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.

Pages

Title Closing Date Tender No.
Provision of transactional banking and related services for PetroSA. 2018-10-01 10:00 CTT17994
Sale of vacant residential Erf: Erf 1031: Murraysburg 2018-09-21 14:00 77/2018
Electrification of Izibityolo, Nofikile/Nqileni, Thoboyi, Ematolweni, Qwanguleni, Mthumbane and Chebe Villages. 2018-10-01 12:00 MNQ/SCM/12/18-19
Construction of Ncerhana Access Road. 2018-10-01 12:00 MNQ/SCM/14/18-19
Construction of Mazikhanye Access Road. 2018-10-01 12:00 MNQ/SCM/15/18-19
Construction of Mahemini Community Hall. 2018-10-01 12:00 MNQ/SCM/13/18-19
Appointment of a panel of electrical engineering consultants to undertake designs and oversee construction of electrical projects for a period of three years. 2018-10-03 11:00 EES 05/2018
Supply and delivery of software 2018-09-28 15:00 AUC/DEA/G/264
Construction of Ncerhana Access Road. 2018-10-01 12:00 MNQ/SCM/14/18-19
Sick leave management and disease profiling. 2018-10-04 11:00 SCM/19-44/S
Appointment of town planning consultants to provide town planning services to the Alfred Duma Local Municipality. 2018-10-04 11:00 DP & HS 06/2018
Supply of laboratory equipment 2018-09-28 14:30 01/AU-PANVAC/18
Supply, installation and maintenance of alarm systems for a period of three years. 2018-10-05 11:00 PS 13/2018
Supply, maintenance and repairs of fire station doors and door motors for a period of three years. 2018-10-08 11:00 PS 14/2018
Supply, maintenance and repairs of radio and radio communication for a period of three years supply, maintenance and repairs of radio and radio communication for a period of three years. 2018-10-09 11:00 PS 15/2018
Maintenance of Underground and Open Stormwater Infrastructure at Pudimoe. 2018-10-10 12:00 GTLM/INFR10/2018/2019
The Breede Valley Municipalities invites tenders for the supply and delivery of protective clothing for the period ending 30 June 2021. 2018-10-26 11:00 BV 717 / 2018
Provision of Banking Services for a Period of Sixty (60) Months. 2018-10-29 12:00 GTLM/FS03/2018/2019
Betterment & Re-Graveling of D93. 2018-09-21 11:00 C235/1819/BR/783
Betterment & Re-Graveling of L2869. 2018-09-21 11:00 C235/1819/BR/785

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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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