Issue Date: 
Thursday, October 31, 2019

Why the B-BBEE level of your sub-contractor is important

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

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.

According to Investopedia subcontracting is the practice of assigning part of the obligations and tasks under a contract to another party known as a subcontractor.  Subcontracting is especially prevalent in areas where complex projects are the norm, such as construction and information technology.  Subcontractors are hired by the project's general contractor, who continues to have overall responsibility for project completion and execution within its stipulated parameters and deadlines.

It is very important to know that in South Africa there is one major rule when it comes to subcontracting if awarded a Government tender.  According to the Preferential Procurement Regulations, 2017:

Section 6(5) states that a person must not be awarded points for B-BBEE status level if it is indicated in the tender documents that such a bidder intends sub-contracting more than 25% of the value of the contract to any other enterprise that does not qualify for at least the points that such a tenderer qualifies for, unless the intended subcontractor is an exempted micro enterprise that has the capability and ability to execute the sub-contract.

This sub-section of the Preferential Procurement Regulations, 2017, clearly indicate that you cannot subcontract more than 25% of the contract value to another party if that party does not have at least the same B-BBEE Status Level as you or a better B-BBEE Status Level than you. The Office of the Chief Procurement Officer is on the lookout for discrepancies like this.  If you are in contravention of these regulations, you stand the change that the contract may not be awarded to you or that your existing contract can be cancelled.  You can also be liable for costs incurred by the Government Entity in executing the contract.

If you are going to subcontract less than 25% of the value of the contract you are save and you do not have to worry about the B-BBEE Status Level of the subcontractor.

Subcontracting do not need to be difficult but if you want to know more about subcontracting and other important tender response information, we suggest you attend our How-to-Tender workshops that we present Country wide.

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 and deliver 90 000 corrugated carton boxes (grade cc) and 90 000 corrugated inner pads (grade cc) 2021-02-19 11:00 B/ WCED 2899/ 20
Appointment of NPOs for the Community Work Programme (CWP) for a period of twelve (12) months. 2021-02-12 11:00 COGTA (T) 17/ 2020
Terms of reference of the technical data assistant for the African Union Governance Campus Project 2021-02-11 11:00 APRM/018/SIDA/DAGC/2021
Provision for Career Guidance Coordination Services 2021-01-29 13:00 EWSETA/RFQ/92/2020
Appointment of a Service Provider For Procurement Of An Audit Management Software 2021-01-29 11:00 SD15/ 2020
Appointment of a Service Provider To Supply, Deliver, Install And Maintain Generators To Various Ditsong Museums Of South Africa 2021-02-12 11:00 DMSA 014/ 2020
Appointment of a Panel of Arts, Cultural And Heritage Practitioners To Develop and Implement Arts, Cultural and Heritage Activities (Public Programmes) At Ditsong Museums Of South Africa for A Period Of 36 Months (Three Years 2021-02-12 11:00 DMSA 001/ 2020
Appointment of a Suitable, Qualified and Competent Service Provider (Buyer) to Manage The Design, Manufacturing and Production of Retail-Ready Merchandise For Dmsa Museum Shops 2021-02-12 11:00 DMSA 010/ 2020
Appointment of an Experienced Ict Accredited Service Provider To Make Provision For Servers, Migration of Data (To O365), Data Backups, Datacentre Controls, Email Hosting, Hosted Pabx and Email Archiving For Ditsong Museums of South Africa (DMSA) 2021-02-12 11:00 DMSA 009/ 2020
Disposable Face Masks 2021-02-19 11:00 0010444247
Rendering of A Cremation and Burial Service Of Pauper and Destitute Decedents For Western Cape Government: Department of Health For a Period Of Three (3) Years 2021-02-19 11:00 WCGHSC 0246/ 2020
Limited (Sanral) Invites Tenders For The Reseal And Overlay On National Route N4 Section 11 And 12 Between Rebecca Street (Km 10.0) And Pelindaba (Km 11.29). 2021-02-19 11:00 SANRAL N.004- 112- 2017/ 1R
Appointment of a panel of training providers for provision of training, skills development programmes for in Pretoria, Durban and Cape Town for a period of three (3) years 2021-02-19 11:00 PO 2020/ 21: 001
Supply, install and configure a Next Generation Firewall (NGFW) and a Unified Threat Management (UTM) End to End Managed Service to Statistics South Africa (Stats SA) for a period of thirty-six (36) months 2021-02-12 11:00 RFB 2348/ 2020
Appointment of a Service Provider to conduct anti - corruption survey in Local Government for 97 Municipalities. 2021-02-12 11:00 RFP: 003/ 01/ 2021
Appointment of a Service Provider for a Provision of Employee Wellness Services programme to the Special Investigating Unit (“SIU”) for a period of three years (3) with an option to renew for a further period of two (02) years 2021-02-12 11:00 RFP: 002/ 01/ 2021
Panel Of Recruitment Agency 2021-02-12 12:00 SAT 186/ 21
Appointment of a Service Provider for the Provision Of Customised All-Risk Commercial Insurance Services At South African Tourism (Sat) Head Offices In 90 Protes Road, Chislehurston, Sandton for a period of thirty-six (36) months 2021-02-15 12:00 SAT188/ 20
The South African Social Security Agency hereby invites Service Providers for the change management capability 2021-02-12 11:00 SASSA: 55- 20- CEO- HO
South African Civil Aviation Authority (SACAA) currently want to invite a firms of attorneys to submit proposals to enable them to be considered in the process of appointment of the SACAA panel of attorneys 2021-02-12 11:00 SACAA/ PA/ 0005/ 2020- 2021

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