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

Having a good B-BBEE status level is VERY IMPORTANT in the tender process!

All tender documents will have 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, 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.

New Preferential Procurement Regulations 2017 for Tenders

The brand new Preferential Procurement Regulations 2017, have been finalized and gazetted on 20 January 2017. There are some interesting changes and challenges that we will discuss during the coming months. We start off with 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.

General Procurement Guidelines

Government issued the General Procurement Guidelines not only as a prescription of standards of behaviour, ethics and accountability which it requires of its public service, but also as a statement of Government's commitment to a procurement system which enables the emergence of sustainable small, medium and micro businesses which will add to the common wealth of South Africa and the achievement of enhanced economic and social well-being of all South Africans.

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

Functionality in Tenders (1)

The Preferential Procurement Policy Framework Act 2017, establish the rules according to how Government Entities must evaluate tenders. The Preferential Procurement Regulations of 2017 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 - Preferential Procurement Regulations, 2017, pertaining to the Preferential Procurement Policy Framework Act, Accounting Officers and Accounting Authorities of all public entities listed in Schedules 2, 3A, 3B, 3C and 3D to the PFMA 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.

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Title Closing Date Tender No.
Professional services to conduct Value Added Tax Recovery Review for Govan Mbeki Municipality 2019-01-04 12:00 8/3/1-43/2018
Appointment of a service provider to render 24 hour security services for the KZN Department of Human Settlements at 353 -363 Eagle Building, in Durban, for a period of 24 months 2019-01-18 11:00 ZNB47/ 2018/ 19HSE
Re Advertisement of the bid: Supply and delivery of fire arms,ammunition and related items for a period of three years 2019-01-18 11:00 RTMC BID 12/ 2018/ 19
Compilation and Maintenance of General Valuation Roll 2020-2025 2019-01-31 12:00 8/3/1-36/2018
Research on Economies of scale value for money 2018-12-18 12:00 Nedlac 2018/ 19/ 01
Provision of Leadership training 2019-01-11 12:00 MTK 28/ 2018
The potential bidders are requested to supply, delivery, install and commission of workshop machines and equipment 1 2019-01-18 11:00 EEC/ T15/ 2018
Advisory services to the Gauteng Infrastructure Financing Agency to conduct a feasibility study for the establishment of a multi OEM knock down disassembly HUB in Tshwane Auto City.. 2019-01-25 11:00 GT/ GIFA/ 178/ 2018
The potential bidders are requested to supply, delivery, install and commission of workshop machines and equipment 2. 2019-01-18 11:00 EEC/ T16/ 2018
The potential bidders are requested to supply, delivery, install and commission the extraction system for 15 bays 2019-01-18 11:00 EEC/ T17/ 2018
Provide change mindset training sessions for 16 500 teachers and support staff at 530 schools for a period of three years (2019-2021) 2019-01-25 11:00 B/ WCED 2472/ 18
Advisory services to the Gauteng Infrastructure Financing Agency to conduct a feasibility study for the establishment of a multi OEM knock down disassembly HUB in Tshwane Auto City 2019-01-25 11:00 GT/ GIFA/ 064/ 2018
Appointment of a Service Provider to support the GIDZ in the registration of Phase 1 of the OR Tambo International Airport Special Economic Zone (ORTIA SEZ) as a Customs Controlled Area (CCA) 2019-01-18 11:00 GIDZ/ 04/ 2018- 19/ CCA
Media monitoring (broadcast, print and online) 2019-02-05 11:00 FSCA2018/ 19- T012
Facilities Management Infrastructure Services 2019-01-09 11:00 IEC/ EM- 02/ 2018
Terms of Reference for the ETDP SETA’s Document Scanning Solution 2019-01-11 11:00 SCMU: 25 - 2018/ 19
Appointment of an Institution of Higher Learning to Develop and Implement the Tourism Short Learning Programme (SLP) For Gauteng Educators 2019-01-18 11:00 GT/ GDED/ 163/ 2018
The South African National Roads Agency SOC Limited (SANRAL) invites tenders for the provision of Consulting Engineering Services for the Routine Road Maintenance of National Route N1 Section 19, N1 Section 20, N1 Section 21, N3 Section 12, N12 Section 18 & N17 Section 1. 2019-01-31 14:00 X.002- 128- 2019/ 1F&N.017- 010- 2019/ 1F
The South African National Roads Agency SOC Limited (SANRAL) invites tenders for the provision of Consulting Engineering Services for the Routine Road Maintenance of National Road R555 from Jackaroo Park to the Steve Tshwete Municipal Border, N12 from Gauteng/Mpumalanga border to eMalahleni, and R573 from Moloto to Moteti and within the Dr JS Moroka municipality. 2019-01-29 14:00 NRA X.002- 105- 2019/ 1F
The South African National Roads Agency SOC Limited (SANRAL) invites tenders for the provision of Consulting Engineering Services for the Routine Road Maintenance of National Road R555 from eMalahleni Municipal Border to Middelburg, R35 from Govan Mbeki Municipal Border to Middelburg, R38 from Msukaligwa Municipal Border to Chief Albert Luthuli Municipal Border, N11 from Msukaligwa Municipal Border over Middelburg to the Limpopo Border. 2019-01-29 14:00 NRA X.002- 104- 2019/ 1F

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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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