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.
Request for Proposals are Invited for Investment in the Refurbishment and Management of the Rustenburg Showgrounds on a Long-Term Lease Basis 2018-03-27 10:00 RLM/DLED/0101/2017/18
Maintenance of Hydraulic Bin Compactors for two (2) years. 2018-03-15 14:00 58726
Request for Proposal for Drilling Two (2) Slim Hole Geologic Characterization Wells in the Zululand Basin for the South African Pilot Carbon Storage Project. 2018-03-16 11:00 435
Provisioning of Security Services in Mangaung Metropolitan, surrounding towns and Thabo Mofutsanyana District. 2018-03-16 11:00 FDC BID NO. 004/2018
Supply Metal pedestal fans 2018-02-26 12:00 GL11800584
Supply and Delivery of Protective Clothing: O.R. Tambo District Municipality Department of Water and Sanitation Services (DWASS) for a period of 2 years. 2018-03-16 10:00 ORTDM SCMU 59-17/18
Appointment of a Panel of Events Managers for Various Municipal Events for a period of three years 2018-03-27 11:00 RLM/DELD/0080/2017/18
Supply, delivery, installation, commissioning and training of Rea-time Polymerase Chain reaction (PCR) Instrument 2018-03-16 12:00 MW/25/2017
Supply and Delivery of Notebooks, PC and Screen 2018-02-27 12:00 297/2017/18
Supply & Delivery of Borehole Maintainance Spares to Mopani District Municipality for 36mothns Multi-framework contract 2018-03-27 12:00 MDM 2017-055/1
Supply Electrical components 2018-03-01 11:00 GH11800433
General electrical domestic maintenance and minor construction work 2018-02-28 12:00 299/2017/18
Design, Provision and Management of a Wide Area Network for Hessequa Municipality 2018-04-06 12:00 HES-ICT 03/1718
Supply: Stay rods,spreaders and battery chargers 2018-03-01 11:00 GH11800435
Supply: Electrical components 2018-02-26 11:00 GH11800434
Supply: Tension cable display stands 2018-02-22 10:15 GL11800588
The supply of energy service goods for low income households 2018-02-26 12:00 GL1180546A
Supply: Cutlery and Crockery 2018-02-21 12:00 GL11800587
Procurement of Service Provider on a three (3) years Contract to profile application for advertised positions 2018-03-20 11:00 LDPWRI-HR/17005
Supply: Folding table and chairs 2018-02-26 12:00 GL11800586

Pages

Tender adjudication process

The SBD/WCBD6.1 document must form part of all bids invited.  It contains general information and serves as a claim form for preference points for Broad -Based Black Economic Empowerment (B -BBEE) Status Level of Contribution, and explains how tenders or bids are decided.

The document says:

  • The bidder obtaining the highest number of points will be awarded the contract.
  • Preference points shall be calculated after prices have been brought to a comparative basis.
  • Points scored will be rounded off to two decimal places... Read More
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