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.
Supply and delivery of Board Room Furniture 2018-11-15 11:00 341018
Supply and Delivery ICT Equipment 2018-11-15 11:00 290481
Supply, Installation of Wireless Internet and Wireless Access. 2018-11-15 11:00 290653
Rental of a Hook Lifter Truck for the Transportation of Residence Bulk Solid Waste 2018-11-16 11:00 BVM/HLT01
Design - build of mechanical and electrical works for the new retreat low lift pump station & associated works, Cape Town. 2018-12-11 10:00 134Q/2018/19
Cleaning Services for Eskom Real Estate(WCOU) 2018-12-11 10:00 E/ZM 3703
Maintenance of Medium Voltage Equipment. 2018-12-11 11:00 ORT5654/2018/RFP
Supply and delivery of Light Delivery Vehicle (LDV) to Breede Valley Municipality (Nekkies Resorts) 2018-11-16 11:00 289545
Enterprise Architecture Review. 2018-12-11 11:00 CATHS/ICTA/004/2018
Consulting Engineering Services for the Upgrade of Zwelethemba Sports Ground Main Entrance and Side Gates 2018-11-16 11:00 171118
The construction of a temporary CNC at Hlanganani in Limpopo. 2018-12-12 10:00 59con1886
Refurbishment of the pelegrini pump station and construction of a new rising main in Bloubergstrand, Cape Town. 2018-12-13 10:00 131Q/2018/19
Replace Existing Flow Meter at the Robertson Water Treatment Works 2018-11-16 12:00 Q46/2018
The design and construction of a CNC at Kranskop in KwaZulu-Natal. 2018-12-13 11:00 CORP 4611
Madwaleni Hospital : Upgrading & Renovations. 2018-12-13 11:00 SCMU5-18/19-0019
Upgrade Goedemoed 11kV overhead line. 2018-12-14 12:00 T61/2018
Term tender for the supply, delivery, installation and maintenance of paving for the execution of energy directorate requirements only (this tender document is not available on the City Of Cape Town’s website). 2018-12-13 10:00 132Q/2018/19
Upgrade of 11kv Line to Poortjieskloof, Montagu 2018-12-14 12:00 T64/2018
Appointment of accredited services provider for the provision of cleaning services in the Table Mountain National Park. 2018-12-14 11:00 GNP-034-18
Appointment of accredited service provider for the provision of security services in Table Mountain National Park. 2018-12-14 11:00 GNP-038-18

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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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