Issue Date: 
Tuesday, November 1, 2016

When to sub-contract?

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting, due in large part, to The Preferential Procurement Regulations, 2017 which came into effect on 1 April 2017. Many entrepreneurs ask us whether they should sub-contract or not, when responding to a tender.

Regulation 9 of The Preferential Procurement Regulations 2017, stipulates the following:

1: If it is feasible to sub-contract for a contract above R30 million, an Organ of State must apply sub-contracting to advance designated groups.

2: The Organ of State must advertise this specific tender condition that the successful bidder must sub-contract at a minimum of 30% (of the value of the contract) to (one or more) to an EME or QSE which is at least 51% owned by:

a.    black people;

b.    black people who are youth;

c.    black people who are women;

d.    black people with disabilities;

e.    black people living in rural or under develop areas or townships;

f.    black people who are military veterans;

g.    A cooperative which is at least 51% owned by black people;

3: In paragraph 3 of Regulation 9 it also states that the Organ of State must make available the list of all suppliers registered on a database approved by the National Treasury to provide the required goods or services in respect of the applicable designated groups mentioned above from which the bidder must select a supplier.

Regulation 9 is very clear because its states "the tenderer MUST sub-contract…..". Thus, according to the Regulations all contracts with a value of R30 million and above will have to comply with this Regulation. Read the tender document carefully because somewhere in the tender document it will stipulate whether or not the bidder will have to sub-contract. Follow those rules. If the tender document doesn't contain any sub-contracting instructions then it is not necessary to sub-contract.

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

To learn more about this and all the other new developments regarding tenders, please attend one of our How-to-Tender workshops. Tender Workshop dates are published on our website at www.how2tender.com. For more information on the tender courses please email Werner at werner@how2tender.com.
 
This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd. which specializes in tender consulting and tender training.

Title Closing Date Tender No.
Electrification of Izibityolo, Nofikile/Nqileni, Thoboyi, Ematolweni, Qwanguleni, Mthumbane and Chebe Villages. 2018-10-01 12:00 MNQ/SCM/12/18-19
Construction of Ncerhana Access Road. 2018-10-01 12:00 MNQ/SCM/14/18-19
Construction of Mazikhanye Access Road. 2018-10-01 12:00 MNQ/SCM/15/18-19
Construction of Mahemini Community Hall. 2018-10-01 12:00 MNQ/SCM/13/18-19
Appointment of a panel of electrical engineering consultants to undertake designs and oversee construction of electrical projects for a period of three years. 2018-10-03 11:00 EES 05/2018
Supply and delivery of software 2018-09-28 15:00 AUC/DEA/G/264
Construction of Ncerhana Access Road. 2018-10-01 12:00 MNQ/SCM/14/18-19
Sick leave management and disease profiling. 2018-10-04 11:00 SCM/19-44/S
Appointment of town planning consultants to provide town planning services to the Alfred Duma Local Municipality. 2018-10-04 11:00 DP & HS 06/2018
Supply of laboratory equipment 2018-09-28 14:30 01/AU-PANVAC/18
Supply, installation and maintenance of alarm systems for a period of three years. 2018-10-05 11:00 PS 13/2018
Supply, maintenance and repairs of fire station doors and door motors for a period of three years. 2018-10-08 11:00 PS 14/2018
Supply, maintenance and repairs of radio and radio communication for a period of three years supply, maintenance and repairs of radio and radio communication for a period of three years. 2018-10-09 11:00 PS 15/2018
Maintenance of Underground and Open Stormwater Infrastructure at Pudimoe. 2018-10-10 12:00 GTLM/INFR10/2018/2019
The Breede Valley Municipalities invites tenders for the supply and delivery of protective clothing for the period ending 30 June 2021. 2018-10-26 11:00 BV 717 / 2018
Provision of Banking Services for a Period of Sixty (60) Months. 2018-10-29 12:00 GTLM/FS03/2018/2019
Betterment & Re-Graveling of D93. 2018-09-21 11:00 C235/1819/BR/783
Betterment & Re-Graveling of L2869. 2018-09-21 11:00 C235/1819/BR/785
Three (3) year contract for the Services of Vehicles at Alkantpan Test Range 2018-09-21 11:00 R&D/ALK-2018/031
To supply, off-load and set to work a compact collapsible spider crawled crane, marine grade, electrically controlled and to be operated from a rooftop. 2018-09-21 11:00 R&D/IMT-2018/030

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Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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