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.
Appointment of a service provider to manage the implementation of expanded public works programme (EPWP) on school food garden project and Agriparks within the Gauteng Department Of Agriculture and Rural Development (gdard) for a period of thirty- six (36) months 2022-02-11 11:00 GT/GDARD/007/2022
Organising, managing and hosting a virtual Agri-Food Fest event 2022-02-11 11:00 GT/GDARD/006/2022
Appointment of service provider for supply and delivery of agricultural production inputs for subsistence producers within Gauteng Province for a period of thirty-six (36) months 2022-02-11 11:00 GT/GDARD/008/2022
Supply and delivery of office stationery for Gauteng Provincial Government (GPG) for a period of 36 months 2022-02-11 11:00 GT/GPT/002/2022
Provision of vehicle parking space for the Gauteng Department of e-Government for a period of 36 months 2022-02-11 11:00 GT/GDeG/001/2022
Integrated Waste Management Services at Cape Town International Airport 2022-02-14 12:00 CIA 6753/2021/RFP
Provision of Upgrade and Maintenance of College Website 2022-02-10 12:00 CO 22/02 O
Supply and delivery of protective clothing and equipment for a period of three years 2022-01-28 12:00 8/2/RNM0334
Provision of internal audit, risk and performance management system for a period of 36 months 2022-02-04 12:00 8/3/1-37/2021
Electrification of households at Dihlabaneng Turnkey 2022-02-07 12:00 Lim473/Dihlabaneng-Elect/21/22/25
Appointment of a Service Provider(S) to Render Guarding Services at The South African Social Security Agency (SASSA) Limpopo Region for a period of thirty six (36) months 2022-02-04 11:00 SASSA: 46-21-CS-LP
The supply and installation of 555.531m fence around the Zenzo Multipurpose Centre in KZN 2022-02-11 10:00 CORP 5615 - R
Provision of screening and verification services for GMM employees for a period of 36 months 2022-02-04 12:00 8/3/1-12/2021
Construction of Manyelrti to Mamone Central Internal Street 2022-02-07 12:00 LIM473/Mamone-road/21/22/24
Construction of Mochadi road and bridge 2022-02-07 12:00 LIM473/Mochadi-Road/21/22/23
Appointment of service provider for the supply, delivery, installation and maintenance of a chemical dosing pump including the wash and rinse aid chemicals for the hood-type dishwasher for a period of twenty-four (24) months to iThemba Labs, Faure, Western Cape 2022-02-04 11:00 iLABS/RFQ 2021/22:182
Supply, delivery, installation and commissioning of automated fluorescence microscope 2022-02-17 12:00 2021/056(a)
Supply and Delivery Of an Industrial Video-Scope 2022-02-17 12:00 2021/030(a)
Business insurance for a period of 12 months 2022-01-28 11:00 REQ0004252
Petrol 93 Unleaded 2022-01-27 11:00 ‪‪‪RFQ-012495

Pages

Who is the bidder or his or her representative?

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

In Organ of State tenders, the Standard Bidding Document 4 – Declaration of Inters – ask in paragraph 2.1 the following: “Full name of bidder or his or her representative... Read More

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