Issue Date: 
Thursday, October 31, 2019

Why the B-BBEE level of your sub-contractor is important

By Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

Tenders and subcontracting go hand in hand.  In fact, subcontracting part of a tender is so commonly placed that in South Africa there are specific rules regulating subcontracting in executing tenders.  This is especially true for South African Government tenders.

According to Investopedia subcontracting is the practice of assigning part of the obligations and tasks under a contract to another party known as a subcontractor.  Subcontracting is especially prevalent in areas where complex projects are the norm, such as construction and information technology.  Subcontractors are hired by the project's general contractor, who continues to have overall responsibility for project completion and execution within its stipulated parameters and deadlines.

It is very important to know that in South Africa there is one major rule when it comes to subcontracting if awarded a Government tender.  According to the Preferential Procurement Regulations, 2017:

Section 6(5) states that a person must not be awarded points for B-BBEE status level if it is indicated in the tender documents that such a bidder intends sub-contracting more than 25% of the value of the contract to any other enterprise that does not qualify for at least the points that such a tenderer qualifies for, unless the intended subcontractor is an exempted micro enterprise that has the capability and ability to execute the sub-contract.

This sub-section of the Preferential Procurement Regulations, 2017, clearly indicate that you cannot subcontract more than 25% of the contract value to another party if that party does not have at least the same B-BBEE Status Level as you or a better B-BBEE Status Level than you. The Office of the Chief Procurement Officer is on the lookout for discrepancies like this.  If you are in contravention of these regulations, you stand the change that the contract may not be awarded to you or that your existing contract can be cancelled.  You can also be liable for costs incurred by the Government Entity in executing the contract.

If you are going to subcontract less than 25% of the value of the contract you are save and you do not have to worry about the B-BBEE Status Level of the subcontractor.

Subcontracting do not need to be difficult but if you want to know more about subcontracting and other important tender response information, we suggest you attend our How-to-Tender workshops that we present Country wide.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops presented in Johannesburg, Pretoria, Durban, Port Elizabeth, and Cape Town.  Book and pay online at https://howtotender.co.za/tender-expert-form/

Contact us at wernervr@howtotender.co.za should you require more information.

You can also purchase a Tender Manual (Handbook) on our website https://howtotender.co.za/ which is a step by step guide how to respond to a South African Tender.  It includes examples of completed SBD forms.

Title Closing Date Tender No.
Request for Proposals: Production of Functional Requirements and Development of a Minimum Viable Product for the PSET CLOUD. 2021-05-16 17:00 No reference number
RFQ for Quotations (RFQ) to appoint a service provider/supplier to review the Corporate Governance Framework of SACNASP and to develop a Delegation Framework and to align SACNASP’s Corporate Governance with Enterprise Risk Management. 2021-04-21 11:00 No reference number
The provision of internal audit services for the KZN Growth Fund Trust for the period of thirty-six (36) months. 2021-05-04 12:00 KGFT - RFP 2021/02
Consultancy services to establish the Africa CDC Regional Integrated Surveillance and Laboratory Network (RISLNET) in Southern Africa 2021-05-04 15:00 ET-AUC-225259-CS-QCBS
Appointment of a service provider for provision of short-term insurance for three (3) years for council for medical schemes 2021-05-10 11:00 CMS022021/22
Appointment of a service provider for provision of human resource service (job evaluation and salary benchmarking) for three (3) months 2021-05-10 11:00 CMS01/2021/22
Appointment of a travel management company (TMC) for three (3) years for the Council for Medical Schemes (CMS) 2021-05-10 11:00 CMS03/2021/22
Supply, installation and management of a prepayment electricity vending system 2021-05-14 12:00 SCM/20218/204/FIN
Supply and Delivery of Personal Protective Clothing for a period of 3 years. 2021-05-14 14:00 SCM 13/2021
ICT Support Services and Licensing for a period of 3 years. 2021-05-14 12:00 SCM9/2020/21
Appointment of electrical contractor for supply, delivery and installation of high mast lighting for a three -year period as and when required in the eastern region 2021-05-20 11:00 BID NO: 292/2021
Appointment of electrical contractors for supply, delivery and installation of high mast lighting for a three -year period as and when required in the southern region 2021-05-20 11:00 Bid No: 293/2021
Three year contract for road resealing & repairs for the City of Mbombela 2021-05-21 11:00 BID NO: 243/2020
Enlistment of training providers in the panel of accredited training service providers for the implementation of training projects funded by the department through the environmental protection and infrastructure programme (epip) on “as and when required basis” over a period of three (3) years. 2021-04-30 11:00 DFFE -T001 (21/22)
Supply and delivery of cast iron saddles 2021-04-19 12:00 RFQ319/2020/21
Supply and fit broken flywheel housing and repair engine block on Nissan UD70 Truck. 2021-04-19 12:00 RFQ317/20/2021
Supply and delivery of tared Pinus Radiata wooden poles 2021-04-19 12:00 RFQ321/2020/21
Supply and fit Tata LPT 1518TC truck reconditioned engine with a warranty 2021-04-19 12:00 RFQ322/20/2021
Pool of consultants for financial services provider to be appointed in the Greater Giyani Municipality for the period of three (3) years 2021-04-28 12:00 G/G/M/6105/001/2021
Supply and delivery of structural fire fighting helmets and spare structural fire fighting helmet face shields (visor) and fire fighting goggles 2021-04-19 12:00 RFQ323/2020/21

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Who is the bidder or his or her representative?

By Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

In Organ of State tenders, the Standard Bidding Document 4 – Declaration of Inters – ask in paragraph 2.1 the following: “Full name of bidder or his or her representative... Read More

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