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.
Request for proposal from professional service providers to conduct a feasibility study for supply of bulk water in the Tzaneen Dam area on behalf of Lepelle Northern Water. 2017-11-27 11:00 LNW 06/ 17/ 18
Betterment & Re-gravelling of P279 (KM 18+300 TO KM 23+300). 2017-11-28 11:00 C252/ 1718/ BR/ 817
Betterment & Re-gravelling of L1428 (KM 8+450 TO KM 16+450). 2017-11-28 11:00 C252/ 1718/ BR/ 820
Betterment & Re-gravelling of D1339 (KM 0+000 TO KM 6+500). 2017-11-28 11:00 C252/ 1718/ BR/ 553
Betterment & Re-gravelling of D2443 (KM 6+840 TO KM12+840) 2017-11-28 11:00 C252/ 1718/ BR/ 555
Betterment & Re-gravelling of D114 (KM6+000 TO KM 12+900). 2017-11-28 11:00 C252/ 1718/ BR/ 554
Betterment & Re-gravelling of D98 (KM0+000 TO KM 7+000). 2017-11-28 11:00 C252/ 1718/ BR/ 568
Supply and deliver Sports Equipment to 108 Mass Opportunity and Development (Mod) Centres in the Western Cape Education Department (Wced). 2017-11-24 11:00 B/ WCED 2419/ 17
Request For Information (RFI) For Welding Information Management System 2017-11-23 10:00 CORP4268
Supply and Delivery of Touch Screens 2017-11-23 10:00 CORP NO 4269
Construction of Outfall Sewers to the Polokwane Regional Wastewater Treatment Works- Phase 1a-Seshego to East of Pipe Bridge 2017-11-23 10:00 PM129/2017
Construction of Outfall Sewers to the Polokwane Regional Wastewater Treatment Works- Contract 1b-Polokwane East and Polokwane West 2017-11-23 10:00 PM130/2017
Construction of Outfall Sewers to the Polokwane Regional Wastewater Treatment Works- Phase 1c-Main Outfall East of the Sand River 2017-11-23 10:00 PM131/2017
Supply and delivery of Multi Stands Striped Or Blue Cables 2017-11-23 10:00 MPGXC004903
Provision of new Electrical Multiple Unit (Emu) Coach Cleaning Services ror Northern Gauteng Region (Ngr) 2017-11-23 12:00 CRES/CNGR/37/10/2017
Provision of Legal Services 2017-11-23 12:00 392/05/10/2017
Construction of Slieve Donald Farm Combo Sport Facility in Ward 7 2017-11-23 12:00 20/10/2017
Construction of Water and Sewer Reticulation in Polokwane Extension 78 2017-11-24 10:00 PM15/2017
Construction of Vaalkop Transfer Station 2017-11-24 10:00 PM135/2017
Request for Proposal for the Provision of Reputation and Stakeholder Perception Survey 2017-11-24 12:00 SRS/10/2017


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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