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:


Title Closing Date Tender No.
Business Turnaround Specialists Panel. 2018-04-13 14:00 RFP 12/2017
Appointment of a Debt Sponsor and a Panel of dealers for the IDC domestic Medium Term Note (DMTN) Programme. 2018-04-09 12:00 T12/03/18
Enterprise Development Tender for Start-up enterprises in the Plumbing, Refrigeration and Airconditioning services 2018-04-12 17:00 UM P&A – Startup Opp 2018
The appointment of a service provider to provide training for all CSOS Employees on conciliation (mediation) and adjudication (arbitration). 2018-04-10 11:00 CSOS009-2018
The provision of concrete structure repairs at the fabric filter plant for a period of 6 months at Camden Power Station. 2018-04-11 10:00 MPGXC005093
Appointment of a suitably qualified service provider to supply, install, and monitor power quality meters for a period of thirty six (36) months and train municipal personnel from date of appointment. 2018-04-11 10:00 11/2018/32 N32/2018
(Re-Advertisement) Appointment of a contractor for supply, delivery, installation, testing and commissioning of 11KV switchgear at NE 3 substation, Vanderbijlpark. 2018-04-11 10:00 11/2018/34 N34/2018
(Re-Advertisement) Appointment of a contractor for supply, delivery, installation, commissioning of 88KV switch gear at NE 3 substation, Vanderbijlpark. 2018-04-11 10:00 11/2018/35 N35/2018
(Re-Advertisment) Repair of protection in various substations for a period of thirty six (36) months on as and when required basis 2018-04-11 10:00 11/2018/36 N36/2018
Eskom Chartered Accountant (CA) Trainee Assessment System. 2018-04-11 10:00 CORP4372
As and When mechanical and electrical maintenance and repairs - COP 29 inspections of Rolling Stock Equipment. 2018-04-12 12:00 61/2017/CTN/RS
Provision of Major Maintenance and Reliability Substation Primary Plant in North West Operating Unit for 36 Months on an "as and when" required. 2018-04-12 14:00 PTATEN2398
Appointment of a services provider to render comprehensive hygiene services for a period of three (3) years. 2018-04-13 11:00 HSRC/04/2017/18
Provision of ablution facilities for a period of three years. 2018-04-17 12:00 CE:119
Invitation to submit proposals for establishment of a panel of professional service providers (PSP) to render professional multi-disciplinary services covering: Built-environment infrastructure projects for a period of three(3) years as and when required. 2018-05-04 12:00 T/2018/03/13/TECH/CONS
The provision of non-industrial cleaning, offices, kitchen and ablution areas at Duvha Power Station for the period of 3 (three) years. 2018-04-16 10:00 MPGXC005089
Supply and delivery of Protective Clothing for employees for 3 years. 2018-04-17 12:00 03/2018
Appointment of Service Provider for the Supply and installation of security equipment, X-ray Machines and Walk through Metal Detectors including a 5-year maintenance contract. 2018-04-19 12:00 SENT/043/2017-18
Manufacture and supply Antimony Lead Alloy Billets. 2018-04-20 12:00 355876
Short - term insurance from 1 July 2018 to 30 June 2019. 2018-04-20 12:00 WDM 02/2018


Tender adjudication process

The SBD/WCBD6.1 document must form part of all bids invited.  It contains general information and serves as a claim form for preference points for Broad -Based Black Economic Empowerment (B -BBEE) Status Level of Contribution, and explains how tenders or bids are decided.

The document says:

  • The bidder obtaining the highest number of points will be awarded the contract.
  • Preference points shall be calculated after prices have been brought to a comparative basis.
  • Points scored will be rounded off to two decimal places... Read More
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