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The tender processes in South Africa are governed by:

  • The Preferential Procurement Policy Framework Act.
  • Preferential Procurement Regulations, 2017.
  • National Treasury’s Supply Chain Regulations.
  • General Procurement Guidelines.

 

According to these Acts and Regulations, Competitive Bids – as tenders are legally called in South Africa – are measured on Functionality.

The Functionality test evaluate bidders on various aspects of the contract to establish if the bidder has the capabilities to execute the contract or not. If an Enterprise’s tender response does not pass the Functionality test, it cannot be measured on Price and B-BBEE.   Enterprises that respond to tenders must ensure that they will pass the Functionality test to advance.

During the functionality test the bidder must score a set minimum number of points out of 100.After the Preferential Procurement Regulations 2017, and specifically paragraph three, were implemented it makes tenders much more transparent.  Previously it had been a struggle to determine how many points one can score on specific functionality criteria.

A threshold of 75 out of the 100 is usually set, but this can be higher or lower, depending on the Organ of State. Only those bidders that reach the minimum threshold, which can be anything between 60 and 90 points out of a possible 100 points, will advance to the next phase, namely the Preference Points Scoring system (Price and B-BBEE).  All tenders achieving less than the set threshold will be declared non-responsive and will not qualify to be evaluated on B-BBEE and Price.

Each Functionality criteria that will be evaluated, will have a weighting in points.  The weighting of each functionality criteria will be dependent on the importance of the criteria in the contract.  Most functionality criteria include:

  • Track record and Experience: The Procuring Entity – either Public or Private Sector – wants to know how many years’ experience the bidders have in executing similar contracts providing the goods and/or services you are proposing. The more experience you have the better.  This indicates to the Organ of State that you have been providing the goods and/or services for a period and that you are experienced in your field of expertise.
  • Recourses: Human Resources: The bidder must indicate if it has the human workforce, with the necessary experience and expertise to successfully comply with the requirements of the contract.
  • Financial capabilities: Procuring Entities are hesitant to award a contract to anyone who does not have the required capital available to successfully execute the contract.
  • Technology: Do you have the necessary systems, for instance machinery/vehicles/software to execute the contract
  • Usually, the Procuring Entity will require other Functionality criteria that are specific to the goods or services that they want to procure. For example: if the Procuring Entity needs a construction company, the bidder will have to be registered with the Construction Industry Development Board or CIBD for short.  If the bidder is not registered with the CIBD then the bid response will be marked as non-responsive.
  • Can you add value to the goods and/or services that the Organ of State require? Is there any other information you deem relevant to your proposal?  If yes, provide details. If you, for example, are selling tables and you offer a table made from wood and steel, it would be better than another supplier that offers plastic tables.  Obviously, your tables would be of a higher quality.

It is especially important to elaborate as much as possible on the technical criteria of your response.  In meeting the technical criteria of any tender, you will be ensured that your enterprise advances to the next phase of evaluation.

To learn more about this and many other tender conditions attend our “Become a Tender Expert” 2-Day workshops and webinars. You can book online at https://howtotender.co.za/workshops/. Contact us at info@howtotender.co.za should you require more information. 

Remember:  We have various manuals and guides to assist you in the process of completing your tender documents.

  • The Tender Manual is a comprehensive, step by step guide how to respond to a South African Tender. It includes examples of completed SBD forms.
  • The Local Content Instruction Manual – completing Standard Bidding Document (SBD) 6.2 and Annexures C, D & E
  • The SBD Manual: Examples of completed Standard Bidding Documents.
  • Joint Venture (JV) agreement template
  • Tender 101: A beginner’s guide to tenders.
  • Tender Example: Cleaning Services.
  • Tender example: Once-off supply (with NO Functionality requirements)
  • Tender example: Once-off supply (WITH Functionality requirements)
  • Tender Example: NEC3 term contract

….. More info