Saturday, 06 October 2018

Jobs Summit decides to change tendering laws

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According to President Cyril Ramaphosa, at the conclusion of the Jobs Summit, his administration will be up-scaling “the implementation of the 30% set aside of government tenders for SMMEs, cooperatives, township and rural enterprises”, by introducing a new Procurement Bill. 

Most companies tendering for government contracts are not even aware as to the reasons why their bids are disqualified, since the tender forms do not include all the relevant Regulations required to submit compliant bids.   

For that reason, bidders will not be totally compliant, if they are not even aware of these Regulations, which are compulsory to comply with before they could be considered in a tender. 

One of the most important Regulations under the current Preferential Procurement Policy Framework Act Regulations (PPPFA) of 2017, is that an organ of state could apply the “Pre-Qualifying Criteria”, to exclude certain companies from tendering or instruct where necessary, to “sub-contract a minimum of 30% to designated groups”.  

If a bidder does not comply with this instruction, its tender will be disqualified. Further, it is compulsory for an organ of state to include “where feasible, a minimum of 30% sub-contracting” for all tenders above R30m to these listed “designated groups”. 

When it comes to “ordinary-course of sub-contracting”, companies are not allowed to sub-contract more than 25% to non-qualifying sub-contractors, and this is where most bidders are disqualified, since no where in the tender document does it stipulate, as to which “sub-contractors” can’t be used under this limitation, despite the fact that its part of the Regulations.  

Companies who have indicated that they won’t be doing any sub-contracting, are also not allowed doing so to “non-qualifying sub-contractors” in excess of the “25% limitation”, after winning the bid. Serious repercussions are applicable if they do. 

Most bidders are also not correctly informed as to who must select the “sub-contractors” and as to the type of “proof of arrangement” required between the parties, which must be submitted with the tender. 

The state is also now allowed to “take away a tender” from the winning bidder where they can’t agree on a final price for the goods or services, and may even subsequently award the contract to the “third best tender” on the short-list. 

According to Gerrit Davids, Lead Advisor at TaranisCo Advisory, a tender specialist consultancy, “Companies are best advised to stop focusing on the negative aspects around tendering and should rather aim to empower themselves on the correct submission of their tenders, It is always advisable to engage the state afterwards when they suspect untoward conduct in the process”. 

For more information on how to submit compliant bids, visit