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.
Supply and delivery of optic fibre cables at Empangeni once off. 2018-09-25 10:00 ERAC EMU 27571 BD 267
Consultancy service to carry out targeted research on online child sexual exploitation (OCSE) in Africa 2018-10-05 15:00 AUC /SAD/C/365
Provision of cleaning services at various buildings in Pretoria (Koedoespoort) for period of Seven (7) months. 2018-09-25 10:00 ERACKT 4679 - 27937
Supply, delivery and Installation of Glass and Latches for Windows and a Stacking Folding Door 2018-09-28 11:00 270918
Appointment of a preferred list of suppliers to conduct Airborne Magnetic Gradiometer and Radiometric Surveys for the Council for Geoscience for a period of three (3) years. 2018-10-16 11:00 CGS-2018- 027A
Scuff – Sanding, Seal and Finish of Wooden Floor and Stage of Town Hall 2018-09-28 11:00 290918
Supply and delivery of Galvanised Poles. 2018-09-26 11:00 288080
Reverse circulation drilling on the premises of Nkomati Mine. 2018-10-01 13:00 NKG E 008/2018
Interested parties are invited  to submit proposals covering technical & financial aspect relating to the following field: Diamond Transport & Security. 2018-10-10 11:00 SDT84/2018-1S
Consultancy Service to Assist the Department of Trade and Industry on the Implementation of the SMEs Strategy 2018-10-05 15:00 AUC/DTI/C/127
Provision of Directional Drilling Services within the Breede Valley Municipal Area. 2018-09-26 11:00 288679
Supply and delivery of 137cm Hotellier Double Bed Set or Equivalent 2018-09-27 11:00 288526
Stellenbosch University (SU) is hereby requesting tenders from businesses with relevant experience and qualification for the management of the SU’s healthcare consultancy service. 2018-10-05 12:00 SU/T9I/20I8
Provision of Firefighter Medical Surveillance Programme From Sept 2018- June 2019 2018-09-27 11:00 288450
Professional Service for the Construction of a New Student Residence at the Soweto Campus, for the University of Johannesburg. 2018-10-08 12:00 RFP UJ 32/2018
Civil Package 4: Boschrand Dam and Watercourse Upgrade 2018-10-16 12:00 N1T0052
Maintenance: Fire Detection and Suppression System 2018-09-27 11:00 287025
Quotation for the appointment of two or more training service providers to facilitate, assess and moderate the accredited problem-solving and decision-making three-day course and portfolio of evidence of 20 learners per programme for the unit standard ID number 242817, NQF level 4, as and when required.Proof of accreditation for unit standard ID number 242817 must be provided. 2018-09-25 10:00 Q04-2018/19 RE-ADVERT
As and when supply and delivery of diesel to Umjantshi House, Shosholoza Meyl Junction, Gauteng Nerve Centre and PRASA House for a period of 12 month. 2018-09-25 10:00 RFQ/O8/09/06/2018
Supply and refurbishment of Sulzer pumps and spares at Kriel Power Station for a period of 3 years. 2018-10-04 10:00 MPGXC005314

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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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