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.
Supply and delivery of vertical water tanks for the harvesting of rainwater 2018-03-09 12:00 HES-COM 04/1718
Policy Development for the Business Development Division 2018-03-09 10:00 COR174/2018
Construction of an emergency overflow pipeline, river outlet and associated works at Zuikerbosch Pumping Station 2018-03-13 12:00 RW01056/14A
Contract for the design, manufacture, supply, delivery, installation, commissioning and putting into service of a chlorine plant at system 4 at Zuikerbosch Pumping Station 2018-03-15 12:00 RW01240/15A
Supply and delivery of construction materials (water pressure pipes, bends, joints, fittings, water meters, valves etc.), for a period of three (3) years 2018-03-02 12:00 CE: 21
Supply and delivery of Male and Female Condoms and Lubrications to the state for the Period 1 July 2018 to 30 June 2021 2018-03-19 11:00 RT75-2018
Design, manufacture, supply, delivery, installation, commissioning and putting into service of an upgrade milk of lime dosing plant for system 3 at Zuikerbosch Pumping Station 2018-03-20 12:00 RW00984/13
Tender for the upgrade by designing, manufacturing, supplying, delivering, installing, commissioning and putting into service of electrical infrastructure of phase 1 of the raw water engine room 4 at Zuikerbosch Pumping Station (minimum CIDB grading required is 7EP/6EP PE) 2018-03-28 12:00 RW01309/16
Supply and configure a next generation Firewall solution for four year period 2018-02-23 12:00 MTK20/2017
Rehabilitation for Asbestos mine: Steel Poort in Limpopo Province 2018-02-27 12:00 MTK12/2018
Appointment of a qualified service provider (supplier) for the provision of protection and indemnity (P&l) insurance as well as hull and machinery (H&M) insurance for samsa maritime special projects’ 7 (seven) vessels as well as 6 (six) 7.3m gemini waveriders (rigid hulled inflatable boats) for a period of thirty six (36) months. 2018-03-02 11:00 SAMSAMSP/05/2017
Appointment of a panel of service providers (suppliers) to support samsa maritime special projects with the port and dock services for a period of three (3) years. 2018-02-27 11:00 SAMSAMSP/04/2017
Appointment of a panel of ship chandlers/service providers (suppliers) to support samsa maritime special projects with the supply of victuals, bed linen, cutlery, crockery and other consumables for a period of three (3) years. 2018-02-26 11:00 SAMSAMSP/03/2017
Appointment of a panel of service providers (suppliers) to supply samsa maritime special projects with the supply of fuel diesel and lubricants services for its vessels for a period of three (3) years 2018-03-01 11:00 SAMSA MSP/02/2017
Appointment of a panel of service providers (suppliers) to support SAMSA maritime special projects with repairs & maintenance, supply of spare parts and other related services for its vessels for a period of three (3) years. 2018-02-28 11:00 SAMSA MSP/01/2017
Rental of Multi-Functional Office Machines (Inclusive of Related Services) for a period not more than 3 years (36 Months) 2018-02-23 11:00 BV683
Rehabilitation for Asbestos mine: Msauli in Mpumalanga Province 2018-02-26 12:00 MTK11/2017
Call for proposals the GIJIMA KwaZulu-Natal Local Economic Development Support Programme Local Competitiveness Fund (LCF) programme (Phase 8) 2018-04-20 16:00 No reference number
As and When Maintenance, Repairs and Services of Alarms Systems, CCTV Systems and Access Control Systems 2018-02-22 12:00 45/2017/CTN/INFRA
Upgrading of Natures Valley Bulk Water Supply - Phase 1 2018-02-23 12:00 SCM/2018/79/ENG


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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