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.
Hiring a panel of service providers for waste management vehicles as and when required for a period of three years 2017-12-07 10:00 RFT01/11/2017/18
Appointment of HVAC Contractor to Replace the Existing Chiller Punt at ATNS Air Traffic Control Centre Cape Town International Airport 2017-12-20 16:00 CHILLERS_C09/21/05/31(32)-2
Tri-Annual Contract for Sewer Infrastructure Rehabilitation Using Trenchless Technologies 2018-01-11 11:00 SCM/17-21/S:
Cleaning material and toiletries 2017-12-26 11:00 GRG 01/2017
Supply Water distribution materials 2017-11-28 16:00 GE11800766
Provision of Fixed-Line Voice Services and Maintenance of Unified Communications Solution Infrastructure for Twenty-four Months (24) period with an option to extend for Twelve (12) Months 2017-12-11 11:00 SCMU12-17/18-0011
Supply: Water distribution materials 2017-11-28 14:00 GE11800767
Supply: Concrete plinth 2017-11-28 14:00 GE11800768
Request For Proposals (RFP) on the Establishment of the Defence Industry Fund (DIF) 2018-01-31 11:00 DIF1117
Supply: polymer covers, gulley grates and frames 2017-11-28 14:00 GE11800770
Provision of Managed Printing Services 2017-12-11 12:00 PT2017/23
Supply: Binding wire 2017-11-23 14:00 GE11800774
Electrical repairs at Lotus River PTI 2017-11-29 09:00 SP11800069
Supply: Civil materials 2017-11-23 14:00 GE11800775
Supply, delivery and off-loading of white hydrated lime for various waste water treatment works and water purification works of the City of Tshwane: as and when reuired: three year period 2018-01-31 10:00 USD WS 04-2017/18
Supply: Glass Beads 2017-11-28 14:00 GE11800776
Appoint a panel of service providers for training and capacity building of farmers and agricultural co-operatives in Tshwane: as and when required: three year period 2018-02-01 10:00 EMS 01-2017/18
Supply: Ibr colorplus /colorbond roof sheeting A 2017-11-24 15:00 GB11800550
Supply, delivery and fitting as well as repairs, maintenance and refurbishment of agricultural infrastructure in Tshwane: as and when required: three year period 2018-02-02 10:00 EMS 02-2017/18
Supply: Care packs 2017-11-28 12:00 GG11800244

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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