Tenders, B-BBEE and the new Preferential Procurement Regulations 2017

We have previously asked: How important is a good B-BBEE status level of contributor in the tender process?

The answer is still the same: VERY IMPORTANT!

In all tender documents, you will find the NEW Standard Bidding Document 6.2 which is used to claim your Preference Points for B-BBEE. The higher your B-BBEE status level of contributor, the more points you will score on the Preference Points System. Ultimately the bidder or bidders scoring the highest points will be awarded the tender.

Brand new Preferential Procurement Regulations 2017 for Tenders

The brand new Preferential Procurement Regulations 2017, has been finalized and was gazetted on 20 January 2017. There are some interesting changes and challenges that we will discuss during the coming months. This is the official media release from National Treasury:

The regulations were initially promulgated in 2001 and revised in 2011 thus making this the second revision since the initial promulgation.

Draft Procurement Regulations Media Release

 The Draft Procurement Regulations 2016 were released on 14 June 2016. If these regulations are going to be implemented it will change the Tender environment in South Africa. Below is the media release from the Office of the Chief Procurement Officer, explaining the major changes in the Regulations:

“The Office of the Chief Procurement Officer (OCPO) has published the proposed new Preferential Procurement Regulations*, to afford the public an opportunity to comment.

General Procurement Guidelines

Government issued the General Procurement Guidelines not only as a prescription for standards of behaviour, ethics and accountability, which it requires of its public service, but also as a statement of their commitment to a procurement system enabling the emergence of sustainable small, medium and micro businesses. These SME's will add to the common wealth of the country and its objective of enhanced economic and social well-being for all its people.

Tenders in South Africa are measured on three principles, namely Functionality, Price and Broad-Based Black Economic Empowerment (B-BBEE). An Enterprise's ability to execute a contract is measured through the Functionality Principal in the Tender Environment. If an Enterprise's tender response does not pass the Functionality test it can't be measured on Price and B-BBEE. Enterprises that respond to tenders must ensure that they will pass the Functionality test in order to advance.

Functionality in Tenders Part 1

The Preferential Procurement Policy Framework Act 2011, establishes the rules according to how Government Entities must evaluate tenders. The Preferential Procurement Regulations of 2011 takes it a step further and gives guidance on how to specifically award points according to certain criteria such as B-BBEE and Price.

There appears to be a serious lack of knowledge regarding South African tender procedures. Here, the tender processes are ruled by various Acts, Regulation and Guidelines which are specifically designed to ensure that the tender processes are in line with the Constitution of South Africa - which dictates that the tender process should be fair, equitable, transparent, competitive and cost-effective.

It is important to know that when you respond to a tender there are certain guidelines that Government Officials need to follow in order to evaluate your tender. According to the Implementation Guide*, Accounting Officers and Accounting Authorities of all public entities** and municipal entities must comply with the rules and guidelines stipulated below.

If one looks at the General Procurement Guidelines that National Treasury issued to Government Departments, it is clear that Government wants the tender process to be fair, equitable, transparent, competitive and cost-effective exactly as Section 217 of the Constitution of South Africa requires.

Draft Procurement Regulations 2015

The Government thought it a good idea to have a look at the Preferential Procurement Regulations of 2011 and to change these Regulations to better fit the South African Tender Environment.

These Regulations were quietly issued end of 2015 for public comment.

As the case with most new Regulations or Acts there is always good and bad that accompanies it.

Some of the good things addressed in these draft regulations are:

Pages

Title Closing Date Tender No.
Cummunications Services and Media Buying for MMM for a period of two years 2018-01-10 11:30 MMM/BID 443: 2017/2018
The Municipality encourage service providers to make quotations for in-house training. External training will be exceptional due to cost cutting measures. 2017-12-20 12:00 No reference number
Supply and application of Herbicides within the MMM for a period of two years 2018-01-08 11:30 MMM/BID 441: 2017/2018
Provision of electrical consumables, supply and delivery for a period of two (2) years 2018-01-23 12:00 395/08/12/2017
Supply and delivery of compression tube fittings to PetroSA Mossel Bay 2018-01-26 16:00 CTT16894
Supply and delivery of Maintenance Equipment for period of two years 2018-01-09 11:30 MMM/BID 404(A): 2017/2018
Supply and delivery of 600 grocery hampers 2017-12-21 12:00 8/2/5/8-2017
Constuction of Parkhome at Kendal 2018-01-04 11:00 OLT1087125
The Design, Manufacture, Supply and Commissioning of an Exhaust Valve Testing Facility for the Armscor Dockyard in Simon's Town. 2018-01-03 11:00 ARMD/21/17
Provision of security services 2018-01-12 12:00 KMLM2018-013
Training of ward committees and councillors on office administration and minute taking 2017-12-20 16:00 MBIZLM/12/12/2017TOWC
Construction of Mdeni community all with a with a CIDB Grading of 4 GB or Higher 2018-01-15 12:00 066/2017/18
Construction of Mdeni community all with a with a CIDB Grading of 4 GB or Higher 2018-01-15 12:00 066/2017/18
Construction of Nkwalweni to Zilinyama Access road with a CIDB Grading of 5 CE or Higher 2018-01-17 12:00 067/2017/18
Appointment of a Services provider for the maintenance of Abattor to Amendu Road with a CIDB Grading of 4 CE or Higher 2018-01-17 12:00 065/2017/18
Supply and delivery of thinkcentre tiny 90W adapter – slim tip (South Africa ac power adapter) P/N:4X20E75147 2017-12-19 11:00 GK1180342A
Supply and delivery of 1X thinkpad EM7455 4G LTE mobile broadband P/N:4XC0M95181 2017-12-19 11:00 GK1180279A
Supply: Pvc vinyl wristband 2017-12-22 12:00 GL11800456
Supply: 80 each x hypochlorite;tablet 2017-12-21 16:00 GC11800399
Supply Spirits;Methylated Ethyl;20L 2017-12-18 16:00 GC11800400

Pages

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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