Issue Date: 
Monday, March 31, 2014

Tenders and Local Content

By Werner van Rooyen

www.how2tender.com

31 March 2014

Did you know that the Gauteng Provincial`s target on procurement spent on Local Content is 75%? This can also be said for the National Government`s procurement spent.

That is very good news! It can also be considered that most of the nine Provinces have got the same target. This means that Local Content is a priority to National as well as Provincial Governments, when it comes to their Procurement spent. This is good news for local manufacturers and services providers. Local manufacturers and service providers has at least a 75% change of winning a tender.

But what is the definition of Local Content?

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 Annexure D and E, summarized in Annexure C. Local Content is total spend less any imported component. Remember that you as suppliers 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 tender that you 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:

  1. finance charges;
  2. property; and
  3. deployment fees of the operations contractor.

Currently the new B-BBEE Codes of Good Practice that will come into effect on 30 April 2015 strong emphasis is given to Enterprise and Supplier Development, one of the five elements of B-BBEE. This element will count 40 out of the 109 points on the B-BBEE scorecard and this element is all about developing the Local Entrepreneur. This will and must stimulate the manufacturing and producing of Local Content.

The National Government has also 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. If your business enterprise falls into one of these 12 designated sectors then you will have to comply with these minimum thresholds. These designated sectors together with its minimum thresholds can be found at: http://www.dti.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. So next time when you tender consider Local Content as an option.

Local Content and much more tender issues are discussed in our Tender Manual. If you want to know more about the tender process and how to complete a tender correctly and hopefully successfully, please visit our website at www.how2tender.com to find out more.
Until the next time - happy tendering.

Don`t delay, get educated today!

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

Title Closing Date Tender No.
Provision of Events Services: Municipal Year-End Function 2017-12-21 13:00 SCM/2018/177/CORP
Supply: Building material 2017-12-18 14:00 GE11800903
Supply: Extruder 2017-12-21 14:00 GE11800905
Supply and delivery of loud hailers to ZDM Vehicles 2017-12-19 12:00 ZDMQ 0403/12/2017
Supply and delivery of Stationery 2017-12-19 12:00 ZDMQ: 0404/12/2017
Training on Demonstrate Knowledge of Waste Water Pipe Unblocking and Maintenance 2018-01-11 12:00 ZDMQ0405/12/2017
Training on Construct Water Reticulation Concrete Works 2018-01-11 12:00 ZDMQ0406/12/2017
Supply Hardware items 2018-01-15 12:00 GG11800417
Training on applying Health and Safety Practices in the water sector for process operations 2018-01-11 12:00 ZDMQ0407/12/2017
Supply Hardware items 2018-01-15 12:00 GG11800416
Supply strapping - material: grade 304 stainless steel 2018-01-15 12:00 GG11800419
Training on Conducting a workshop on Job Evaluation Systems, Job Descriptions Alignment with the Organogram and Change Management 2018-01-05 12:00 ZDMQ0408/12/2017
Supply: Water distribution material 2017-12-21 14:00 GE11800898
Electrification of 136 Households in Nuresh A and B Villages 2017-12-29 12:00 MATAT 2017/2018-28
Supply: Engineering materials 2017-12-18 14:00 GE11800901
Provision of Website Hosting, Development, Redesign and Maintenance Services 2018-01-09 12:00 MATAT 2017/2018-31
Provision of Training on Construction Roadworks (National Certificate NQF Level 2- Unit Standard 24133) for 10 municipal employees 2017-12-29 12:00 MATAT 2017/2018-32
Supply polymer grids, covers and frames 2017-12-21 14:00 GE11800902
Provision Electronic Document Management System 2017-12-29 12:00 MATAT 2017/2018-27
Supply: Valve 2017-12-21 14:00 GE11800904

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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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