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.
Department of Health: Utrecht: Niemeyer Memorial Hospital: Construction of Borehole and Erecting a New Galvanised Elevated Water Storage Facility 2018-10-29 11:00 ZNTL 03837 W
Department of Social Development: Amajuba District: Osizweni Arts Centre: Repairs and Renovations: Completion Project 2018-10-29 11:00 ZNTU 52439 W
Supply, Delivery and Installation of Surface Grinding and Milling Machine for Regional Workshop Gauteng. 2018-11-08 11:00 CPSC- B- G- 113- 2018
Procurement of Mobile Prefabricated Office and Store Utilising the Volumetric and Light Steel Frame Building Method. 2018-11-01 11:00 CPSC- B- G- 151- 2018
Umzinyathi District :Dundee: Department Of Cooperative Governance and Traditional Affairs: Hire of Office Accommodation : A Lettable Area Sufficient to Accommodate 470m2 of Assignable Office Space Plus 94m2 of Non-Assignable Space. 2018-10-30 11:00 ZNT 6002 W
Supply and Delivery of Twenty (20) Specialised Breeding Dogs between Eighteen Months and Three Years of Age for Military Veterinary Institute. 2018-10-22 11:00 CPSC- B- M- 066- 2018
Electrical maintenance and perimeter lighting at Catherine Booth Hospital, Amatikulu. 2018-10-25 11:00 ZNTU 03423 W
Construction of Kwa-Nocomboshe, Osuthu and Dondotha New, Deep Rural Police Stations: (Cluster 1) KwaZulu Natal Province 2018-10-31 11:00 19/ 1/ 9/ 1 / 60TB (18)
Construction of Nsuze New Police Station: KwaZulu-Natal Province 2018-10-30 11:00 19/ 1/ 9/ 1/ 82TB (18)
Procurement and Installation of Four (04) Mobile Flatpack Modular System Unit at SA army Combat Centre for VIP Accommodation. 2018-10-22 11:00 CPSC- B- G- 137- 2018
Supply and Delivery of Coal Peas A-Grade for boilers at Bizzah Makhate Correctional Centre 2018-10-29 11:00 KST02/ 2018
Sconversion of a 12 Meter Flat Deck Trailer as well as a 6 Meter Flat Deck Trailer into a mobile Uniform Shop: Western Cape 2018-10-26 11:00 19/ 1/ 9/ 1/ 135TV(17)
Expression of Interest for Development of a Shopping Center at Erf 914 and Relocation of Ngqeleni Stadium 2018-10-25 12:00 47/2018
Lease of a portion of erf 397 2018-10-26 12:00 70/2018
Lease of a portion of Sklipadhoogte (3.3ha), McGregor 2018-10-26 12:00 69/2018
Lease of municipal building situated on erf 81, McGregor (Old ACVV building) 2018-10-26 12:00 68/2018
Alienation of various available erven 2018-10-26 12:00 71/2018
Supply, installation and management of a STS compliant prepayment electrical vending system for a period ending 30 June 2021 2018-10-26 11:00 BV 730
Lease and Management of the Point Caravan Park (Erf 3626, 3601 and 3794, Including the Putt-Putt Course, Skateboard Facility and Resort Shop): Total Area ±3.5ha, Mossel Bay: for a period of fifteen (15) years 2018-10-26 12:00 TENDER 25-18/19
Consultancy Services to Prepare a Solar Energy Policy Framework for Africa 2018-10-26 15:00 AUC/IED/C/379

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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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