3 Sub-contracting rules to be aware of when responding to tenders

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting, due in large part to The Preferential Procurement Regulations, 2017 that has been implemented on the 1st of April 2017. Many entrepreneurs ask us whether they should sub-contract or not, in responding to a tender and how and where do they get onto the sub-contracting lists.

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting. The Draft Preferential Procurement Regulations, have been gazetted and are currently up for review. However, these Regulations are the major cause for the confusion. Many entrepreneurs ask whether they should sub-contract or not whilst responding to a tender.

Finding Sub-contractors

These categories are:

  • Black female owned EME's or QSE's;
  • Black youth owned EME's or QSE's;
  • Black owned EME's or QSE's.

After the Preferential Procurement Regulations were gazetted there is a need for businesses to find sub-contractors.

But where are businesses, which respond to tenders, going to find sub-contractors? We have thought about this and one answer is at Briefing Sessions.

Sub-contractors versus Consortiums and Joint Ventures

The Preferential Procurement Regulations, 2017 states that 30% of all Government Contracts above R30 million must be sub-contracted to specific categories of SMME's. These SMME's include, but are not limited to, black female owned and black youth owned businesses.

Tenders and Subcontracting

Tenders and subcontracting go hand in hand. In fact, subcontracting part of a tender is so commonly placed that in South Africa there are specific rules regulating subcontracting in executing tenders. This is especially true for South African Government tenders.

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Title Closing Date Tender No.
Supply and delivery of workshop processable materials to the following Management Area: Boksburg 2019-01-25 11:00 GTC 2/ 2018
Supply and delivery of four wheel tractors to the following Management areas: Baviaanspoort; Leeuwkop; Kgosi Mampuru II; Zonderwater 2019-01-25 11:00 GTC 4/ 2018
Supply, delivery, installation and commissioning of workshops machinery and equipment to the following Management Areas: Boksburg; Leeuwkop; Kgosi Mampuru II 2019-01-25 11:00 GTC 3/ 2018
Supply and delivery of Agricultural machinery equipment to the following Management areas: Leeuwkop, Kgosi Mampuru II, Zonderwater, Boksburg 2019-01-25 11:00 GTC 5/ 2018
The South African National Roads Agency SOC Limited (SANRAL) invites tenders for the provision of Consulting Engineering Services for the Routine Road Maintenance of National Route N4 Section 1, N4 Section 11 & 12, N1 Section 21, R21 Section 2 & R104 Sections 1 & 2 (Tshwane Freeway RRM). 2019-01-31 14:00 X.002- 088- 2019/ 1F&R.104- 012- 2019/ 1F
Supply and delivery of mattresses to East London and St. Albans Management Areas 2019-01-18 11:00 RCECB 5/ 2018
Supply, Delivery and Installation of Upgrading Milking Parlour and 8 points Automatic Milking Machine including Pasteurizer and Milking equipment : BARBERTON MANAGEMENT AREA (Mpumalanga Province) 2019-01-16 11:00 LMN 16 / 2018
Appointment of a Specialist Service Provider To Facilitate the Professional Design, Management, Supply and Installation of an Irrigation System, Center Pivots and Equipment for the 65 Ha Kamma Furrow Section of Zanyokwe Irrigation Scheme as a Turnkey Service in the Amahlathi Local Municipality, Amathole District Municipality in the Eastern Cape. 2019-01-15 11:00 5/ 2/ 2/ 1- CRDP- 0007 (2018/ 2019)
Revamping of Dairy Structure and 8 point Milking Sytem including Milk Cooling Tank 1600 Litres and Pasteurizer at : Rooigrond Management Area. 2019-01-16 11:00 LMN 16 / 2018
Regional offices: Manguzi: Installation of elevated water tank and electrification at Department of Agriculture and rural development, Umhlabuyalingana 2019-01-11 11:00 ZNTU 01728 W
Loligo Squid required as Bait for linefish January Cruise and must be delivered end January. 2018-12-14 11:00 RFQ000309
Appointment of Civil and Structural Engineers on the Department’s Database, To Provide Engineering Services for a period not exceeding 5 years 2019-01-25 11:00 ZNB37/ 2018/ 19HSE
The Wetland Rehabilitation Project 2018/19 2019-01-18 11:00 GT/ GDARD/ 179/ 2018
Turnkey services for refurbishment of the Gauteng Gambling Board offices 2019-01-31 11:00 GGB/ RFP/ 001/ 2018
Contracting of a service provider for the supply and delivery of fencing material and miscellaneous for 3 sites: Ngqala, Cwabi & Mshiki (Nongoma). 80/20 preference point system will apply. 2019-01-07 11:00 ADAB 03/ 2018
Request for erection of emergency exit door and steel staircase 2018-12-14 16:00 RFQ NO. 372/12/2018
Supply of official Motor Vehicle 2018-12-19 12:00 KLM/MV/12/2018
Invites suitable professional service providers to supply, commissioning, maintenance and support of vending servers for a period of twelve (12) months. 2019-01-11 11:00 CD79 / 2018
Appointment of the contractor to undertake the construction of the Farmer Production Support Unit (FPSU), bulk services, admin and training facility and mechanisation and logistics centre in Zastron, Mohokare Local Municipality, under the Xhariep District Municipality, Free State Province 2019-01-17 11:00 5/2/2/1 CON 0016 (2018/2019)
Refurbishment of Naval Base Building within the Port of Port Elizabeth 2019-01-22 12:00 TNPA 733/PEH/VB

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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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