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 Artisan Stovepipe Welders/Boilermakers, 400 Amps welding machines and welding equipment for eThekwini Water Services for a 36-month period 2018-01-19 12:00 WS.7031
Supply comer p.t.o.shaft for bush cutter 2017-11-22 10:00 WC11801102
Transport of Containerised Waste from Klapmuts and Franschhoek to Devon Valley Landfill Site 2017-11-24 11:00 FQ 126/18
Hiring of AudIo Visual –JCC Event, 2.12.2017 2017-11-24 12:00 SD11800266
Supply and delivery of 20 x adm/dn configuration dongles 2017-11-21 11:00 GK11800277
Supply and delivery of 70 kg Chlorine gas and 940-100Kg to various Chlorination stations in the Stellenbosch Municipal area. 2017-11-24 11:00 FQ/SM109/18
Supply: Hardware items 2017-11-23 12:00 GG11800265
Supply: Hardware items 2017-11-23 12:15 GG11800260
Supply: padlock - material: brass 2017-11-27 12:00 GG11800261
Moving and Maintenance of Developed Public Open Spaces, Sidewalks, Entrances, Underdeveloped Public Spaces and Road Reserves as per specifications 2017-11-28 11:00 FQ 116/18
Supply: Hardware items 2017-11-23 12:00 GG11800266
Supply: twine - material: tarred; colour: black 2017-11-23 12:00 GG11800263
Supply: plastic sheeting - material: polyethylene 2017-11-23 12:00 GG11800262
The Construction and Furnishing of Residential House for the African Union Commission (AUC), Addis Ababa, Bole Sub-City, Ethiopia 2017-12-20 15:00 AUC/AFMD/W/6
Experienced and competent architect for the design of container offices, Beltana 2017-12-01 11:00 FQ/SM117/18
Supply: Hardware items 2017-11-27 12:00 GG11800267
Supply: Hardware items 2017-11-27 12:00 GG11800268
Amanzimtoti Station – Construction of 200mm diameter (45m long) and 150mm diameter (120m long) steel reticulation mains: Ward 97 2017-12-08 12:00 WS.7050
Supply: whistle - colour: red; material: plastic 2017-11-22 12:00 GG11800219
Upgrading of LA Motte community hall. 2017-12-01 11:00 FQ/SM113/18

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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