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.
The RAF hereby invites Service Providers for the Rental Of Scanners, Installation, Maintenance and Support for RAF Offices for a Period of three (3) Years 2020-11-25 11:00 RAF 2020/ 00016
Appointment of Accredited Training Service Providers To Manage The Implementation of The Chefs Training Programme on Professional Cookery in the North West, Free State and Northern Cape Provinces for 300 Unemployed and Retrenched Youth 2020-11-13 11:00 NDT0007/ 20
Appointment of Accredited Training Service Providers to Manage the Implementation of the Wine Making Youth Programme in the Two Provinces of KZN and WC For 252 Unemployed And Retrenched Youth. 2020-11-17 11:00 NDT0009/ 20
Supply, delivery, installation, commissioning and configuration of an high performance computing (HPC) solution for the NICD. 2020-11-13 11:00 RFB 102/ 19/ 20
Security Service at Fabian and Florence Ribero Treatment Centre 2020-11-13 11:00 GT/ GDSD/ 053/ 2020
Request to purchase 13 laptops at North Coast Region, Ulundi Contract period: 30 days. 2020-11-23 11:00 ZNQ 20/ 21/ 0010/ NCR
Security Service at Emmasdal Child and Youth Care Centre 2020-11-13 11:00 GT/ GDSD/ 052/ 2020
Appointment of service provider to assist the Department of Small Business Development with conducting a longitudinal study on SMMEs and Co-operatives within South Africa covering the period 2021-2024 2020-11-20 11:00 DSBD Research 002/ 2020
DPW : DMRS : DOD Lenasia : Lenz Miltary Base : Replacement and Ugrade of Civil Engineering Services 2020-11-12 11:00 JHB 20/ 04
Appointment of a Panel of Attorneys to Render Debt Management Services to the Department Of Health For A Period Of 3 Year Adhoc Contract. 2020-11-16 11:00 ZNB 5128/ 2020- H
Supply, Delivery, Installation and Commissioning of Horizontal Bedhead system services for Dora Nginza Regional Hospital 2020-11-20 11:00 SCMU3- 20/ 21- 0181- DNG
Request for proposals for the supply and delivery of mobile communication services to the state for a period of 60 months (5 years) 2020-11-27 11:00 RT15
Virkons Disinfectant (10 kg x 5) 2020-11-06 11:00 RFQ 000412
Supply and deliver of concrete ready mix concrete at Mzimvubu water project – access road for construction east near Maclear in the Eastern Cape Province for a period of 12 months 2020-11-20 11:00 DWS12- 1020 WTE
Procurement of 11,5 % sodium hypochlorite (Must be in blue cans) 10 x 25 litres 2020-11-06 11:00 RFQ 000411
Appointment of a Service Provider to repair the roof & infrastructure for the Hamburg Aquaculture Project facility, situated in Hamburg, Eastern Cape. Repair infrastructure for the following: Office space; Boardroom; Laboratory; Aquaculture products packing room and Ablution facilities 2020-11-06 11:00 RFQ 000410
Hach DR 6000 spectrophotometer annual calibration, servicing and repairs (currently switches on but does not allow for testing).; Hach DR 900 colorimeter annual calibration and servicing x2; Hach HQ40D probe annual calibration and servicing x 2; Hach LDO rugged probe annual calibration, servicing and replacement sensor; Hach pH rugged probe annual calibration and servicing; Hach CDC410 laboratory probe annual calibration and servicing; Hach pH/ Conductivity Pocket Pro 2 annual calibration, servicing and replacement sensor; Hach Conductivity Pocket Pro annual calibration, servicing and replacement sensor 2020-11-06 11:00 RFQ 000409
Appointment of a service provider to procure maintenance tools and accessories for the South African Nursing Council. 2020-11-11 11:30 RFQ 41/2020
To Appoint The Suitable Service Provider To Render Project Management Services to the Department Of Environment, Forest and Fisheries to Remove And/Or Clear Illegal Dumping and Cleaning Streets In Matjhabeng Local Municipality Over A Period Of Twenty Four (24) Months. 2020-11-13 11:00 E 1582
Supply & delivery of cleaning material to National dept of Public Works & Infrastructure, Cape Town Regional Office ( 24 months) 2020-11-13 11:00 CPTSC14/ 20

Pages

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Many people ask us: how do you decide between using a Joint Venture, a Consortium or Sub-contractor in responding to a... Read More

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