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.
National key point guarding and patrolling security services for Petrosa in Mossel Bay and at the George Heliport 2017-12-14 10:00 CTT16485
Water network maintenance contractors 2018-01-18 10:00 RFT19/11/2017/18
Procurement of erection of traffic calming systems (Speed humps) 2018-01-18 10:00 RFT18/11/2017/18
Request for tender: Invitation for the appointment of a service provider to partner with the NWDC in the establishment of a provincial printing house in Bokone Bophirima. 2017-12-15 12:00 NWDC/PRO046/2017
Procurement of traffic lights repair and maintenance purposes 2018-01-18 10:00 RFT17/11/2017/18
Appointment of a service provider to perform periodic Vat savings review for SEFA. 2017-12-15 11:00 sefa: 17/FIN/2017
Request for proposals: Appointment of a service provider for public sector invoice discounting. 2017-12-15 11:00 sefa:16/DL/2017
Supply delivery and offloading firefighting protective equipment's for fire service division in Madibeng 2018-01-18 10:00 RFT16/11/2017/18
IREX, is seeking quotes from qualified facilities to provide accommodation and conferencing facilities for a conference in early June 2018. 2017-12-15 11:00 No reference number
Horticultural maintenance for Westridge Garden in M/Plain 2017-12-01 09:00 SN11800470
Rendering of security services for the premises of Madibeng in cluster seven (PSIRA Accreditation) 2018-01-18 10:00 RFT15/11/2017/18
Horticultural maintenance for center Islands In M/Plain 2017-12-01 09:00 SN11800474
Rendering of security services for the premises of Madibeng in cluster six 2018-01-18 10:00 RFT14/11/2017/18
Dumping Removal from POS & Parks of Mitchell’s Plain, Colorado and Samora Machel. 2017-12-04 09:00 SN11800475
Rendering of security services for the premises of Madibeng in cluster five 2018-01-18 10:00 RFT13/11/2017/18
Rendering of security services for the premises of Madibeng in cluster four 2018-01-18 10:00 RFT12/11/2017/18
Service & sanitising of water coolers & descale of hydroboils at Mitchells Plain WWTW 2017-12-01 12:00 SK1180186A
Rendering of security services for the premises of Madibeng in cluster two 2018-01-18 10:00 RFT11/11/2017/18
Supply and lay Artificial grass for soccer pitch at Silvertown Park, Khayelitsha. 2017-12-04 09:00 SN11800480
Rendering of security services for the premises of Madibeng in cluster one 2017-12-07 10:00 RFT10/11/2017/18

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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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