Tenders, B-BBEE and the new Preferential Procurement Regulations 2017

We have previously asked: How important is a good B-BBEE status level of contributor in the tender process?

The answer is still the same: VERY IMPORTANT!

In all tender documents, you will find the NEW Standard Bidding Document 6.2 which is used to claim your Preference Points for B-BBEE. The higher your B-BBEE status level of contributor, the more points you will score on the Preference Points System. Ultimately the bidder or bidders scoring the highest points will be awarded the tender.

Brand new Preferential Procurement Regulations 2017 for Tenders

The brand new Preferential Procurement Regulations 2017, has been finalized and was gazetted on 20 January 2017. There are some interesting changes and challenges that we will discuss during the coming months. This is the official media release from National Treasury:

The regulations were initially promulgated in 2001 and revised in 2011 thus making this the second revision since the initial promulgation.

Draft Procurement Regulations Media Release

 The Draft Procurement Regulations 2016 were released on 14 June 2016. If these regulations are going to be implemented it will change the Tender environment in South Africa. Below is the media release from the Office of the Chief Procurement Officer, explaining the major changes in the Regulations:

“The Office of the Chief Procurement Officer (OCPO) has published the proposed new Preferential Procurement Regulations*, to afford the public an opportunity to comment.

General Procurement Guidelines

Government issued the General Procurement Guidelines not only as a prescription for standards of behaviour, ethics and accountability, which it requires of its public service, but also as a statement of their commitment to a procurement system enabling the emergence of sustainable small, medium and micro businesses. These SME's will add to the common wealth of the country and its objective of enhanced economic and social well-being for all its people.

Tenders in South Africa are measured on three principles, namely Functionality, Price and Broad-Based Black Economic Empowerment (B-BBEE). An Enterprise's ability to execute a contract is measured through the Functionality Principal in the Tender Environment. If an Enterprise's tender response does not pass the Functionality test it can't be measured on Price and B-BBEE. Enterprises that respond to tenders must ensure that they will pass the Functionality test in order to advance.

Functionality in Tenders Part 1

The Preferential Procurement Policy Framework Act 2011, establishes the rules according to how Government Entities must evaluate tenders. The Preferential Procurement Regulations of 2011 takes it a step further and gives guidance on how to specifically award points according to certain criteria such as B-BBEE and Price.

There appears to be a serious lack of knowledge regarding South African tender procedures. Here, the tender processes are ruled by various Acts, Regulation and Guidelines which are specifically designed to ensure that the tender processes are in line with the Constitution of South Africa - which dictates that the tender process should be fair, equitable, transparent, competitive and cost-effective.

It is important to know that when you respond to a tender there are certain guidelines that Government Officials need to follow in order to evaluate your tender. According to the Implementation Guide*, Accounting Officers and Accounting Authorities of all public entities** and municipal entities must comply with the rules and guidelines stipulated below.

If one looks at the General Procurement Guidelines that National Treasury issued to Government Departments, it is clear that Government wants the tender process to be fair, equitable, transparent, competitive and cost-effective exactly as Section 217 of the Constitution of South Africa requires.

Draft Procurement Regulations 2015

The Government thought it a good idea to have a look at the Preferential Procurement Regulations of 2011 and to change these Regulations to better fit the South African Tender Environment.

These Regulations were quietly issued end of 2015 for public comment.

As the case with most new Regulations or Acts there is always good and bad that accompanies it.

Some of the good things addressed in these draft regulations are:

Pages

Title Closing Date Tender No.
Provision of Disaster Recovery (DR) Services, WAN Services, Cloud Services and Rack Rental 2017-10-13 11:00 GMA/ 007/ 17
Request for Qualification of the Tshwane Agroprocessing Hub O.B.O. Teda 2017-11-10 11:00 GT/ GIFA/ 122/ 2017
Provision of office space for lease for a period of 2 years with an option to extend for another 2 years 2017-10-17 11:00 Corp/ 2017/ 08
Appointment of a Qualified ICT Service Provider To Provide Or Develop a SETA Grant & Learner Management Integrated System (Sglmis) 2017-10-16 11:00 Corp/ 2017/ 09
Appointment of a panel of service providers to provide secretariat services for the period of three years to assist the MHSC when hosting events 2017-10-23 11:00 MHSC014/ 2017- 18
Appointment of a service provider to assist NERSA with media monitoring and analysis services for a period of two (2) years 2017-10-12 11:00 NERSA/ 1718/ CSM/ MMA/ BID009
Appointment of a Service Provider Conduct the Pilot Research Study on the Elements of Financial Costs and Economics of Disability for Children and Persons with Physical Disabilities in South Africa 2017-10-13 11:00 SD10/ 2017
Appointment of a service provider (s) to conduct forensic investigation on the Integrated Financial Management System (Ifms) Project. 2017-10-13 11:00 NT018- 2017
Appointment of a service provider to provide organisational capacity assessment to support PSETA strategy 2017-10-12 11:00 OD/ PSETA/ 2017- 09
Appointment of a Travel Management Company (Tmc) to Provide Travel Management Services to Robben Island Museum (Rim) for a period of thirty-six (36) months 2017-10-18 11:00 RIM FIN 01- 2017 / 2018
Request For Proposal: Corporate Travel Management Services 2017-10-30 14:00 RFP 2017/ 07
Virginia and Odendaalsrus Project Management Services to Conceptualise, Implement 2017-10-31 11:00 SADPMR03/ 2017/ 18
Job Grading, Remuneration Benchmark and Employee Engagement Services for Technology Innovation Agency. 2017-10-16 11:00 TIA013/ 2017
Appointment of an experienced service provider to provide Meeting management services for a 6 months period 2017-10-13 11:00 WRFQ CS 2017/ 001
Provision of personnel verification services on a 6 months contractual appointment. 2017-10-13 11:00 WRFQ PV 2017/ 002
Supply: 120 units of toner cartridge brother (TN 3290) (brother original) 2017-10-09 11:00 ZnqSN333/ 17gaz
Supply and deliver safety boots x 10 Pairs 2017-10-02 11:00 217/ 2017/ 18
Supply and delivery of Library Material 2017-10-24 11:00 19/ 1/ 9/ 1/ 06TS(17)
Supply and deliver plumbing materials 2017-10-05 11:00 ZNQ 13/ 05/ 2017
Supply: 03 Units-Ent Patient Examination Chair 2017-10-04 11:00 A 05/ 17- 18

Pages

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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