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

Title Closing Date Tender No.
Appointment of a Maximum of two (2) Service Providers for the Supply, Delivery and Off-Loading of Lime and Sludge Thickening Polyelectrolyte as and when required for a period of thirty six (36) months 2018-04-19 12:00 BS12/02/2018
Consultants for the Investigation, Design, Supervision and Monitoring of Rietkuil Reservoir and Bulk Supply Pipe Lines in Steve Tshwete Local Municipality 2018-04-18 12:00 BS04/02/2018
Repair of light vehicle and trucks. 2018-04-18 11:00 67/2017/2018
Supply and delivery of cleaning chemicals, equipment and accessories. 2018-04-18 11:00 65/2017/2018
Supply and delivery of traffic road marking paints. 2018-04-18 11:00 77/2017/2018
Panel of Maximum Three (03) Mechanical Contractors to Provide Services for Repair and Maintenance of Plant and Equipment at the Water and Wastewater Treatment Works as and when required for a period of thirty six (36) months. 2018-04-24 12:00 BS06/02/2018
Supply, repair, fitting of tyres, wheel alignment and balancing. 2018-04-18 11:00 73/2017/2018
Supply and delivery of sanitary bins, air fresheners and dispensers. 2018-04-18 11:00 74/2017/2018
Supply and delivery of stationery. 2018-04-18 11:00 76/2017/2018
Request for the Civil Engineering Professional Service Providers for the Design, Supervision and Monitoring of Construction of a Outfall Sewer Line From German Development to Eastdene 2018-04-05 12:00 BS10/03/2018
Recruitment Engagement and Registration of Disaster Management Volunteers 2017/2018. 2018-04-17 11:00 COMM-36/2017/2018
Panel of a maximum of three (3) civil contractors for supply, delivery, erection and commissioning of ventilated improved toilets within MP313 rural areas for a period of 36 months as and when required 2018-04-19 12:00 BS04/03/2018
Provision of Employee Wellness Service. 2018-04-17 11:00 COR-A29/2017/2018
Proposal to invite black empowered enterprises, especially women owned to supply building and construction material on an "as when required basis" 2018-04-19 11:00 RFP065/2018
Proposals for design and supply of tables and chairs for municipal council chambers. 2018-04-19 12:00 2018/01/24/CCF
The Supply and Delivery of Wet Rations, bread and rolls to the Department of Defence (Maluti area). 2018-07-05 11:00 SPSC- B- 080- 2017
The Supply and Delivery of Wet Rations, various Meat (fresh and frozen) to the Department of Defence (Maluti area). 2018-07-05 11:00 SPSC- B- 079- 2017
The appointment of a service provider for the supply and delivery of perfusion and cardiothoracic surgery requirements to Groote Schuur - Tygerberg- and Red Cross War Memorial Children’s Hospital for a period of three (3) years. 2018-04-20 11:00 TBH514/2017
The Supply and Delivery of Wet Rations, various Dairy Products to the Department of Defence (Maluti area). 2018-07-05 11:00 SPSC- B- 083- 2017
Appointment of a Panel of Maximum Seven (7) Consulting Engineers for the Provision Of Professional Services, Planning, Design And Implementation of Civil Engineering Projects for a period of 36 months as and when required 2018-04-24 12:00 BS06/03/2018


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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