Issue Date: 
Tuesday, August 7, 2018

Local content calculation in tenders

The National Government has introduced "designated sectors" which are sectors, sub-sectors or industries that have been designated by the Department of Trade and Industry in line with national development and industrial policies for local production, where only locally produced services, works or goods or locally manufactured goods meet the stipulated minimum threshold for local production and content1.

What is Local Content and how must we apply it in our tender responses?

Local Content is Local Value Added in South Africa by South African recourses. Where a tender response contains a combination of local and imported goods and/or services, the tender price must be separated into its local and imported components as per the Standard Bidding Document 6.2

Where it becomes tricky is Annexure C, D and E that needs to be completed before Standard Bidding Document 6.2 can be completed. Because little of tender responders read the tender document very carefully this requirement is overlooked. This makes it very difficult to complete Standard Bidding Document 6.2.

It is important to know the sequence in which these annexures must be completed. Completing it in the wrong sequence is going to lead to much frustration on the side of the bidder.

Please remember that you as bidder will be contractually required to maintain records to certify imported content, for example, invoice of materials, expenditure records and income statements.

It must be emphasized that when you respond to a tender you must ensure you know which goods and/or services you can claim as Local Content. Be aware that certain tenders will exclude cost such as the following from Local Content:

  • finance charges;
  • property; and
  • deployment fees of the operations contractor.

The designated sectors together with its minimum thresholds can be found at: http://www.thedti.gov.za/industrial_development/ip.jsp.

There is an increase in the drive from National as well as Provincial Government to promote Local Content. This drive is not a South African initiative but a world wide trend. In a South African context it is good because it stimulates internal growth of the economy.

Local Content is a difficult item in any tender. Many bidders don't know whether or not it is applicable to them. We understand the Local Content criteria and documents.

If you want to know more about Local Content contact us to find out when our next Local Content workshop is taking place in your area.
werner@how2tender.com

This article was written by Werner van Rooyen, Director of HowToTender which specializes in tender consulting and tender training. (04/05/2018)

1.  Definition of "designated Sectors" as per SBD document 6.2.

Title Closing Date Tender No.
Appointment of a Panel Of Attoneys to Assist Sedibeng District Municipality with Legal Related Matters on an Ad Hoc Basis. 2019-01-08 12:00 8/2/1/2-2018
Appointment of service provider to provide security services at Buffalo City Metropolitan Municipality – Silver Crown Old Age Home for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0037
Provision of Short Term Insurance for the Period From 01 July 2019 to 30 June 2022 2019-01-18 12:00 FIN 01/2019/20
Consulting engineering services for the routine road maintenance of national route N2 section 8 km 80.08 to section 10 km 73.50 and national route R62 section 6 km 36.76 to section 8 km 2019-02-04 14:00 X.003-030-2019/1F
Consulting engineering services for the routine road maintenance of national route N2 section 12 km 0 to section 13 km 103.56 and national route R67 section 2 km 0 to km 36.19 2019-02-04 14:00 X.003-032-2019/1F
Appointment of service provider to provide security services at Buffalo City Metropolitan Municipality – Enoch Sontonga Rehabilitation Center for the Department of Social Development, Eastern Cape for a period of three (3) years 2019-02-04 11:00 SCMU4-18/19-0036
Leasing of Premises for Customer Care Centres For uMgungundlovu District Municipality 2019-02-04 12:00 39/2018
Upgrading of the Kleinbrak 66/11kv substation 2019-02-08 12:00 TENDER 51-18/19
Appointment of Communication Service Provider to Assist the Department to Design, Develop and Edit a Publication on the Success Stories of the Environmental Programmes Branch of the Department of Environmental Affairs 2019-01-11 11:00 E1496
Spesialisdienste van Afrikaanse Taalkundige word verlang vir projek om Historiese gemarginaliseerde Afrikaanse varieteite te onsluit (Oranjerivier Afrikaans) 2019-02-12 11:00 ATM 017/2018-2019
Appointment of the service provider to conduct an Implementation evaluation of the Environment and Culture Sector within the EPWP 2019-01-11 11:00 E1497
Supply and delivery of gloves to PetroSA, GTL refinery (call of contract) 2019-02-15 11:00 CTT20907
Redesign, fabrication and installation of lifting platform main beams at Syncrolift dry dock in the Port of Cape Town 2019-02-19 10:00 TNPA 783/CIDB
Supply and Instal 4 Air Conditioners at NHLS Doran Nginza - Port Elizabeth 2018-12-28 11:00 RFQ 1469498
Supply, Deliver & Installation of Furniture at Gonubie Resort 2018-12-19 12:00 RFQ/DCS/2018-19/285
Supply and Delivery of Faltering Acid to BCMM Stores, Chiselhurst, East London 2018-12-19 12:00 RFQ/SCM/2018-19/283
Overhaul Bauer K 14 Upright Compressor 2018-12-19 12:00 RFQ/HPS/2018-19/281
Supply, Delivery & Installation of Storage Containers for Traffic Services 2018-12-19 12:00 RFQ/HPS/2018-19/280
Period Tender for Manufacturing and Installation of Transformer Fire Protection 2019-01-31 10:00 194Q/2018/19
Supply and Delivery of HTH Chlorine to Bcmm Stores, Chiselhurst, East London 2018-12-19 12:00 RFQ/SCM/2018-19/282

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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.

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