Issue Date: 
Tuesday, November 1, 2016

When to sub-contract?

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting, due in large part, to The Preferential Procurement Regulations, 2017 which came into effect on 1 April 2017. Many entrepreneurs ask us whether they should sub-contract or not, when responding to a tender.

Regulation 9 of The Preferential Procurement Regulations 2017, stipulates the following:

1: If it is feasible to sub-contract for a contract above R30 million, an Organ of State must apply sub-contracting to advance designated groups.

2: The Organ of State must advertise this specific tender condition that the successful bidder must sub-contract at a minimum of 30% (of the value of the contract) to (one or more) to an EME or QSE which is at least 51% owned by:

a.    black people;

b.    black people who are youth;

c.    black people who are women;

d.    black people with disabilities;

e.    black people living in rural or under develop areas or townships;

f.    black people who are military veterans;

g.    A cooperative which is at least 51% owned by black people;

3: In paragraph 3 of Regulation 9 it also states that the Organ of State must make available the list of all suppliers registered on a database approved by the National Treasury to provide the required goods or services in respect of the applicable designated groups mentioned above from which the bidder must select a supplier.

Regulation 9 is very clear because its states "the tenderer MUST sub-contract…..". Thus, according to the Regulations all contracts with a value of R30 million and above will have to comply with this Regulation. Read the tender document carefully because somewhere in the tender document it will stipulate whether or not the bidder will have to sub-contract. Follow those rules. If the tender document doesn't contain any sub-contracting instructions then it is not necessary to sub-contract.

The fact is that the tender document will dictate what you should or should not do. Read the tender document carefully, follow the instructions precisely and to the point.

To learn more about this and all the other new developments regarding tenders, please attend one of our How-to-Tender workshops. Tender Workshop dates are published on our website at www.how2tender.com. For more information on the tender courses please email Werner at werner@how2tender.com.
 
This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd. which specializes in tender consulting and tender training.

Title Closing Date Tender No.
Supply, Delivery, Installation & Commission of Three Headlight Aim Testers for Vehicle Test Station for Traffic Services 2018-12-24 12:00 RFQ/HPS/2018-19/291
Provision of Driver Education (Learner and Driving Licence) 50 Persons in Ward 38 2018-12-24 12:00 RFQ/IDP/2018-19/290
Supply & Delivery of Electrical Inventory Items 2019-01-11 12:00 SCM/2019/94/ENG
Provision of Driver Education (Learner and Driving Licence) 50 Persons in Ward 08 2018-12-24 12:00 RFQ/IDP/2018-19/289
Appointment of construction of a small administration block, 2 x grade R classrooms, guard house, erection of fence, completion of the multi- purpose classroom, nutrition centre, 2 x 3 classroom blocks, conversion of 1 x 3 classroom block into hall and external works at Leboeng Primary School located in Leboeng Village in Sekhukhune District, Limpopo Province grade 7 GB and Above 2019-01-30 12:00 EDDP 184/57B
Advanced Firearm Training Programme 2018-12-28 12:00 RFQ/DHR/2018-19/297
Updating and Maintenance of BCMM`s Water Hydraulic Models and Water Demand Analysis in IMQS - Inland 2018-12-28 12:00 RFQ/DES/2018-19/296
Procurement of Professional Service Providers from the Built Environment that specializes in Architecture, Quantity Surveyors, Civil & Structural Engineers, Electrical Engineers and OHS Agents For The Planning, Design, Supervision and Closure of the Programme 9 Schools for the Limpopo Department of Education 2019-01-28 09:00 LDOE/66PSP/2018/1
Thermocycler 2018-12-21 11:00 RFQ GAU86
Jagerust Water Treatment Plant Refurbishment 2019-02-28 10:00 E/BS3691R
Supply of parts, spares and repairs of Teledyne make of ambient air quality monitoring gas analyser for lab and site network 2019-03-08 10:00 CORP 4655
Supply and delivery of electrical material and equipment for Nkomazi LM for a period of three (3) years 2019-01-31 12:00 NKO 90/2018
Provision of a functional and technical support service for Ellipse and associated bespoke systems implemented at eThekwini Electricity 2019-02-15 11:00 E.9646
Online coal quality measurement staithes incline conveyors 2019-02-12 10:00 MPGXC005157R
The maintenance and repair of portable earthing gear in Mpumalanga Operating Unit on an as and when required basis 2019-02-12 10:00 MPDX001033
Appointment of a service provider to compile a waste characterization report - Solid Waste Management 2018-12-28 11:00 FQ/SM: 97/19
To design, manufacture, supply, delivery, removal, installation and commissioning of 2 (two) spare LP heaters (1 x LPH 3 and 1 x LPH 4) for a period of 5 years 2019-02-13 10:00 MPGXC005426
Supply, delivery and installation of 2 x automated multi-deck weighbridges at Tutuka Power Station 2019-02-13 10:00 MPGXC005428
Supply and delivery of one (1) Landfill Compactor 2019-01-18 12:00 IHLM-78/12/2018-19/COMM
Provision of Short Term Insurance for the period from 01 July 2019 To 30 June 2022 2019-01-18 12:00 FIN 01/2019/20

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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