/2017/18
Municipal Finance Management Programme 2017-12-18 12:00 2/2/4/2017-18
Expressions of interest are invited for investment in the Development and Management of the Fresh Produce Market in Rustenburg 2018-01-10 13:00 Not Supplied
Water and wastewater projects-Vondo RWS:Upgrading of vondo water treatment works (Electrical) 2018-01-19 12:00 VDM/TECH/10/11/2017/01
Expressions of interest are invited for investment in the Development of an Education Precinct in Rustenburg 2018-01-10 08:00 Not Supplied
350 mm DIA pipeline from R2 to RD2 & A 355 mm DIA pump main from vondo WTW to R2 2018-01-19 12:00 VDM/TECH/10/11/2017/03
Water and Wastewater Projects: Vondo RWS:Upgrading of Vondo Water Treatment Works 2018-01-19 12:00 VDM/TECH/10/11/2017/04
Expressions of interest are invited for investment in the Development of a Precinct or portions thereof in Lethabong, Rustenburg 2018-01-10 09:00 Not Supplied
Two 10ml Command existing R2 Reservoir site in Phiphidi 2018-01-19 12:00 VDM/TECH/10/11/2017/05
Expressions of interest are invited for investment in the Development of a Precinct or portions thereof in Monnakato, Rustenburg 2018-01-10 11:00 Not Supplied
Expressions of interest are invited for investment in the Development of a Precinct or portions thereof in Phatsima, Rustenburg 2018-01-10 14:00 Not Supplied
Request for expression of interest (installation of smart water metering) 2017-12-15 12:00 MLM/SCM 05/17/18
Expressions of interest are invited for investment in the Development of a Precinct or portions thereof in Tlhabane Rustenburg 2018-01-10 12:00 Not Supplied
Expressions of Interest for Investment in the Development of a precinct or portions thereof in Boitekong, Rustenburg. 2018-01-10 10:00 Not Supplied
Appointment of a Service Provider to Perform Insurance Replacement Cost Valuations 2017-12-15 12:00 PICPROP007 /2017
Expression of Interest for the Transportation of Heavy Fuel Oil By Road Tankers 2017-12-15 11:00 Not Supplied
Supply and deliver One new Diesel Bus with a 22 seating capacity to Majuba TVET College 2018-01-08 12:00 CO 17/03 C Rev 01
Supply and deliver Two new 1.6 Sedan Motor Vehicles to Majuba TVET College 2018-01-08 12:00 C017/02 C Rev 01


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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