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 Ngqeleni Transport Hub 2018-06-26 12:00 BID 24/2018
Supply & delivery of motor coach & plain trailer brake blocks (as & when required). 2018-06-28 10:00 DBN/OPS (RTPC) 776
Supply, delivery, commissioning and off-loading of ambulance equipment for the City of Ekurhuleni Disaster and Emergency Management Services Department on an “as and when “required basis from 01 July 2018 until 30 June 2021 2018-06-26 10:00 A-DEMS 05-2018
Tender for the disassembly, assembly and relocation of 275/132/11kv transformers from one point to another, complete with all accessories, and retrofitting and repairing faulty power transformers to their original condition in all respects as and when required: three year period 2018-06-26 10:00 USD EE 56-2017/18
Appointment of consulting firm as technical advisors to Ekurhuleni Taxi Industry (ETI) on the Ekurhuleni Integrated Rapid Public Transport Network (IRPTN/BRT) from the date of award until 30 June 2021 2018-06-27 10:00 PS-PT 35-2018
Appointment of an Independent Facilitator for the Industry Transition Process of the Integrated Rapid Public Transport Network within the City of Ekurhuleni, on an as and when required basis from date of award until 30 June 2021 2018-06-26 10:00 PS-PT 33-2018
Appointment of a Geotechnical Consultant with specific experience in all areas of dolomite related risk management to assist CoE on an “as-and-when” required basis for the period from date of award until 30 June 2021 2018-06-26 10:00 PS-CP 24-2018
Tender to appoint a panel of public relations, communication and marketing agencies to implement the City of Tshwane above-the-line (ATL), below-the-line (BTL) and through-the-line (TTL) marketing and communication campaigns and projects, as and when required: three year period. 2018-06-27 10:00 CME 02-2017/18
RFP for the Upgrade of Bays 48 & 49 at the Wagon Manufacturing Business, Bloemfontein. 2018-06-26 10:00 TE18-BFX-5FP-01787-CIDB
Supply of Ad-Hoc Sewage Suction Tank Services 2018-06-29 12:00 114-17/18
Rendering of Street Cleaning Services within the Worcester Central Business Area for the period ending 30 june 2020 2018-06-29 11:00 BV 613
Supply and delivery of cannon boxes and U-Tube. 2018-06-26 10:00 TE18-BFX-050-03450
Provision of banking services. 2018-07-30 12:00 T2017/18/24
South African National Roads Agency SOC limited contract NRA N003-030-2017/2ENV for environmental subservices on the upgrade of national route 3, section 3 from Gladys Manzi Road (km 5.9) to New England Road Interchange (km 9.0) T1.1 tender notice and invitation to tender (Incorporating SBD1). 2018-06-27 14:00 NRA N003-030-2017/2ENV
Supply and Delivery of 11kv Miniature Substations and Distribution Transformers With Rating of up to 1mva for a contract period ending 30 june 2021 2018-06-29 12:00 BSM 109/18
Van Der Stel Sport Grounds: Roof and Structural Repairs and Minor Alterations 2018-06-29 12:00 B/SM 88/18
Manufacture, supply and installation of steel high security perimeter fencing and access gates for electrical substations, for a contract period ending 30 June 2021 2018-06-29 12:00 BSM 77/18
Appointment of an operator to operate the restaurant at the Lowveld National Botanical Garden, Riverside, Mbombela, Mpumalanga, for a period of five years. 2018-06-25 11:00 SANBI: G297/2018
Provision of consulting Electrical Engineering Services to Design and perform Project Management for Installation of Ngwako Primary Cableline. 2018-06-26 00:00 BS03/04/2018
For Professional Support Services to Support the Avantis Shneider Electric Prism. 2018-07-26 10:00 CORP4427


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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