Issue Date: 
Tuesday, November 1, 2016

When Must I Sub-Contract?

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.

The Draft Preferential Procurement Regulations stipulates the following: 

  1. For contracts above R30 million, the tenderer MUST sub-contract a minimum of 30% of the value of the contract to –
    • One or more of the categories:
      • EME’s (Exempt Micro Enterprises) or QSE’s (Qualifying Small Enterprises) owned by black people who are female;
      • EME’s or QSE’s owned by black people from the ages 14 to 35;
      • EME’s or QSE’s owned by black people;
      • EME’s or QSE’s owned by black people with disabilities)
    • One or more Exempt Micro Enterprises (EME’s) or Qualifying Small Enterprises (QSE’s); or
    • One or more small businesses, as defined in the National Small Business Act.
  2. If a successful tenderer sub-contracts to another person without disclosing it in its tender documents, the organ of state must penalise the tenderer 10% of the value of the contract, unless the tenderer submits a satisfactory reason for failing to make the disclosure.

The Regulations are very clear because its states “the tenderer MUST sub-contract…..”. Thus, once the Regulations are finally gazetted then all contracts with a value of R30 million and above will have to comply with this Regulation. Remember that currently (as of 31 Oct. 16) the Regulations are not finalized yet.

Until such time that the Regulations are finalized the answer is easy whether or not to sub-contract – look at the scope of the tender or the special conditions. Somewhere in the tender document it will stipulated whether or not the tenderer will have to sub-contract.  Follow those rules. If the tender document doesn’t contain any sub-contracting instructions (at this stage) then it is not necessary to do so.

The fact is that the tender document will dictate what you should or should not do. Read the tender document carefully and follow the instructions to the point.

To learn more about this and all the other new developments regarding tenders, attend one of the How-to-Tender workshops.

Learn to earn

www.how2tender.com

Title Closing Date Tender No.
Supply: Streetlight poles 2017-11-28 15:00 GJ11800513
Supply and deliver 48 X 48 Hour Meters 220-250 volt 2017-11-28 11:00 SQ11171137
Provision, disposal and servicing of sanitary bins at all the libraries in the City of Cape Town. 2017-12-01 09:00 SM11800201
Provision of armed escort and VIP services on adhoc basis for a period of 3 years 2017-12-01 14:00 TG094017
Supply: Luminaire adaptors 2017-11-22 15:00 GJ1180483A
Supply and deliver Water Meter Spares Connectors 2017-11-28 11:00 SQ11171137
Supply and delivery of 1,5 million liters of diesel p/m for a period of 3 years 2017-12-01 14:00 TG093017
Youth Development Program- Hair & Beauty training/workshop- WARD 75 2017-11-28 09:00 SM11800304
Supply and deliver Brass Bushes reducing 19mm x 15mm. 2017-11-28 11:00 SQ11171137
Supply and delivery of work uniform for a period of 3 years 2017-12-01 14:00 TG092017
Service provider: Hiring of toilets for the festive lights switch on – Sunday, 3 December 2017 2017-11-27 12:00 SL11800105
Supply and delivery of 10 000 boxes of A4 paper reams annualy for a period of 3 years 2017-12-01 14:00 TG091017
Supply and deliver Insertion Rubber 1.2mtr x 3mm thick 2017-11-28 11:00 SQ11171137
Sarah Baartman District Municipality Fire Service Assessment 2017-12-08 12:00 32/2017
Appointment of a service provider to assist CSOS with a content management website and intranet system 2017-12-11 11:00 CSOS004-2017
Supply and delivery of 3000 truck tyres annually for a period of 3 years 2017-12-01 14:00 TG090017
Hatch NBC and hatch ESP assemblies 2017-12-13 12:00 DLS150637
Supply and deliver Pre-Paid "Pay-As-You-Go" Airtime 2017-11-28 11:00 CSQ11171185
Service hatch assemblies 2017-12-13 12:00 DLS150638
Transfer fuel tank 2017-12-13 12:00 DLS150639

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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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