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: Bar round 2017-09-21 14:00 A021800416
Supply and delivery of Paint and Paint Products for the period 01 January 2018 To 31 December 2021. 2017-10-20 12:00 SBM 22/17/18
Supply, delivery, installation & commissioning of demand side management system - 33/11kV substation 2017-10-10 12:00 TENDER NO. MN 90 / 2017
Install new floor tiles at Lavendar Hill Clinic 2017-09-28 12:00 SC11800005
Appointment of a Design and Construction Consortium for Infrastructure Department New Facility: Wolmerton Capital Park 2017-10-20 12:00 CRES/NGR/29/09/2017
Appointment of Service Provider/S for the Provision of Cleaning Services and Horticultural Services at Various Stations within the Western Cape for a period of 36 months (stations on the Central Line) 2017-10-20 12:00 WC/CRES/30/09/2017
Demonstrate knowledge pertaining to fires in working places 2017-09-26 14:00 SL11800048
Appointment of Service Provider/s for the Provision of Cleaning Services and Horticultural Services at various stations within the Western Cape for a period of 36 months (stations on the Ikapa/Boland Line) 2017-10-20 12:00 WC/CRES/31/09/2017
Horticultural Maintenance Gordons Bay Main Beach 2017-09-26 12:00 W101800301
Provision of MSM training 2017-09-26 09:00 SM11800163
Provide Training in Public Participation 2017-09-22 16:00 ENQUIRY NUMBER: 2017-18/020
Hiring of Audio Visual Equipment and Related Professional Services: Seniors Event @ Athlone Stadium 2017-09-21 14:00 SA11800120
Supply: Handcuffs 2017-09-28 10:00 GA11800062
Removal and Disposal of Dry Sludge from Waste Water Treatment Plants for a Conditional Period of three (3) years at King Shaka International Airport 2017-10-20 15:00 DIA56/2017
Supply: Medical supplies 2017-09-21 15:00 R081800229
Supply: Medical supplies 2017-09-21 15:00 R081800230
Provide Training in Reputation Management 2017-09-22 16:00 ENQUIRY NUMBER: 2017-18/021
Provision of Professional Services:Distribution of Newsletter and Ad Hoc Material 2017-10-23 10:00 84S/2017/18
Operation and Maintenance of Thohoyandou Landfill Site(3 Year Contract) 2017-10-23 11:00 27/2017/2018
Supply and delivery of Water and Waste Water Material 2017-10-23 11:00 INF-W24/2017/2018

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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