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.
Supply: Cable;cu;1c;63mm²;h/d;pvc;blk;1000m 2017-09-28 15:00 R021800366
Supply: Cable;o/h hard drawn;16mm²;cu;1c;pvc;blk 2017-09-28 15:00 R021800364
Supply: Cable;o/h hard drawn;10mm²;cu;1c;pvc;blk 2017-09-28 15:00 R021800363
Horticultural Sonic Tomograph inspection of Various Mature Trees @ Voortrekker Park Resort 2017-09-29 14:00 SB11800155
Resurfacing of tennis courts at Pinelands Tennis Club 2017-09-29 12:00 SB11800132
Supply: Conductor;acsr;42.9mm²;fox 2017-09-28 15:00 R021800362
Supply: Cable;lv;70mm²;cu;1c;pvc pvc;blk 2017-09-28 15:00 R021800367
Waterproofing concrete roof at Goodwood Fire Station 2017-09-27 14:00 SL11800053
Public function – Hiring of audio-visual (av) equipment 2017-09-22 09:00 RSR/IAS/001/06/2017
Hiring of Audio Visual Equipment and Related Professional Services: Cultural Day Celebration @ Nomzamo Community Hall, 29 Selven Street, Strand @ 24.09.2017 @ 10:00-16:00 2017-09-21 09:00 SM11800167
Invitation for a suitable service provider to submit a bid for the appointment of Events Management Company to organise an Orchestra event "Golden Classics" (Outdoor Orchestra Concert) at Golden Gate Highlands National Park 2017-09-29 11:00 GNP-009-17
Horticultural services at Blackheath Reservoir 2017-10-02 12:00 SK11800110
Felling and removal of Eucalyptus Trees at Wemmershoek 2017-10-02 12:00 SK11800105
Repairs of two troglotech sewer CCTV cameras at scientific services 2017-10-02 12:00 SK11800114
Appointment of Contractor for supply, delivery and support of GSM-R Operation portable handheld (OPH) Radios For PRASA Group 2017-10-17 14:00 HO/RAIL/318/09/2017
Oil and vibraion analysis at Kraaifontein WWWTW 2017-09-27 14:00 SK11800113
Supply of Personal Protective and Safety Equipment on a Consignm,ent Stock Basis 2017-10-15 15:00 007/2017
Mossel Bay: New Dog Unit (Offices,Parking,Kennels,Dip Tank,Exercise Camp) For SA Police Service: 3420.80m2 2017-10-18 11:00 CPTL 004/17
Supply, delivery and service of waste sanitary bins for One year. 2017-09-29 11:00 NOTICE. 19/2017/2018
Supply: Hardware items 2017-09-26 12:00 R051800271

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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