Issue Date: 
Thursday, October 31, 2019

Sub-contractors versus Consortiums and Joint Ventures

By Werner van Rooyen, Director of HowToTender (Pty) Ltd which specializes in tender consulting and tender training.

The Preferential Procurement Regulations, 2017 states that, if it is feasible, 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.

To help with the confusion that arises from whether one must form a Joint Venture, Consortium or sub-contractor/contractor relationship when responding to a tender it is always good to understand the definition of these types of business relationships:

  • A sub-contractor/contractor relationship arises when a main contractor hires or employs additional businesses or persons outside of the main contractors own business to do work or to deliver services as part of a larger project.  The important thing to remember is that the main contractor is in charge and must ensure that the project is executed and completed as stipulated in the contract.
  • A consortium is an association of two or more individuals, companies, or organisations with the objective of participating in a common activity, such as responding to a tender, or pooling their resources to achieve a common goal.  Within the consortium, each participant retains their separate legal status and the consortium’s control over each participant is limited to activities involving the joint endeavour, particularly the division of profits.  A consortium is formed by contract.
  • A Joint Venture can be described as a business enterprise where two or more participants come together to share their expertise to win a specific contract for a set period.  A Joint Venture is a separate entity and is not part of the individual participant’s own enterprise.  Therefor a Joint Venture must have its own set of rules by which it is managed, and this is called a Joint Venture Agreement.

To become a sub-contractor, you will have to have a running business.  Main contractors will only use dependable sub-contractors with a proven track record.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops presented in Johannesburg, Pretoria, Durban, Port Elizabeth, and Cape Town.  Book and pay online at https://howtotender.co.za/tender-expert-form/

Contact us at wernervr@howtotender.co.za should you require more information.

You can also purchase a Tender Manual (Handbook) on our website https://howtotender.co.za/ which is a step by step guide how to respond to a South African Tender.  It includes examples of completed SBD forms.

Title Closing Date Tender No.
Supply: Tools & Machinery 2020-04-30 12:00 GD12001044
Supply: Clothing, PPE & Accessories - Clothing 2020-04-30 10:00 GA12001018
Supply: Shade cloth 2020-04-20 14:00 WG12001752
Request for the supply and delivery of meter boxes for a period of thirty-six (36) months 2020-05-08 15:00 UGU-06-1541-2020
Invitation to tender for a 24 month contract to purchase and remove scrap ferrous metal, insulators and electronic waste from various sites in the Eskom Northern Cape Area 2020-04-27 10:00 MWNC20-IR08 (Re-Issue)
Mobile Iron licence renewal (Product Code MI-EMP-D-1YMC-A) 2020-04-10 15:00 Apr03/20
Request for proposals for the appointment of a professional service provider: to provide Facility Management services for Freedom Park for a period of 5 years 2020-05-22 10:00 FP11/20PO
Appointment of a project manager to oversee the Fabrication and Installation of the 700m² permanent exhibition in the Gallery of Leaders. 2020-05-15 11:00 FP02/20HK
Expression of Interest: Proposals for Funding of Municipal Projects 2020-04-30 12:00 ELM/7/03/2020T
The provision of the nuclear engineers programme (NEP) on an as and when required basis 2020-05-12 10:00 KBG1936
Consultancy Services - Continental Cost Benefit Analysis (CBA) on the implementation of a Satellite Based Augmentation System (SBAS) 2020-04-28 15:00 AUC/IED/C/003
Provision of Accounting Services for a Three Year Period 2020-04-14 12:00 CED 12/2019-2020
Electricity Pre-Paid Vending System for a Period of Three (3) Years 2020-04-17 12:00 T 02 /2020
Supply: Medical Equipment, Accessories & Supplies 2020-04-30 12:00 GC12002615
Provision of Legal Services (Attorneys)-Panel of Professional Services for a Period of Three (3) Years 2020-04-17 12:00 T 01 /2020
Supply: Chemicals - Osec salt 2020-04-30 14:00 GC12002623
Supply: Chemicals - Osec salt 2020-04-30 14:00 GC12002625
Provision of External Loan Finance 2020-04-24 12:00 04/2020
Supply: Electrical Equipment & Components - Elec-equipment 2020-04-23 12:00 GH12002059
Supply and Delivery of Protective Clothing 2020-04-10 12:00 05/2020

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