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.
Provide Training in Risk Management 2017-09-22 16:00 ENQUIRY NUMBER: 2017-18/022
Short Term Provision of Harbour Pilot Services Using a Leased Helicopter on an “as and when required” Basis for the Ports of Richards Bay & Durban 2017-10-24 10:00 RB2017/47
Provision of Laundry and Related Services at Nelson Mandela Central Hospital and Mthatha Regional Hospital, Eastern Cape for a period of 18 months 2017-10-24 11:00 SCMU3-16/17-0159-HO
Supply: Hardware items 2017-09-21 12:00 R051800267
Limpopo and Thohoyandou Security Services 2017-10-24 12:00 RFP/RIS/2017/34
Provide Training in Social Media 2017-09-22 16:00 ENQUIRY NUMBER: 2017-18/023
Manufacture and supply of estimated quantities of distribution class surge arresters on an “as and when” required basis for distribution division. 2017-10-26 10:00 CORP4142
Construction of Saul Mkhizeville Bus and Taxi Route 2017-10-26 12:00 MKHO008/2017/18
Provide Training in Stakeholder Relations 2017-09-22 16:00 ENQUIRY NUMBER: 2017-18/024
Supply: 3 each x 450mm sluice gate gate valve with frame 2017-09-22 14:00 A021800374
Provision of Physical Security Services at SABC Mpumalanga for a period of three years 2017-10-26 12:00 RFP/RIS/2017/33
Pool of Contractors for Civil, Buildings, Works/Services in Graeter Tzaneen Municipality 2017-10-27 12:00 SCMU 15/2017
Provide Training in Sub Editing and Proof Reading 2017-09-22 16:00 ENQUIRY NUMBER: 2017-18/025
Construction of the Rustplaas 1ml/Day Wastewater Treatment Works 2017-11-01 12:00 MKHO14/2017/18
Construction of the Rustplaas Sewer Reticulation Network 2017-11-01 12:00 MKHO15/2017/18
Sale of Residential Erf. 3702 in Oak Street Railton, Swellendam 2017-11-03 12:00 SMT10/17/18
Provide Training in Crisis Communications 2017-09-22 16:00 ENQUIRY NUMBER: 2017-18/026
Supply: Bricks 2017-09-25 14:00 A021800395
Supply and delivery of Programmable Paddle Jar Tester at Withoogte 2017-09-22 12:00 6/5/2/160
Professional Service Provider for Annual Report Layout, Design, Printing, Binding, Packaging and delivery 2017-10-26 12:00 2018/022

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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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