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

Having a good B-BBEE status level is VERY IMPORTANT in the tender process!

All tender documents will have 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, 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.

New Preferential Procurement Regulations 2017 for Tenders

The brand new Preferential Procurement Regulations 2017, have been finalized and gazetted on 20 January 2017. There are some interesting changes and challenges that we will discuss during the coming months. We start off with 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.

General Procurement Guidelines

Government issued the General Procurement Guidelines not only as a prescription of standards of behaviour, ethics and accountability which it requires of its public service, but also as a statement of Government's commitment to a procurement system which enables the emergence of sustainable small, medium and micro businesses which will add to the common wealth of South Africa and the achievement of enhanced economic and social well-being of all South Africans.

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

Functionality in Tenders (1)

The Preferential Procurement Policy Framework Act 2017, establish the rules according to how Government Entities must evaluate tenders. The Preferential Procurement Regulations of 2017 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 - Preferential Procurement Regulations, 2017, pertaining to the Preferential Procurement Policy Framework Act, Accounting Officers and Accounting Authorities of all public entities listed in Schedules 2, 3A, 3B, 3C and 3D to the PFMA 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.

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Title Closing Date Tender No.
Appointment of a Panel Of Attoneys to Assist Sedibeng District Municipality with Legal Related Matters on an Ad Hoc Basis. 2019-01-08 12:00 8/2/1/2-2018
Appointment of service provider to provide security services at Buffalo City Metropolitan Municipality – Silver Crown Old Age Home for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0037
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
Consulting engineering services for the routine road maintenance of national route N2 section 8 km 80.08 to section 10 km 73.50 and national route R62 section 6 km 36.76 to section 8 km 2019-02-04 14:00 X.003-030-2019/1F
Consulting engineering services for the routine road maintenance of national route N2 section 12 km 0 to section 13 km 103.56 and national route R67 section 2 km 0 to km 36.19 2019-02-04 14:00 X.003-032-2019/1F
Appointment of service provider to provide security services at Buffalo City Metropolitan Municipality – Enoch Sontonga Rehabilitation Center for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0036
Leasing of Premises for Customer Care Centres For uMgungundlovu District Municipality 2019-02-04 12:00 39/2018
Upgrading of the Kleinbrak 66/11kv substation 2019-02-08 12:00 TENDER 51-18/19
Appointment of Communication Service Provider to Assist the Department to Design, Develop and Edit a Publication on the Success Stories of the Environmental Programmes Branch of the Department of Environmental Affairs 2019-01-11 11:00 E1496
Spesialisdienste van Afrikaanse Taalkundige word verlang vir projek om Historiese gemarginaliseerde Afrikaanse varieteite te onsluit (Oranjerivier Afrikaans) 2019-02-12 11:00 ATM 017/2018-2019
Appointment of the service provider to conduct an Implementation evaluation of the Environment and Culture Sector within the EPWP 2019-01-11 11:00 E1497
Supply and delivery of gloves to PetroSA, GTL refinery (call of contract) 2019-02-15 11:00 CTT20907
Redesign, fabrication and installation of lifting platform main beams at Syncrolift dry dock in the Port of Cape Town 2019-02-19 10:00 TNPA 783/CIDB
Supply and Instal 4 Air Conditioners at NHLS Doran Nginza - Port Elizabeth 2018-12-28 11:00 RFQ 1469498
Supply, Deliver & Installation of Furniture at Gonubie Resort 2018-12-19 12:00 RFQ/DCS/2018-19/285
Supply and Delivery of Faltering Acid to BCMM Stores, Chiselhurst, East London 2018-12-19 12:00 RFQ/SCM/2018-19/283
Overhaul Bauer K 14 Upright Compressor 2018-12-19 12:00 RFQ/HPS/2018-19/281
Supply, Delivery & Installation of Storage Containers for Traffic Services 2018-12-19 12:00 RFQ/HPS/2018-19/280
Period Tender for Manufacturing and Installation of Transformer Fire Protection 2019-01-31 10:00 194Q/2018/19
Supply and Delivery of HTH Chlorine to Bcmm Stores, Chiselhurst, East London 2018-12-19 12:00 RFQ/SCM/2018-19/282

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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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