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.
Leasing of a Resort Booking System for a period of three (3) years 2018-03-23 12:00 HES-CORP INF 01/1718
Appointment of a service provider for the provision of Data Center Backup Solution 2018-03-20 11:00 NEPO/093/2018
Provision of Auctioneering Services for Hessequa Municipality 2018-03-23 12:00 HES-CORP INF 02/1718
Cell phone and data contracts for a 2-year period 2018-03-20 11:00 T 2017/100
Supply and implementation of a storage solution. 2018-03-20 11:00 T 2017/103
Panel of Legal Services 2018-03-20 11:00 CATHS/PLSP/003/201
Upgrading of Kayamandi Police Station, Stellenbosch 2018-03-23 12:00 B/SM 51/18
Provision of subsistence and travel banking services. 2018-03-23 12:00 SAX18/02/0322
Appointment of a Suitable Service Provider for the External Paintworks at Dorp Street Apartments 2018-03-23 12:00 B/SM 41/18
Tarring of Ibisi Access Road 2018-03-23 12:00 ULM-INFR020/18
Re-Gravelling of D1859 2018-03-26 11:00 ZNT373/C245/D1859/R/18-19
Supply and Delivery of Protective clothing for the Overstrand Municipality for a contract period ending 30 June 2021 2018-03-23 12:00 SC 1857/2018
Re-Gravelling of P161 2018-03-26 11:00 ZNT373T/C245/P161/R/18-19
Supply and Delivery of Electrical items for a contract period ending 30 June 2020 2018-03-23 12:00 SC 1858/2018
Supply of Newspapers 2018-02-23 12:00 Q27.02.18
Supply and Delivery of Tissue Paper Products and Cleaning Materials for a contract period ending 30 June 2021. 2018-03-23 12:00 SC 1859/2018
Supply and install evacuation alarm at Steve Tshwete Local Municipality. 2018-02-23 12:00 Q28.02.18
The rehabilitation of road P122/1 from km 8,4 (Olifantsfontein) to km 17,8 (Solomon Mahlangu drive) - approximately 9,4 km. 2018-03-23 10:00 DRT 116/02/2017
Supply and delivery of a new ksb eta 150-50 Pump and Motor for Vaalbank Water Treatment Plant 2018-02-22 12:00 Q25.02.18
Provision of security services for SABC Eastern Cape offices for a period of three years. 2018-03-23 12:00 RFP/LOG/2018/17

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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