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.
Provision of Office Accommodation: Vredendal Local Office for a leased period of 5 years.(Leases ranging from seven to ten years will also be considered). 2018-10-26 11:00 37/ 2018
Provision of Office Accommodation: Carletonville Satellite Office for a leased period of 5 years. 2018-10-26 11:00 46/ 2018
Supply and service of chemical toilets for a period not exceeding 36 months. 2018-10-16 11:00 HLA 4/ 2 / 4 - 2018 / 05
Provision of Office Accommodation: Wolmaranstad Satellite Office for a leased period of 5 years. 2018-10-26 11:00 50/ 2018
Provision of cleaning services for the 6 inner city hostels in Johannesburg for a period not exceeding 36 months. (Denver , George Goch , Jeppe , LTA , MBA and Murray and Roberts) 2018-10-12 11:00 HLA 4/ 2 / 4 - 2018 / 04
Provision of Office Accommodation: Pretoria Local Office for a leased period of 5 years. 2018-10-26 01:00 52/ 2018
Erect retaining wall to separate classrooms, plaster and painting at Sizaminqubeko Combined School, Umhlabuyalingana. 2018-10-19 11:00 ZNQ UM 27M/ 17- 18
Procurement of a service for the establishment of the Project Management Office (PMO) for the Kopanong Precinct Project (KPP) for a period of 7 (seven) years 2018-10-16 11:00 RFP 10/ 09/ 2018
Repair to roof, doors, windows, floors and painting in 6 classrooms including kitchen and storage at Velabasha Primary School, Manguzi. 2018-10-19 10:00 ZNQ UM 24M/ 17- 18
Provision of Property Management Services for the Gauteng Department of Infrastructure Department Development for the period of three (3) years. 2018-10-16 11:00 RFP 11/ 09/ 2018
Repairs to 5 classrooms, roof, floor, windows, doors, door frames, veranda, floors and painting at Majindi Primary School, Hlabisa. 2018-10-19 11:00 ZNQ UM 2871 U
Repair 5 classrooms, roof, floor, windows, doors, door frames, veranda and painting at Manzengwenya Primary School, Umhlabuyalingana. 2018-10-19 11:00 ZNQ UM 71M/ 17- 18
KwaZulu-Natal: Department of Health: EThekwini Region: Durban: St. Aidan’s Hospital: Replacement of collapsing boundary Wall. 2018-10-23 11:00 ZNTD 03682W
Repairs to 5 classrooms, roof, doors, door frames, windows, floors and painting at Ntshingwayo Secondary School, Umhlabuyalingana. 2018-10-19 11:00 ZNQ UM 2843 U
Repair 5 classrooms roof, doors, door frames, windows, floor, veranda and painting at Mashalaza High School, Umhlabuyalingana. 2018-10-19 11:00 ZNQ UM 16M/ 17- 18
KwaZulu-Natal: Department of Public Works: eThekwini Regional Office: Mayville Offices–South Wing: Upgrade of Air Conditioning System 2018-10-26 11:00 ZNTD 03279W
Construction of 40KL elevated water tank at Mduku clinic- Hlabisa. 2018-10-19 11:00 ZNTU 03407 W
DUTYWA MAGISTRATE: Replacement of damaged wall. 2018-10-12 11:00 MTH 58/ 2018
KwaZulu-Natal: Department of Public Works: eThekwini Region: Durban: Installation of 800KVA standby generator for the Mayville Complex and Relocation of the existing 400KVA to iLembe District Office. 2018-10-29 11:00 ZNTD 04430W
14 SAI BATALLION: Office & Staff Quarters - Repairs to Storm Damage. 2018-10-12 11:00 MTH 56/ 2018

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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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