Are you ready for the new Tendering Regulations?
Government’s new Tendering Rules to become effective soon!
National Treasury has promulgated the new Preferential Procurement Policy Framework Act (PPPFA) Regulations and it will now make all tenders ‘unacceptable’ if they do not comply with these changed stipulations.
According to Gerrit Davids, Lead Advisor at tender advisory consultancy, TaranisCo Advisory CC, “the new Regulations from the outset grants an organ of state the authority to stipulate a ‘Preferred Minimum BBBEE Level’ in a tender, which will exclude certain companies with a lower BBBEE Level from submitting bids”.
The Regulations also allow the state to include another wide-ranging Sub-Contracting stipulation, which could force principle bidders to make use of up to 8 x different types of sub-contractors under the ‘Pre-Qualification Criteria’. A failure to do so will also have the bid being declared ‘unacceptable’.
The value of the 80:20 and the 90:10 Preference Point Systems has also been increased to below and above R50m respectively. However, it retains the current scoring of points for Price alongside that of BBBEE in tenders.
Additionally, the new Regulations also place a 25% maximum on Sub-Contracting, which is done in the ordinary course of business with companies that have a lower BBBEE level than that of the principle bidder. A failure to comply with this stipulation will also cause tenders to be disqualified from consideration.
Davids says, that the Regulations are also introducing a new approach to pricing where a bidder scores the ‘highest points’ in a tender but its price is not market related and refuses to adjust it to be in-line with market related prices, the organ of state will have the right not to award the tender to such a bidder and it may even decide to cancel it.
Davids also points out that the much debated stipulation of compulsory Sub-Contracting of 30% for all tenders above R30m in value will also be allowed ‘where feasible’ to advance any one or more of the ‘designated groups’ as defined by these new Regulations.
Another new stipulation to the Regulations makes it obligatory for an organ of state issuing tenders to ‘make available a list’ of potential sub-contractors that qualify under the definition of ‘designated groups’ and such a list must be subject to approval by National Treasury.
According to Davids, “the biggest challenge will be to find the right ‘designated’ sub-contractors and on the face of it, one can read, “an organ of state must make available the list of all suppliers (sub-contractors) registered on a database approved by the National Treasury”. If on the other hand, it is required from the organ of state to make such a list available for every single ‘sub-contracting’ tender, it will surely place a big administrative burden on them to manage the process in line with this stipulation bearing in mind that the Central Supplier Database (CSD), which at present, according to us is the only list approved by National Treasury”.
“If it indeed refers to the CSD to vet these ‘designated groups’, it will mean that your existing sub-contractors, even if they do qualify under the scope of these ‘designated groups’, will also have to be registered on it, even if they themselves do not tender for state contracts, otherwise you won’t be able to ‘select’ them in your tender. In this scenario, its also important to note that even if you do manage to get them to register on the CSD and if at the time of your tender, any of their details are not verified, it will also make your tender ‘unacceptable’ until they have updated their ‘un-verified details’.
However, we are also of the opinion that if any of your existing sub-contractors do not qualify under this ’designated groups’ status, it would mean that you won’t be able to ‘select’ them in a tender. It will then force bidders to facilitate joint ventures between ‘designated groups’ sub-contractors and that of their own.
Another key regulation stipulates that sub-contracting, which was not mentioned in the bidder’s tender could only be done with the permission of the organ of state ‘after a tender has been awarded’. A 10% penalty of the total value of the contract may be imposed where the correct sub-contracting procedures were not followed or where information was withheld, a ban on doing business with the state for 10 years could also be imposed by National Treasury under these new Regulations.
The Regulations will come into effect on 1 April 2017 giving tenderers less than 3 months to prepare for its impact.
Davids says, “The meaning and understanding of the concept of ‘being proactive’ becomes a very relevant application with this new dispensation. Tenderers will be left behind if they do not make the required changes in the way they submit government tenders, especially in relation to sub-contracting”.
– Gerrit Davids | Lead Consultant | TaranisCo Advisory
Workshop Schedule: Key Principles of Tendering (Including the New PPPFA Regulations)
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"A Well-Researched Workshop"
"May I take this opportunity to express my sincere gratitude for the professional manner the workshop was handled. The topics covered were, well researched and will without doubt contribute immensely to our future endeavours to succeed in the tender world. Thumbs up to you Gerrit and keep up the good work!" - Willingness Ndlovu, Group Legal Advisor, Metro Lifestyle Group
Please Note: Our workshop and advisory services are only for tendering to organs of state inclusive of municipalities, national and provincial departments, state owned enterprises, agencies, state councils, etc. These workshops focus on bid compliance and conditions of tender inclusive of the Tender Forms as well as the Pricing Schedules but exclude Costing and Estimation. To see a list of organs of state Click Here
If you require assistance with non-state tenders, kindly contact us with your requirements.
This Workshop will show you how to compile winning and compliant tenders!
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Industry Thought Leader & Facilitator: Gerrit Davids, Lead Advisor, TaranisCo Advisory
I’ve been presenting this course for more than 10 years and have assisted 1000’s of people to improve their knowledge on how to submit compliant tenders. It will certainly be my pleasure to host you and your colleagues at one of our upcoming workshops.”
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