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.
Manufacturing, Supply and Delivery of Socks Drab, Socks, Grey, Cushion Sole, Socks, Grey, Half Hose and Socks Black for a Period Of Two (2) Years: Division: Supply Chain Management 2020-02-26 11:00 19/ 1/ 9/ 1/ 29TC (19):
Western Cape Provincial Treasury is inviting bidders from registered Tertiary Higher Education Institutions to provide training and capacity building to the Western Cape Municipalities and relevant Western Cape Government officials for the period of three (3) years envisaged to commence from 01 April 2020 to 31 March 2023 with an option to extend for 12 moths 2020-02-14 11:00 WCPT 04/ 2019/ 20
Panel of Contractors for Preventative and Day to Day Maintenance of Standby Generators in State Building for 24 Months in Mopani Area. Bidders should have a CIDB contractor grading designation of 4 EB or higher. 2020-02-18 11:00 PLK20/ 07
SANRAL Northern Region : Design and Construction 2020-03-02 14:00 SANRAL R.037- 020- 2019/ 1
Rendering of Security Services for period of 36 months at Department Of Employment & Labour : Provincial: Office : Emalahleni. 2020-02-14 11:00 Q58051631
Print, label, pack and distribute 192 100 English and 126 200 Afrikaans family numeracy manuals for grade 4 parents/guardians over a 3 year contract from February 2020 to January 2022. 2020-02-21 11:00 B/ WCED 2702/ 19
The Appointment of the the Service Provider to Provide Support and Maintenance of SAP Business One to Public Protector South Africa for a period of three (03) years 2020-02-21 11:00 PPSA 008/ 2019
Technology Innovation Agency E-Evidence Management System. 2020-02-28 11:00 TIA001/ 2020
Transportation of learners for the following routes in the Cape Winelands District 2020-02-28 11:00 VARIOUS
Leasing of Hardware with Maintenance and Support for SITA for a period of three (3) years 2020-02-14 11:00 RFB 2058/ 2019
Transportation of learners for the following routes in the West Coast District & in the Eden and Central Karoo 2020-02-14 11:00 VARIOUS
Request of approval for the sourcing of a service provider to deliver Cleaning and Hygiene services to SITA Eastern Cape buildings for a period of 36 Months 2020-02-14 11:00 RFB 2046/ 2019
Appointment of a Service Provider For Kwelera National Botanical Garden, East London: New Boundary Fence 2020-02-21 11:00 SANBI: G361/ 2020
South African Local Government Association (Salga). Appointment of a Service Provider to Measure The Extent to Which Asset Maintenance Is Deferred By Municipalities, The Implications and Impact On Municipal Governance 2020-02-24 11:00 SALGA/ 82/ 2020
Refurbishment of a Residential Dwelling for the SA Navy at 20 Lloyd Avenue, Bluff, Durban, Kwazulu-Natal as per Scope of Work. CIDB GB Grading 3. Validity 120 days. Evaluation against 80/20 principal 2020-02-21 11:00 SPSC- B- 031- 2019
Erection of Carports at (J TAC HQ EC) Maluti Borderline Base as per Scope of Work. Validity 120 days. Evaluation against 80/20 principal 2020-02-20 11:00 SPSC- B- 029- 2019
The RAF hereby invites experienced, suitably qualified service providers for a Panel of Forensics for a period of five (5) years 2020-02-26 11:00 RAF/ 2020/ 00002
Upgrade of the Automotive Fuel Dispensing Facilities complete with ancillary equipment and associated works for the SA ARMY at 9 South African Infantry Battalion as per Scope of Work. Validity 120 days. Evaluation against 80/20 principal 2020-03-03 11:00 SPSC- B- 030- 2019
The RAF hereby invites experienced, suitably qualified service providers for Enterprise Project Portfolio Management (Microsoft Project Server) Solution for a period of five (5) years 2020-02-24 11:00 RAF/ 2020/ 00001
The RAF hereby invites experienced, suitably qualified service providers to configure and implement Microsoft Dynamics 365 Workflows 2020-02-21 11:00 RAF/ 2019/ 00025

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