17 May 2021

Can an organ of state insist on which subcontractors must be used in tenders?

Submitted by Gerrit Davids
Can an organ of state insist on which subcontractors must be used in tenders?

More and more tenders are issued with lots of confusion as to whether an organ of state may insist on whether bidders, must only use subcontractors, from a list as provided by the state.

The Preferential Procurement Policy Framework Act Regulations (PPPFA) of 2017 make various references to subcontracting for tenders and in certain instances, it instructs organs of state to make available a list of subcontractors from, which bidders must select “designated groups”, as per the demand of both the tender and the Regulations itself.

However, this instruction is not applicable to all other instances of subcontracting as referenced in the Regulations, and organs of state can thus not demand that bidders must with every tender, make use of a list, which it deems fit as preferred subcontractors. 

Also, bidders must ensure that they understand the application of this “Instruction”, in that with other references to subcontracting in the Regulations, it does not afford the state the same right, to insist that only subcontractors listed on the Central Supplier Database (CSD), must be used for purposes of benefitting “designated groups”, as subcontractors.

In essence, the Regulations do not stipulate that all tenders featuring a demand for subcontracting, that only those on the CSD, must be used for such purposes.

According to Gerrit Davids, Lead Advisor at TaranisCo Advisory, tendering agency, “It is common cause that organs of state interpret these Regulations in a “Copy and Paste” – manner without having a full understanding of its actual application.”

“However, bidders also continue to accept the incorrect application of these Regulations, which is mainly due to a lack of having a contextual and legal understanding as to whether they should challenge it or not.”

“Bidders must also move away from the attitude that they “know how to fill in tender forms” and yet they do not have a full understanding of what these Regulations are and more in particular, how it disqualifies them from being considered for tenders.”

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Gerrit Davids
Lead Consultant

TaranisCo Advisory CC
Web Site: http://www.taranis.co.za

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