info@howtotender.co.za        071 484 1010

SA’s leading service provider in Tender training

Start-up businesses

Apart from the basic, minimum requirements to tender (Company registration documents, CSD registration, and a tax clearance certificate) there are also other requirements that Government Entities will look at in order to decide if your business will be able to fulfil the tender.  These requirements include:

  1. The business must have a bank account: If you are going to open a legitimate business (and I really hope this is the case) then the second thing you will need is a bank account. This is a straightforward process and I recommend that you start out with a savings account with little or no bank charges.  This is to say if you start out with a small one-man business.  Obviously, you must consider the needs of the business when opening a bank account but try and keep the initial costs to a bare minimum.  You will need proof of Identity as well as proof of your address to open a bank account.  If you are in a partnership, you will also have to have a partnership agreement.  In the case of a company, you will have to have the company registration documents on hand to give to the bank. 
  2. The business must have a fixed address: You will have to have a fixed address from which you are going to operate your business. Keep this in mind because South African Legislation dictates that you must supply a legitimate address when registering for a multitude of things.  Currently the trend from Government Entities is to do site visits to ensure that the bidders are real companies.  The problem with erecting a company with the sole intention to respond to tenders is that the company is not really in business and therefor there is no site that it operates from.  Depending on the tender that you are responding to the minimum that you need to do is to set up an office of some sort, even if it is at your house.  You need to show them that you have capacity to earn points on Functionality and to move forward to the next phase.
  3. Experience: In the tender process, it is essential that an enterprise be knowledgeable of the supply it wants to bid for. This is exactly where start-up enterprises fail.  The entrepreneur does not realize that if you want to tender you must have some expertise of the supply you want to deliver.  This little point in the tender process is many start-up businesses’ downfall.

The more knowledge the enterprise has of its supply, the better its odds are of being awarded a tender.  It is practical to start a business in something that you have experience in, so we advise start-up entrepreneurs to use their experience, gained through studying or working in a specific sector, in their tender responses.  Use personnel references and ask the supplier/s that you dealt with in your previous job/s to be your references.

One condition under Functionality is always the amount of experience you or your company have in a specific industry.  To resolve this, we suggest that you respond to tenders that you as person have relevant experience in.  A good example is where someone who worked in the IT sector, starts their own business, and then responds to tenders in the IT sector – this way you can use your own experience on your CV to earn points on Functionality.

An alternative to overcome the lack of experience would be to go into a Joint Venture.  Collaborate with an enterprise that has the necessary expertise and that complies with the Functionality of a specific tender.  Finding enterprises to go into a joint venture with can be difficult but if a start-up enterprise can bring unique skills or Black Ownership to a joint venture, it will be easier to find a joint venture partner.

  1. Have a B-BBEE certificate or an EME Affidavit (in the case of a start-up)

It is crucial for an enterprise to have some B-BBEE credentials because the enterprise’s B-BBEE score is used in the Standard Bidding Document 6.1 to calculate the enterprise’s Preferential Points.  Without these points it will be difficult for an enterprise to get pass the evaluation stadium of any tender process, not even to mention the adjudication stadium.  No points will result in losing the tender.  The good news is a Start-up Enterprise automatically qualifies as a Level one, two or four Contributor to B-BBEE.  It all depends on your Black ownership.

  1. Compulsory Governing Body registration

Is your business registered with a statuary body?  Numerous industries in South Africa have statuary bodies and you must be registered at to conduct business and many Government tenders require registration certificates showing your affiliation to a Governing Body.  Failure to produce such a certificate can lead to your tender response as being judged as non-compliant and this can lead to you being disqualified.  Find out if your business falls into such a body and if so, register.

Three examples of such Governing Bodies are:

  • National Home Builders Registration Council (NHBRC),
  • The Financial Services Board (FSB) and
  • The National Contract Cleaners Association.

There are two major challenges that the business owner face when registering with the appropriate Governing Body:

  • Firstly, the rules and regulations that the business must adhere to register and
  • Secondly the cost involved.

The answer would be to try and register even if it is costly.  Remember that you will have to comply in any case with the rules and regulations of the Governing Body should you be so lucky to win the tender.  Find out what the rules and regulations are and start to comply now and register.

  1. Will you be able to deliver on time?

Once a tender has been awarded to you there is no room for non-delivery.  If you miss a delivery the contract can be terminated and that could mean the end of your business.  Government Entities want to see that you will be able to deliver.

Do you have enough financial resources to fulfil the contract?  It might be that in order to deliver, you will first have to invest a great deal of financial resources in stock prior to you getting paid.

  1. Is your work force up for the task at hand?

You will always find that Government Entities ask for CVs of employees that are going to be involved in the tender.  Only if you have enough capable employees; then you are ready to tender.

So how does an enterprise, especially a start-up enterprise, overcome these challenges?  The logical answer would be to join forces with an enterprise that has the necessary expertise and that comply with the technical criteria of a specific tender.  Finding enterprises that will go into a joint venture can be difficult but if the start-up enterprise can bring some specific skills to the joint venture, it will be easier to find a partner.

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

The answer to this question is for the Organ of State that has issued the tender, to decide. The bad news is that few tenders are awarded to new businesses. Yes, tenders are awarded to start-ups, but the bulk of tenders are awarded to running concerns – businesses with a track record. However, the Government is set on developing SMME’s. This is good news for start-up enterprises!
Organs of State have identified certain industry sectors such as cleaning, grass cutting, security and a few others where they will try and award tenders to start-up enterprises. Furthermore, the new Preferential Procurement Regulations 2017, have three specific Regulations that Organs of State can apply, to the advantage of designated groups, through sub-contracting 30% of a tender to Small, Medium and Micro Enterprises (SMME’s).
It means that when an Organ of State has a large tender that it must award, it might award some or part of the tender to SMME’s or start-up enterprises. This means that your start-up enterprise might just be the lucky one to score that big tender. 
There are some things that a start-up can do to ensure that it subscribe to the minimum requirements of a
tender.
Starting a business is an extremely arduous process – starting a business specifically for the purpose to respond to tenders is even more difficult. Start a small business, get it up and running, get some experience under the belt, earn a bit of income, and then start responding to tenders.

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

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 will be declared non-responsive and will not qualify to be evaluated on B-BBEE and Price.

Recently we received an email from a start-up company that want to find out if one can be awarded a tender if he/she does not have experience.  The answer is simple: 99% of the times you would not be awarded the tender and The Procuring Entity will automatically disqualify bid responses that do not have the necessary experience.  There are some Government Entities that have committed themselves to procure a certain percentage of goods and services from start-up enterprises (businesses with no or little experience).  But these bids are hard to find and there are many businesses that respond to these bids.  This means that your chances of being the successful bidder are very slim.

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.

In your tender response it is always important to stipulate the following when it comes to your track record and experience:

  1. References:

Provide contactable references and proven track record of the goods and/or services.  In your response it is always good to provide references, even if it is just one reference.  The Organ of State needs to know that you can be trusted and how better to evaluate this by contacting your references.  Remember to be honest in your response as the Organ of State is sure to contact your references.  Remember to be honest in your response as the Organ of State is sure to contact your references.

  1. Success rate:

Provide information on your success rate.  This is overstating the obvious, but it is good.  The more emphasis that is given on previous successes the better.  Tell them about previous tenders that were awarded to you and how successfully you have completed it.

  1. The goods/services your company provide

What is the nature of goods and/or services your company supply?  It is imperative that you supply the goods and/or services that the tender asks for.  If you do not supply the exact goods and/or services that the tender asks for you may be disqualified.

  1. Volume and value of goods or services you supply

Provide details of your monthly volume and rand value of goods and/or services you supply to your existing clients.  This again will show your experience.  Even if you are providing small volumes you still supply the goods and that means experience.

If you do not have experience and is a start-up company, we suggest that you find something that you are good at and start a small business.  Start doing business and once you have gained some experience you start responding to quotations and bids.

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

We get a lot of questions and requests on “How to start a tendering business”.  First off, to have a registered company and to have a business, is not the same thing.

Put simply, registering a company is a paper exercise where you list the name and detail of a legal entity you wish to do business under and that is it. Unfortunately, there are other requirements that you must comply with in order to be ready to tender. There is this misconception that if you have registered a company, you are ready to tender.  This could not be further from the truth.  You cannot say that you have registered this company and now you are ready to tender. It just does not work that way. 

To tender, you must have a business and not just register a company!  To have a business means that your company are operating, trading, and generating income already. It means you are already doing business.

Even if it is a start-up business, you must have the intention to do business, irrespective of winning a tender or not. There is a misconception that there is such a thing as a “tendering business” and that it is possible to win a tender even if your company haven’t started doing business yet. Few tenders are awarded to a start-up business and you will not get far if you do not already have an operating business.  Yes, tenders are awarded to start-ups, but the bulk of tenders are awarded to running concerns – businesses with a track record.

Do not think that once you have registered a company, got a Tax Clearance Certificate as well as a B-BBEE Certificate you are ready to tender, thinking that these three documents will ensure that you will be successful in your bidding efforts.  The truth of the matter is that unfortunately you would be lucky if your tender response makes it through the first round of evaluation.

To tender is not a business but if you have a business and you respond to tenders it can be extremely rewarding.

Remember: To have a registered company and to have a business, is not the same thing.

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

Starting your own business in South Africa can be a challenge.  According to survey that is done annually by The World Bank, South Africa is rated 88th when it comes to the ease of doing business.  This is all good and well if you are an overseas investor with a lot of money and looking for new countries to invest in.  However, if you are a South African with little or no money, doing and/or starting a business in South Africa can be a daunting task!

There are many people who dream of starting their own business.  There are many people who go out and start their own business and then they fail dismally.  There are horrific statistics of how many start-up businesses fail within the first two years.  It is said that 80%-90% of all new start-up businesses fail within the first two years and of the remaining 10%-20% another 80% fail in the following three years.  The 2-4% of businesses that survive the first five years will most probably be successful and exists for some time.

You think the large family concern that you are working for is safe from failing, wrong again, most family owned businesses last not much longer than twenty-five years. 

So, starting one’s own business is tough, keeping the doors open – even tougher. 

The question is why do so many businesses fail?  There is not a straightforward.  Many people have studied this phenomenon and there are many reasons why businesses fail but we are not going to focus on that; we need to focus on what to do to make your business sustainable.  You want to ensure your business survive the first two years in order for you to build up a reputation as reliable and sustainable enabling you to respond to that large tender that will provide you with financial independence.

But let us get back to the ease of opening a business in South Africa.  There are many factors that one needs to consider when starting your own business:

  1. You must decide which product or services you are going to sell.
  2. You then must decide on where you are going to locate your shop or factory or offices. Getting a lease agreement signed is challenging in South Africa – ensure that your credit record is clean; otherwise you are going to struggle to get a lease agreement for your business.  If you are going to sell goods, then you need to be located at the best location.  You can have the best product or service on offer but if people do not know of your existence you are going to fail.  Find the best place to put up shop so that as many as customers as possible see your goods that you have on offer.
  3. Then there is the matter of registering everywhere – from SARS to UIF, Workman’s Compensation to your industry specific regulation body.
  4. You also will have to open a bank account – this can be a challenge.
  5. Ensure you have enough funding. There are few businesses that you can start without money.  Even the smallest of small business will need a cash injection to get the ball rolling.  There are many ways to get funds to start a business, but the trick is to have access to funds to sustain the business when times are tough.  Always save money for tough times.
  6. The most challenging thing of opening your own business is to find clients. Sure, if you open a shop in the busiest mall in town you will attract walk in cliental.  But what if you are not so lucky?  Or, you produce something that needs to be sold to retailers all over the Country?  How do you then find clients?  This is where a lot of business owners tend to take the Tender Route.  They imagine that if they are lucky enough to be awarded a tender, they will generate enough sales to be sustainable. 
  7. There is an old tale about the business owner who did not believe in advertising, eventually his business failed and the first advertisement he had to place was advertising the liquidation of the business.  Advertise as much as possible.
  8. Be committed. The main reason you start your own business is because you want to be independent.  The problem is that once you have the freedom you lack the commitment.  When you work for yourself you need to be 110% committed otherwise you are going to fail.  The rule is to apply the same work ethics and commitment that you would have applied should you have been working for a boss.
  9. Be willing to start from the bottom. There are few businesses that started out as multi-million-dollar operations.  Ninety nine percent of the time it is small businesses that grow into large businesses.  The rule is to start out small and affordable and then grow your business over time.

By following these guidelines, you might just give yourself the edge needed in succeeding in your own business.

So, starting one’s own business is tough, keeping the doors open – even tougher.  My advice to you when starting your own business is to be as well prepared as possible.  Ensure that you have enough knowledge of your product or service.  You do not need to be the best but be at least competitive. 

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

The Preferential Procurement Policy Framework Act dictates that Organs of State enforce certain minimum requirements when awarding tenders, to verify that an enterprise is legally operating and is tax compliant.

These are:

  1. Company registration documents.
  2. Be registered on the Central Supplier Database
  3. A tax clearance certificate: The business must be registered with SARS for Income Tax purposes:

But remember that to have a registered company and to have a business, is not the same thing.

These items are only the beginning.  Once you comply with these three items you must actively start doing business.  In other words, your business must be a running concern.

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

Central Supplier Database - CSD

We have an overwhelming response from Small, Medium and Micro Enterprise (SMME’s) owners requesting us to help them to register on the Central supplier Database.

To register on the Central Supplier Database or CSD (for short) you need to go to the website: https://secure.csd.gov.za/. Once you are on the website the registration process is fairly easy.

The trick is that you must first register as a natural person before you can register your business on the website.  You will also need an active email address that you can access whilst registering and you will need a cell phone because you are going to receive one-time-pin messages from the CSD website.

Once you have registered in person you will need to activate your account.  This is done by clicking on the activation link that is send to your active email account.  After your account has been activated you can start registering your businesses on the CSD.

Here is some valuable information that you will have to have on hand to register quick and easy:

  • Company name (you have the option to register as a company or any other legal entity or as an individual or partnership);
  • Company or Legal Entity registration number;
  • Income Tax reference number;
  • VAT number;
  • Bank details that will be used in your business;
  • Physical as well as a Postal address (especially if the postal address differs from your physical address;
  • Your business’ commodities and a good description thereof.

An interesting feature of the CSD website and the registration process is that once you have completed each section it links up with other Government departments such as SARS (South African Revenue Services) and CIPC (Companies and Intellectual Property Commission) as well as the commercial Banks in South Africa. This means that:

  • Once you have inserted your Income Tax reference number it shows your tax status as well as your Tax Clearance Certificate information; and
  • It retrieves all your directors’ information from CIPC; and
  • It confirms that your bank account is a valid bank account.

At the end of the day the registration process is actually quite easy and not very time consuming.

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

One of the hottest topics in the South African tender environment is the Central Supplier Database (CSD).  If you want to do business with the South African Government, you must be registered on the Central supplier Database.

Once you start registering on the Central Supplier Database (CSD) it is noticeable how many security features there are.  The database starts of by requesting you to supply a very high-level password.  The password must inter alia contain capital letters, numbers as well as special characters.  There are numerous other security features but the CSD website list the following seven features that address identity proofing:

  • When registering on the CSD, not only is the email address confirmed but also a One Time Pin (OTP) sent as an SMS to the cell phone number provided when registering. This is called an ‘Out of Band’ method of adding an additional layer of identity proofing.
  • When a new bank account is added or any existing bank accounts edited, an OTP will be sent to the supplier’s preferred contact as well as a notification e-mail informing the preferred contact that changes were made to the supplier’s banking information. Email notifications are also sent when changes are submitted.  Both are implemented to endeavour to protect the supplier against malicious practices.
  • The use of a CAPTHA functionality limit robots and crawlers to access certain areas of the CSD application.
  • The CSD furthermore implemented role-based access control per user per supplier and thus only the supplier’s user(s) have access to the supplier information. The CSD does not have an administrative module and thus no single user can be a CSD administrator and access supplier information using the application.
  • All passwords are encrypted on the CSD database. Any additional users the main user creates only have secondary privileges which means those additional users are not able to create other users which ensures that control remains with the main user.
  • The communication channel between the CSD servers and the client’s browser implements SSL security which means the communication is encrypted and various other additional technical aspects have been implemented to limit other security breaches such as hacking.
  • The Supplier Summary Registration report can only be accessed by other users if you decide to share both your supplier number and security code with them.

As one can see the security is comprehensive.  Ensure that you are well prepared when you start the registering process.

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

As you all know the Government has launched the Central Supplier Database on 1 September 2015.  One of the purposes for the Central Supplier Database is “the establishment of a Central Supplier Database (CSD) that will result in one single database to serve as the source of all supplier information for all spheres of government.  The purpose of centralising government’s supplier database is to reduce duplication of effort and cost for both supplier and government while enabling electronic procurement processes”.  If you are doing business with the Government or if you intend to do business with Government in the near future, you will have to register on the Central Supplier Database.

The question that arises and is asked at our HowtoTender workshops is should we as business owners still register as vendors with the different municipalities and government departments that we do business with?  The short answer is yes – you will still have to register as a vendor if it is required from the municipality, government entity or government department.

The reason for this is because there is not a link between all municipalities, government entities or government departments between their databases and that of the CSD.  We are aware of certain National Departments such as the National Department of Health that is linked to the Central Supplier Database.  There was a transitional period from 1 September 2015 to 31 March 2016 when existing Organ of State supplier databases were transferred to the Central Supplier Database.  This has not been completed yet.  Once this has been completed you might be requested to validate your information on the Central Supplier Database.

We urge you to register your business on the Central Supplier Database as quickly as possible if you want to do business or continue to do business with government.  The process to register is easy.

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

I often wonder what the use is to register as a supplier on a supplier data base of Organs of State.  I mean to say, I have registered with more than I can remember Organs of State and I really can’t say that me or the companies I have registered have received any work from these Organs of State purely based on our registration.

I am curious what the main purpose for registering is and do enterprises actually get any business from Organs of State solely on its registration on the data basis?  Or is the fact that you must register just another point that needs to be ticked in the procurement policy or process?  I do not have the answers.  All I know is that you must register.

My advice is to register as far as possible. I know it can be time consuming but rather be on the data base and stand a change of getting business than not being on the data basis and not getting any business.

Data base registration is in any case easy to do and it does not require all the paperwork that goes into a Tender response or a Request for Proposal.  It usually requires only the basic information of your business, a tax clearance certificate as well as a B-BBEE certificate and some other documents such as your Company profile, share certificates and Identity documents.  You will also find a Declaration of Interest that needs to be signed.

What is disturbing is that not all Supplier data base registration forms keep up with the new laws of the Country.  You will find that some of these registration forms still ask questions that are based on the old BEE Codes of 2003.  Not to even mention that the Codes have changed in 2007 and in 2013 again!  My advice is to make the Organ of state aware of this and to attach your current B-BBEE certificate to the forms.

To conclude it might feel that to register is unnecessary, but I strongly suggest that you register on each and every data base you can – you just never know what business will flow your way because of the registration.

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

Joint Ventures and Consortia

The advantage of having a Joint Venture when you bid for a contract is that you combine the skills sets of the participants involved in the Joint Venture.  Another advantage is that you minimize your risk and exposure towards the bid and the participants also share the profits as well as the costs in the Joint Venture.

Joint venture Advantages:

  • Provides companies with the opportunity to gain new capacity and expertise.
  • Enables companies to enter related businesses or new geographic markets or gain access to modern technology.
  • Provides access to greater resources – including specialised staff and technology.
  • Shares risks with a venture partner.
  • Enables flexibility: a joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business exposure.
  • Offers a creative way for companies to exit from non-core business.
  • Companies can gradually separate business from the rest of the organisation and eventually, sell it to another parent company. Roughly, 80% of all joint ventures end in a sale by one partner to another.

Joint Venture Disadvantages:

  • It takes time and effort to build the right relationships and partnering with another business can be challenging. Problems are likely to arise if:
  • The objectives of the business are not 100% clear and communicated to everyone involved.
  • There is an imbalance in the level of expertise, investment or assets brought into the venture by the different parties.
  • Different culture and management styles result in poor integration and co-operation.
  • The partners do not provide enough leadership and support in the initial stages.
  • Creating a joint venture may result in more complex tax arrangements.
  • Success in a joint venture depends on thorough research and analysis of the objectives.
  • Creating a joint venture can be more costly than a consortium.

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

Consortia 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 Consortia as well as Joint Ventures.  In this article we list the advantages and disadvantages of Consortia.  Look out for the same article on Joint Ventures.

Consortia Advantages:

  • Easy to establish as there are no formal procedures that must be followed. Most consortia are formed in writing by the execution of a consortium agreement.  In addition, no capital is required to create the consortium.
  • Members of the consortium can change their contractual agreement at any time to suit changed circumstances.
  • The consortium can be set to expire on a given date or on the occurrence of certain events without any formal requirements.
  • The consortium is not directly subject to taxation; however, the individual members are.
  • Some of the members of a consortium may choose to be ‘undisclosed’ in dealings with third parties.
  • The cost of running a consortium is usually lower to that of a joint venture.

Consortia Disadvantages:

  • It is difficult for consortium members to restrict or limit its liability. Members may even become liable to third parties for the non-performance of other members of the consortium or the debts of such members in undertaking a common project.
  • Third parties will often find it difficult to enter into contract with a non-legal entity like a consortium. Because it is a non-legal entity funding is also difficult.

    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 havae 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

Should you decide to bid through a Joint Venture, it is very important that you have a sound Joint Venture Agreement in place for your Joint Venture.  A good, rock solid Joint Venture Agreement will protect the parties in the Joint Venture.

Include your duly signed Joint Venture Agreement in your tender proposal.  If you do not comply with this rule, your tender can be disqualified. Therefor a Joint Venture must have its own set of rules by which it is managed, and this is called a Joint Venture Agreement.  A Joint Venture agreement must include some minimum rights and duties. 

This includes:

  1. The purpose of the Joint Venture must be clearly defined;
  2. The persons who will be the representatives of the Joint Venture.
  3. Establish a Lead Partner in the Joint Venture and use the Lead Partner’s information when completing the Standard Bidding Documents and any other forms or documents;
  4. The percentage participation of all the members must be clearly stated. The way the participants will share the profit or loss; Remember that the members share in the profits and losses of the Joint Venture and the percentage in which this will be, must be indicated as such.
  5. There must be a paragraph that provides the formation of the management body for the Joint Venture;
  6. A management body must ensure that there is consensus between the members of the Joint Venture to prevent the activities of the business being slowed down because the members cannot agree on how the business is run.
  7. The dispute resolution must be effective, easy, and not expensive to reach;
  8. The duties of each participant towards the Joint Venture; There must be clear and comprehensive guidelines that sets out the contributions to be made by each member towards the activities of the Joint Venture in securing and executing the contract and monetary values should be allocated to every member’s contribution. All members must provide meaningful input to the management activities of the Joint Venture as well as the policies thereof;
  9. There must be a safeguard to limit, as far as possible, any losses to the Joint Venture because one of the members default on their responsibilities;
  10. The Joint Venture Agreement must be flexible enough to allow for Joint Ventures which differ in objectives, inputs by members and management systems;
  11. The Joint Venture Agreement must be tender specific – this means the name of the tender as well as the tender number must be mentioned in the Joint Venture Agreement;
  12. Finally, the Joint Venture Agreement must be tender specific. The start and end date of the Joint Venture; and The reason the Joint Venture has been established; A different Joint Venture must be in place for different tenders.

Make sure that your Joint Venture Agreement contains all these features.  This will ensure that you are covered against most unforeseen contingencies.

If you want a copy of a Joint Venture Agreement template, click here…

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

Government Entities must use the Preferential Procurement Point System to calculate which tender response will be awarded the tender and if you do not have a good B-BBEE Score and if it is a close race, you are going to lose out with a low B-BBEE Score.

On 1 May 2015, the Amended B-BBEE Codes of Good Practice came into effect.  These Amended Codes place a lot of emphasis on Ownership and have a major impact on the B-BBEE Scores of all businesses that participate in B-BBEE in South Africa.  If your company is not going to score any points on Ownership you are also going to struggle to achieve a good B-BBEE Level.  This will negatively impact your tender response. 

Joint Ventures can be a great tool to use to increase B-BBEE Scores by joining forces with Black Owned companies thus increasing your Ownership. If you have the correct Joint Venture partner, with a good B-BBEE score, the overall score that you will achieve in the Preferential Procurement Point System can be much higher than going into the tender alone.

When bidding through a Joint Venture, the Joint Ventures must submit a Consolidated B-BBEE certificate if it is not an incorporated entity when responding to tenders.  This means that you will have to obtain a new B-BBEE certificate for the Joint Venture which consolidates each participant’s B-BBEE status level.  You apply for a Consolidated B-BBEE certificate at your B-BBEE Verification Agency who will issue the Consolidated B-BBEE certificate after combining the Joint Venture partners’ B-BBEE Certificates – this should not be a tedious task and it should not take long at all.

The Consolidated B-BBEE certificate must be tender specific – in other words it must contain the name and number of the tender that you are responding to.

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

Joint ventures are collaborative arrangements where two or more businesses come together to share their expertise to win a specific contract for a set period for a common purpose such as bidding for a tender. A Joint Venture is a separate entity and is not part of the individual participant’s own enterprise. 

There are many examples of successful Joint Ventures, such as Sony-Ericsson, Virgin Mobile India Limited, Nokia (Siemens AG and Nokia Corp), Cadbury Schweppes PLC Carlyle Group Joint Venture and Chery Jaguar Land Rover Automotive Company.  They are all well-known and are very lucrative. 

Partners in a Joint Ventures join forces and make Joint Ventures a good business idea to compete if you do not have all the necessary skills, expertise, recourses, infrastructure, or capital that are required for a specific tender.

It is important to know the following 8 things about Joint Ventures:

  1. Definition

A Joint Venture is a strategic cooperation where two or more people and/or companies agree to contribute goods, services and/or capital to a common commercial enterprise for the purpose of a specific tender or request for proposal.

  1. Difference between a Joint Venture and a Private Company

The moment two or more people and/or companies unite to do business together it can be construed of being a Joint Venture, but once these parties to this business register a formal private company then it is no longer a Joint Venture.

  1. Difference between a Joint Venture and a Partnership

A Joint Venture often sounds much like a Partnership but the main difference between a Joint Venture and a Partnership is that the members of a Joint Venture have come together for a specific Tender or Request for Proposal, while a Partnership is usually formed between two or more people to run a business for an unlimited period.

  1. Share expenses

Each member of a Joint Venture only shares the expenses of the specific Tender for which the Joint Venture was established.

  1. Income Tax

Each member of a Joint Venture is liable for their own Income Tax.  If the Joint Venture is profitable the net income of the Joint Venture will be distributed to each member of the Joint Venture according to their percentage contribution towards the Joint Venture.  The members will then be tax in their individual capacity or if the member of the Joint Venture is company, then the gains of the Joint Venture will form part of the income of the company and will be taxed according to company tax legislation.

  1. Ownership

Especially important to realize is that each member of the Joint Venture keeps ownership of their own personal fixed assets as well as their current assets.

  1. Bank account

It is important to open a separate bank account for the Joint Venture.  You do not want your private funds to get entangled with the funds of the Joint Venture.

  1. Set of accounts

Always keep a separate set of accounts for the Joint Venture.  You do not want the Joint Venture transactions to get mixed up with your own transactions or those of your company.

 

 

 

Remember, before you dismiss a Tender or Request for Proposal as undoable, think of teaming up with other businesses and/or people in the form of Joint Venture and bid through the Joint Venture. Do not underestimate the power of Joint Ventures.

Joint Ventures can bring you the success you always wanted without being trapped in a never-ending partnership or shareholding scenario.

Countless tenders have been awarded to Joint Ventures and many more tenders will be awarded to Joint Ventures. 

We foresee that Joint Ventures will become an integral part of South Africa’s business sphere.

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

There are many reasons why Joint Ventures fail and five of the most common reasons are:

  1. Lack of a proper Joint Venture Agreement. The importance of a proper JV Agreement cannot be emphasized enough.  Ensure that you have a proper contract in place that covers the entire foundation of your JV.
  2. Lack of finance. If one of the parties to the Joint Venture is struggling financially it can be the downfall.  The simple reason is that the struggling partner will drain the Joint Venture, not allowing the it to build up capital for challenging times or future expansions.
  3. Control issues. In any relationship you will always find that someone needs to be the leader or the decision maker.  A Joint Venture is the same – somebody needs to be in control.  Ensure that the correct leadership is appointed.
  4. Sometimes in the rush of securing a tender a business owner will go into a Joint Venture with another business owner who does not have the same values and ethics.  This is a dangerous mistake.  Remember that you have established a certain way of doing business and that you have invested a lot in building the ethics in your business.  Ensure that the Joint Venture partner that you sign up with is compatible with your policies of running a business.
  5. Unrealistic expectations. Ensure that all role players are on the same page when it comes to the Joint Venture’s successes.  There must be clear indicators on the chances of winning a tender as well as the expected profits to be made after the awarding of a tender and the completion of the tender.  All the parties involved must be briefed on the expected profits so that there are no unrealistic expectations from any of the parties involved.

If you tend to these five critical areas in your Joint Venture the chance for it to succeed will increase immensely.

The Preferential Procurement Regulations, 2017 states that, if it is feasible, 30% of all Government Contracts above R30 million must be sub-contracted to specific categories of SMME’s.  These SMME’s include, but are not limited to, black female owned and black youth owned businesses.

 

To help with the confusion that arises from whether one must form a Joint Venture, Consortium or sub-contractor/contractor relationship when responding to a tender it is always good to understand the definition of these types of business relationships:

 

  • A sub-contractor/contractor relationship arises when a main contractor hires or employs additional businesses or persons outside of the main contractors own business to do work or to deliver services as part of a larger project. The important thing to remember is that the main contractor is in charge and must ensure that the project is executed and completed as stipulated in the contract.
  • A consortium is an association of two or more individuals, companies, or organisations with the objective of participating in a common activity, such as responding to a tender, or pooling their resources to achieve a common goal. Within the consortium, each participant retains their separate legal status and the consortium’s control over each participant is limited to activities involving the joint endeavour, particularly the division of profits.  A consortium is formed by contract.
  • A Joint Venture can be described as a business enterprise where two or more participants come together to share their expertise to win a specific contract for a set period. A Joint Venture is a separate entity and is not part of the individual participant’s own enterprise.  Therefor a Joint Venture must have its own set of rules by which it is managed, and this is called a Joint Venture Agreement.

To become a sub-contractor, you will have to have a running business.  Main contractors will only use dependable sub-contractors with a proven track record.

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

It is common business practice to form a Joint Venture when one responds to a tender, especially if you do not have all the expertise required by the specific tender.  But Joint Ventures can be complicated to form and to find the correct partner for the Joint Venture can be challenging.  There is an alternative option.  You could go into a consortium when responding to a tender.

A consortium is an association of two or more individuals, companies, or organisations with the objective of participating in a common activity, such as responding to a tender, or pooling their resources to achieve a common goal.  Within the consortium, each participant retains their separate legal status and the consortium’s control over each participant is limited to activities involving the joint endeavour, particularly the division of profits.  A consortium is formed by contract.

A Joint Venture can be described as a business enterprise where two or more participants come together to share their expertise in order to win a specific contract for a set period of time.  A Joint Venture is a separate entity and is not part of the individual participant’s own enterprise.  Therefor a Joint Venture must have its own set of rules by which it is managed, and this is called a Joint Venture Agreement.

The key reasons to form a joint venture or consortium may be that it will provide your company with new opportunities to respond to a tender or request for proposal and secure tenders which would not otherwise be available to you due to your company’s size and scale.

Before entering into either a joint venture or consortium agreement, all parties need to understand what they want from the relationship.  Both joint ventures and consortiums have risks and benefits: the most important thing is to take account of what your objective is in entering the relationship and then to weigh up which one is more appropriate to help you win a tender.

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

The structure of the Joint Venture should set out the nature of your partnership.  There are two main types of agreements:

  1. If the Joint Venture is a business, it will be an incorporated joint venture. This type is not recommended when one wants to respond to a competitive bid or a request for quotation.
  2. A co-operative arrangement between two existing parties that keep their separate identities is called a contractual joint venture. This type of joint venture is the safest option to use in responding ton tenders.

 

In both types mentioned above a Joint Venture Agreement (JVA) is crucial in managing the Joint Venture.

The Joint Venture agreement should include:

  • Objectives: keep it simple and try to have no more than five objectives.
  • Funding: both parties need to specify how much funding they will put into the venture, and for how long.
  • Assets: list any assets or employees that will be transferred throughout the duration of the Joint Venture.
  • Intellectual property: state who owns any intellectual property created during the Joint Venture and how any financial benefits will be distributed.
  • Roles: clearly indicate who has responsibility for the processes involved during the Joint Venture. If you are setting up a new company, the composition of the Board – e.g. Chief Executive and Chief Financial Officer – should be identified and voting rights agreed.
  • Agreement: Incorporated Joint Venture agreements may also need to include a shareholders’ agreement, covering issues such as dividend policy and how the management accounts will be produced and made available.
  • Third parties: any consents or approvals needed from third parties should be explained in the agreement.
  • Finances: state how any profits or losses will be divided between parties. Liabilities must also be clearly listed.
  • Disputes: specify a mechanism by which any disputes can be resolved, such as arbitration by an agreed third party.
  • Duration: specify how long the joint venture would last. If it is open-ended the agreement should state the period of notice that each party should give if they want to withdraw.
  • Confidentiality: you may wish to consider a confidentiality or non-disclosure agreement.
  • Principles: include a statement that is not legally binding on the two parties. Instead it should be a statement of principles – enabling the parties to negotiate a final, legally definitive agreement in good faith.

    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

Many people ask us: How do you decide between using a Joint Venture, a Consortium or Sub-contractor in responding to a tender?

In choosing which business type to use (Joint Venture, Consortium or Sub-contracting) in responding to a bid depends on how many partners (if any) is needed to comply with the specific bid specifications.

The best option is to respond to a bid on your own. This is not always possible. There are many reasons, i.e. Sub-contracting criteria (30% Regulations), minimum B-BBEE levels, minimum Financial requirements, and the most common reason – Purchasing Authorities that combine goods and/or services that they think is one supply or product. Some bids specify that only Consortia may respond due to the complexity of the contract. All these factors will play a role in deciding which business type/tender vehicle bidders will use in responding to a specific bid.

Joint Ventures and Consortia are partnerships that is established to execute a tender. Both type of partnerships has their advantages and dis-advantages. You can find our articles describing the advantages and dis-advantages of both these business types here: https://howtotender.co.za/hints-and-tips/

The next question is: how many partners in Joint Venture or consortium? The general guideline is that Joint Ventures do not have more than 3 partners. Any number of partners above three will be better suited by forming a Consortium.

Sub-contracting is always a better option in complying with bid specifications than restricting yourself to one or more Joint Venture/Consortium partner/s. With sub-contracting the main contractor stays in control of the contract execution. It is easier to replace a sub-contractor than getting rid of a partner.

In some cases, bidders will find it necessary to establish a Joint Venture/Consortium and sub-contract a portion of the contract.

The answer to the question: When to choose a Joint Venture, Consortium or Sub-contracting will thus depend on all these factors mentioned above. Read the bid specifications carefully and make an informed decision in choosing partners and/or sub-contractors.

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

Sub-Contracting

According to the Preferential Procurement Regulations, 30% of all Government Contracts above R30 million, must be sub-contracted to specific categories of SMME’s, if it is feasible. These categories are:

  • Black female owned EME’s or QSE’s;
  • Black youth owned EME’s or QSE’s;
  • Black owned EME’s or QSE’s.

 

After the Preferential Procurement Regulations were gazetted there is a need for businesses to find sub-contractors.

But where are businesses, which respond to tenders, going to find sub-contractors?  We have thought about this and one answer is at Briefing Sessions. Briefing Sessions or Information Sessions are usually compulsory for all bidders that want to respond to a specific tender.  For this reason, anyone trying to win a specific tender will attend the Briefing / Information Sessions.

You will find all sorts of businesses at Briefing Sessions – from large Johannesburg Stock Exchange listed companies to the small one-man operations or sole proprietors.  Many times, smaller businesses will not necessarily be able to comply with all the requirements of a tender, and therefore their tender responses will be unsuccessful whereas larger businesses will comply with all the requirements of a tender and their tender responses are successful.

By implementing the 30% sub-contracting rule Government is trying to spread the wealth that comes with winning a tender.  This will be good for growing SMME’s in the future.  We foresee that Briefing Sessions are going to be the place where potential sub-contracting deals are going to be made.

Keep in mind, for a business to become a sub-contractor it will have to be a running concern.  Large businesses will only use dependable sub-contractors with a proven track record.

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

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting, due in large part, to The Preferential Procurement Regulations, 2017 which came into effect on 1 April 2017.  Many entrepreneurs ask us whether they should sub-contract or not, when responding to a tender.

Regulation 9 of The Preferential Procurement Regulations 2017, stipulates the following:

  • IF IT IS FEASIBLE to sub-contract for a contract above R30 million, an Organ of State must apply sub-contracting to advance designated groups.
  • The Organ of State must advertise this specific tender condition that the successful bidder must sub-contract at a minimum of 30% (of the value of the contract) to (one or more) to an EME or QSE which is at least 51% owned by:
    1. black people;
    2. black people who are youth;
    3. black people who are women;
    4. black people with disabilities;
    5. black people living in rural or under develop areas or townships;
    6. black people who are military veterans;
    7. A cooperative which is at least 51% owned by black people;
  • In paragraph 3 of Regulation 9 it also states that the Organ of State must make available the list of all suppliers registered on a database approved by the National Treasury to provide the required goods or services in respect of the applicable designated groups mentioned above from which the bidder must select a supplier.

 

Regulation 9 is very clear because its states “the tenderer MUST sub-contract…” Thus, according to the Regulations all contracts with a value of R30 million and above will have to comply with this Regulation.  Read the tender document carefully because somewhere in the tender document it will stipulate whether the bidder will have to sub-contract.  Follow those rules.  If the tender document does not contain any sub-contracting instructions, then it is not necessary to sub-contract.

The fact is that the tender document will dictate what you should or should not do.  Read the tender document carefully, follow the instructions precisely and to the point.

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

There seems to be a lot of confusion amongst entrepreneurs when it comes to tenders and sub-contracting, due in large part to The Preferential Procurement Regulations, 2017 that has been implemented on the 1st of April 2017.  Many entrepreneurs ask us whether they should sub-contract or not, in responding to a tender and how and where do they get onto the sub-contracting lists.

There are 3 sub-contracting rules in the Preferential Procurement Regulations 2017 that Organs of State can/must apply when issuing tenders to the public.

The first Regulation is Regulation 4 which state inter alia: if an Organ of State decides to apply pre-qualification criteria to advance certain designated groups that Organ of State must ADVERTISE the tender with a specific tendering condition that certain bidders can or may respond.

The second Regulation is Regulation 9 which state inter alia: if it is feasible to sub-contract for a contract above R30 million, an Organ of State must apply sub-contracting to advance designated groups.

The designate groups mentioned in both Regulation 4 and 9 are Black Owned Enterprises with 51% or more black ownership and any of female Black owned, youth black owned, black people with disabilities owned or black military veterans owned enterprises.

The third sub-contracting rule has to do with sub-contracting after the award of the tenderRegulation 12 states inter alia: (3) a person awarded a contract may not subcontract more than 25% of the value of the contract to any other enterprise that does not have an equal or higher B-BBEE status level of contributor than the person concerned, unless the contract is subcontracted to an EME that has the capability and ability to execute the subcontract.

The tender document will dictate how you should or should not sub-contract.  Read the tender document carefully; follow the instructions precisely and to the point.  Organs of State are applying these Regulations rigorously and failing to comply will lead to your tender response being disqualified.

Tender trends and Regulations are changing frequently.

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

Tenders and subcontracting go hand in hand.  In fact, subcontracting part of a tender is so commonly placed that in South Africa there are specific rules regulating subcontracting in executing tenders.  This is especially true for South African Government tenders.

According to Investopedia subcontracting is the practice of assigning part of the obligations and tasks under a contract to another party known as a subcontractor.  Subcontracting is especially prevalent in areas where complex projects are the norm, such as construction and information technology.  Subcontractors are hired by the project’s general contractor, who continues to have overall responsibility for project completion and execution within its stipulated parameters and deadlines.

It is very important to know that in South Africa there is one major rule when it comes to subcontracting if awarded a Government tender.  According to the Preferential Procurement Regulations, 2017:

Section 6(5) states that a person must not be awarded points for B-BBEE status level if it is indicated in the tender documents that such a bidder intends sub-contracting more than 25% of the value of the contract to any other enterprise that does not qualify for at least the points that such a tenderer qualifies for, unless the intended subcontractor is an exempted micro enterprise that has the capability and ability to execute the sub-contract.

This sub-section of the Preferential Procurement Regulations, 2017, clearly indicate that you cannot subcontract more than 25% of the contract value to another party if that party does not have at least the same B-BBEE Status Level as you or a better B-BBEE Status Level than you. The Office of the Chief Procurement Officer is on the lookout for discrepancies like this.  If you are in contravention of these regulations, you stand the change that the contract may not be awarded to you or that your existing contract can be cancelled.  You can also be liable for costs incurred by the Government Entity in executing the contract.

If you are going to subcontract less than 25% of the value of the contract you are save and you do not have to worry about the B-BBEE Status Level of the subcontractor.

Subcontracting do not need to be difficult but if you want to know more about subcontracting and other important tender response information, we suggest you attend our How-to-Tender workshops that we present Country wide.

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

Pricing

Many bidders that respond to tenders, struggle when it comes to calculating a price for a specific tender.  One of the reasons for this is that many Small Business Owners are usually new to the tender process and therefore they lack the necessary experience to price their bids correctly.

Without getting into the fundamentals of accounting there are two basic items that determine your tender price.  In fact, these two basic items should always be your guide when determining your price on the goods or services you sell.

The two items that determine pricing is:

  • Direct Cost; and
  • Indirect Cost.

 

  1. Direct Cost

Direct Cost is the cost that one pays to either:

  • Produce goods or services; or
  • The cost price you pay to procure goods or products that you will resell to your customers.

For instance, if you manufacture wooden chairs your Direct Cost will be the money you spend on purchasing the wood for the chairs.  Other Direct Cost in manufacturing wooden chairs would be wood glue, nails, and labour costs.

Thus, when responding to a tender you must take the utmost care that you include all your Direct Costs in your tender price.

  1. Indirect Cost

Indirect Cost is the expense that you must incur to run your business and these costs do not necessarily generate any income.  Some of the most common Indirect Cost that your business incurs will be:

  • Rent
  • Utility expenses such as electricity and water
  • Telephone
  • Stationery
  • Salaries and wages
  • Accounting fees

It is especially important to include Indirect Cost in your tender price.  Remember that the tender will form part of your normal day-to-day business and therefore it must contribute to your Indirect Cost. 

The question is how to calculate how much of the Indirect Cost is contributable to the tender.  There is not one specific rule but one of the more common rules is to estimate the time spend on servicing the tender and then use that to factor in the Indirect Cost into the tender price.  In other words, if you must spend 50% of your time servicing the tender then 50% of your Indirect Cost should be part of your tender price.

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

Many people ask the question “how must we work out our tender price?”, but there is no simple answer, because every tender is different, e.g. a tender for the supply of furniture will have a different pricing structure than a tender for the supply of food for a government function. So, to provide individual pricing techniques would be exceedingly difficult.

In general, there are these ten points that must be dealt with when calculating price:

  1. Price is king – ensure you price your product/service as low as possible, to stand a chance at winning a tender.
  2. Be precise, when the product supplied is R 101,26 then state it in the tender response as that and not as R 101,00 or even R 102,00. Slight differences like these can amount to substantial amounts that can be lost, depending on the size of the tender.
  3. Ensure that all the costs of delivering the product/service are taken into consideration; double check your pricing – something small not included can be to your disadvantage.
  4. Confirm prices of goods with your suppliers. Prices can change very quickly due to increases in fuel prices or exchange rate fluctuations.
  5. Always remember to add Value Added Tax (VAT) at 15% to your price, especially when it relates to Government tenders. Most tenders state that the price must include VAT.
  6. Ensure that all other applicable taxes are included in the tender price.
  7. Most importantly, never bid too low or too high;
    • Bid Evaluation Committees are well informed, and they will know if a is bid too low or too high;
    • Bidding too low or too high might lead to a tender response being disqualified or marked as non-responsive;
  8. Law can influence pricing as well. Several industries in South Africa, such as the cleaning industry, has minimum wages payable to employees;
  9. A suggestion is that if your usual mark-up is 25% then tender at 18% to 20%. Remember that you are going to save on direct costs as well as on other expenses such as advertising, telephone costs and much more.  Use these savings to lower your price.
  10. Remember that in Government tenders you are going to be scored on your price, and currently price counts for 80 out of 100 points for tenders for less than R50 million, and 90 out of 100 points for tenders with a value of more than R50 million. The bidder with the lowest price receives the most points.

    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

One of the most important parts of any tender is pricing.

All tender documents will tell you that it is not necessarily the lowest bid that will win the tender but that there are also other factors that influence the final decision.  This might be true but be assured that you will lose more tenders than you will win if you have the highest price.  Make sure to price your tender correct.

Dealing with the Standard Bidding Document 3 (SBD 3.1, 3.2 and 3.3), which is the pricing document, can be hair-raising.  In these documents they talk about firm prices, non-firm prices, professional service providers, exchange rates and lots more confusing matters.  There are three SBD 3 documents namely the:

  • SBD 3.1 for firm prices
  • SBD 3.2 for non-firm prices
  • SBD 3.3 for professional service providers.

Many people ask the question – how must we work out our tender price?  There is no straightforward answer because every tender is different.  The fact is that a tender for the supply of furniture will have a different pricing structure than a tender for the supply of food for a government function thus providing individual pricing techniques would be exceedingly difficult.

In general, there are a couple of points that must be considered when you calculate your price.  These include:

  • Be precise; when your product that you supply is R10-26 then state it in the tender document as R10-26 and not as R10-00 or even R11-00. Depending on the size of the tender, these minor differences can amount to substantial amounts that can be lost or influence the success of your tender.
  • Ensure that you take all your costs into consideration; double check your pricing – something small left out can come back and bite you later.
  • Always remember to add Value Added Tax (VAT) at 15% to your price. The tender committees want to see the purchase price.  They do not want to sit with a calculator and calculate what your price is supposed to be when VAT is included.  Most tenders state that the price must include VAT.
  • Try and quote firm prices, even if the tender duration is more than 12 months. Tender committees are hesitant for non-firm prices.

If you apply these points above, your pricing will be less of a challenge.

Another piece of advice is to draw up your own pricing schedule and to refer back to your own pricing schedule on the SBD 3 document, because every supply is unique and to try and fit your pricing into the SBD 3 forms is usually not possible.  You will find that almost all bidders do this.  Your tender would not be judged as non-responsive by using a separate pricing schedule.

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

Preferential Procurement Regulations and Functionality

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



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.

 

Government Entities have developed a system called “Functionality” or “Technical Criteria” to enhance the system and to ensure that the Enterprises with the best ability are evaluated according to the Preferential Procurement Regulations.  This is a safety measure built into the system to keep the Enterprises with no ability but with the lowest price out from winning a tender.  Private Sector Entities have, although slightly modified, also adopted the same system.  For a better understanding, we will name Government Entities and Private Sector Entities one as Procuring Entities.

 

It is just fair that a Request for Quotation or Competitive Bid (Tenders) is awarded to the Enterprise with the best ability.  Otherwise no contract awarded will be executed correctly, according to specifications and on time.

 

An Enterprise’s ability to execute a Request for Quotation or Competitive Bid is measured through its ability to perform.  This ability to perform can be measured in many ways of which the following are common:

  • Human Resources.
  • Financial Resources; and
  • Goods or Services delivery capability.

 

The first three is easy to understand and easy to proof.  It is the fourth item, Goods or Services delivery capacity that many Enterprises struggle with.  Procuring Entities must ensure that when procuring goods and/or services from an Enterprise that it will be done:

  •  Correctly as per specifications, and this can only be proofed if an Enterprise has the necessary infrastructure to deliver the goods and/or services required.

    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

It is stipulated in the Preferential Procurement Regulations 2017, that the evaluation criteria should be objective, giving enterprises a fair shot at being able to advance to the next phase of evaluation, namely Price and B-BBEE.

Most tenders are evaluated on Functionality, but an Organ of State will indicate in the tender documents how the tender will be evaluated.

The tender document will normally specify the evaluation standards for measuring functionality.  It will also state the following:

  • The points available for each criterion and, if any, each sub-criterion.
  • The minimum qualifying score needed to advance. Usually the threshold is between 65% and 85% out of 100%.

 

All tenders achieving less than the minimum qualifying score will be declared non-responsive and will not qualify to be evaluated on Price and B-BBEE.

When an Organ of State sets the minimum qualifying scores for Functionality, the scores should:

  • Not be generic.
  • Be determined separately for each tender.
  • Not be so low that it jeopardises the quality of the required goods/services.
  • Not be so high that they are impossible to attain.

 

All tenders that score the minimum qualifying score for functionality must be evaluated further, in terms of Price and B-BBEE as stated by the preference point systems in accordance with the Preferential Procurement Regulations 2017.

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

Here are 10 tips on how to pass the Functionality test:

  1. You must realize that the Functionality test in a tender is nothing else but the section where you advertise your goods and / or services. Responding to tenders it is a focussed marketing opportunity.  You get the opportunity to focus your marketing one specific buyer who is in desperate need of procuring goods and / or services such as what you are offering.  Ensure to make the most of it!
  2. You earn points during the Functionality test. Before you start responding to tenders go to the Functionality section.  Scan the criteria to see if you will earn enough points to go through to the next round of evaluation.  It does not make sense to waste time and money on a tender response if you are not going to pass the Functionality test.
  3. Ensure that you respond to a tender that is related to the business you are in. You will not be successful in bidding for something that you have no experience of.
  4. Use the exact phrasing or wording in your tender response that is used in the tender document. This makes it easier for the Evaluation Committee to find what they are looking for in your tender response.
  5. Use the exact same format that the tender document uses in your response on Functionality. If the Functionality in the tender document is in a table then try and use a table as well in your response.
  6. Your items under Functionality must be in the same order as that in the tender document. Do not swap items around.  You want to make it as easy as possible for the Evaluation Committee to find what they are looking for.
  7. Do not over sell your business. This might seem weird saying this, but many Enterprises have a range of goods and / or services that they sell.  Evaluation Committees are only interested in the goods and / or services that they want to procure.  Giving them too much information at the wrong time might prevent them from finding the right information.
  8. Be visual! In today’s world everything is about visual effects.  We look at mobile screens, computer screens and big screen televisions.  Heck, even your car has a screen it these days!  Ensure that your tender response, especially when it comes to Functionality, has some photos in it.  Put photos in of your product as well as photos of your Enterprises’ people.  If you use machinery in your business, then showing it of is always a clever idea.  At the end of the day the photos that you put into your tender respond must add value to your tender response.  Obviously, the photos must be relevant to the tender requirements.
  9. Be honest in your functionality response. Remember that a tender is binding and if you cannot execute the contract you might find yourself in legal battles if you have won the tender, but you cannot execute the tender.
  10. Finally, you must remember that your tender response is going be evaluated by a person such as you and me. Also remember that your tender response is not going to be the only tender response to that specific tender.  So, make it easy for the people on the Evaluation Committee to find and score your Functionality items.

If you follow these tips and tricks you will have a better chance in be successful at bidding.

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

It is important to know that when you respond to a tender there are certain guidelines that Government Officials need to follow 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.

Prior to the invitation of bids, Accounting Officers and Accounting Authorities are required to:

  • Properly plan for the provision of services, works or goods in order to ensure that the resources that are required to fulfil the needs identified in the strategic plan of the institution are delivered at the correct time, price, place and that the quantity and quality will satisfy those needs.
  • As far as possible, accurately estimate the costs for the provision of the required services, works or goods. This is to determine and stipulate the appropriate preference point system to be utilized in the evaluation and adjudication of the bids and to ensure that the prices paid for the services, works and goods are market related.


Estimated costs can be determined by conducting an industry and commodity analysis whereby prospective suppliers may be approached to obtain indicative market related prices that may be utilized for benchmarking purposes.  Based on the findings, the relevant preference point system (80/20 or 90/10) to be utilized for the evaluation of the bid must be stipulated in the bid documents.

  • Determine whether the services, works or goods for which an invitation is to be made have been designated for local production and content in terms of Regulation 8 of the Preferential Procurement Regulations. This will entail the inclusion of a specific condition in the bid documents that only locally produced services, works or goods or locally manufactured goods with a stipulated minimum threshold for local production and content will be considered.  This will subsequently have a direct impact on the evaluation of the bid.


Sometimes one gets the feeling that not all Accounting Officers and Accounting Authorities necessarily follow these procedures.  But now you know, and you can hold them to these rules and regulations.

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

Recently I had a look at an Eskom tender.  In it was a section pertaining to Policies and Procedures.  It made me wonder how many SMME’s have Policies and Procedures in place.  The problem with Policies and Procedures is that it sounds much more complicated than it is.

Policies can be described as clear and simple statements of how your company or enterprise intends to conduct its services, actions, or business.  It is a set of guiding principles to help you with decision making.  Especially important to remember is that Policies do not need to be long or complicated – a couple of sentences may be all you need for each policy area.

Policies and Procedures go hand in hand.  Procedures describe how each policy will be put into action in your company or enterprise.  Each procedure should outline:

  • Who will do what?
  • What steps they need to take?
  • Which forms or documents to use?

Procedures can just be a few points or instructions.  Sometimes they work well as forms, checklists, instructions, or flowcharts.

Policies and their accompanying procedures will vary between enterprises because they reflect the values, approaches and commitments of a specific company or enterprise and its culture.  But they share the same role in guiding your company or enterprise.

There are many Policies that your company or enterprise can have or adhere to.  Some of the most common Policies and Procedures are:

  • Financial Policy
  • Disaster Recovery Policy
  • IT Security Policy
  • Compliance Policy
  • HR Policies which include –
    • HIV and AIDS Policy
    • Alcohol and Substance Abuse Policy
    • Disciplinary Code
  • Code of Ethics

Policies and Procedures do not feature much in Governmental Tenders but in State Owned Companies such as ESKOM, Telkom and SABC you will be required to include your Policies and Procedures.  The Private Sector also puts heavy emphasis on Policies and Procedures especially large companies such as MTN, ABSA and FirstRand.

If you are going to respond to a Tender for State Owned Companies or Private Sector Companies, I recommend that you get your Policies and Procedures in place.  I also recommend that you get a Professional Person to assist you when drawing up your company or enterprise’s Policies and Procedures.  Like mentioned before, it is not long and/or complicated documents, but it needs to be done correctly.  It is best to get someone knowledgeable to assist you.

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

The Preferential Procurement Regulations 2017 have been gazetted on 20 January 2017. The regulations were initially promulgated in 2001 and revised in 2011 thus making this the second revision since the initial promulgation.

The revision of the Preferential Procurement Regulations of 2011 was influenced by the need to empower certain categories (Small Medium and Micro Enterprises (SMME) also classified as EMEs or QSEs, Co-operatives, Township and Rural enterprises) through procurement.  This was a product of social dialogue on the New Growth Path (NGP), wherein government and social partners signed a Local Procurement Accord on 31 October 2011.  To this end, a commitment was made by government to leverage public procurement.

The revised regulations are also aligned to President Jacob Zuma’s pronouncement in his 2015 State of the Nation Address, wherein he said, that government will set-aside 30% of appropriate categories of State procurement for purchasing from SMMEs or co-operatives as well as township and rural enterprises.  Also, giving impetus/ incentive to the NGP.  The highlights of the revision are:

  • Introducing the prequalification criteria, which allows the advancement of these selected categories of people, by limiting competition to only amongst themselves. This restricts the inclusion of well-established companies, unless they meet further requirements of subcontracting to these groups, should they (established company) be successful.  (Refer to regulation 4).
  • Acknowledging that in the main, that high value tenders in the region of R30 million and above tend to be awarded to established companies, due to economies of scale and affordability, leaving out categories of aspiring businesses. The revised regulations require all those, with the ability to deliver the required service, to demonstrate the element of subcontracting to the categorised groups at a tendering stage.  (Refer to regulation 9).
  • Addressing the outcry of the categorised groups, who felt that the threshold of R1 million is too insignificant for them to grow to a level of established companies. Current regulations have increased to R50 million.  This now gives smaller companies a greater chance to compete in the economy, in a meaningful way.  (Refer to 6 & 7)

 

Commenting on the release of the regulations, the Finance Minister said that the regulations aim to use public procurement as a lever to promote socio-economic transformation, empowerment of small enterprises, rural and township enterprises, designated groups, and the promotion of local industrial development.  He said this is in line with the current dialogue on inclusive economic growth in South Africa.

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

Toggle Content

B-BBEE in Tenders

Enterprise Development is one of the most current buzz phrases in South Africa.  Everybody from Government to Large Corporates to SMME’s must either perform Enterprise Development or must be the beneficiaries of Enterprise Development.

According to the Stellenbosch Business School Enterprise Development is defined as “the act of investing time and capital in helping people establish, expand or improve businesses.  Enterprise development helps people to earn a living; it helps them out of poverty; and it leads to long-term economic growth for themselves, their families, and their communities”.

Enterprise Development is a Priority Element on the Amended B-BBEE Codes of Good Practice that came into effect on 1 May 2015.  If your business does not achieve a subminimum of 40% for Enterprise Development then your business’ B-BBEE Score will drop a level – in other words if your business achieved a Level 4 but you do not achieve 40% in Enterprise Development your business is going to be discounted one Level to a Level 5.

Fortunately there are many ways to comply with Enterprise development and because it is very easy to calculate how much your business have to spend (1% of Net Profit After Tax or NPAT for short), it is fairly easy to score the maximum available points on your B-BBEE Score Card. Just remember that there needs to be proper recordkeeping of all the Enterprise Development spend that you do.

Also, particularly important to remember is that both Large Businesses as well as Qualifying Small Enterprises (QSE’s) must comply with this element.

10 ways to spend Enterprise Development are:

  1. Provision of training or mentoring by suitably qualified entities or individuals to SMME’s which will assist the SMME’s to increase their operational or financial capacity;
  2. Investments in beneficiary entities (SMME’s);
  3. Loans made to beneficiary entities;
  4. Guarantees given or security provided on behalf of beneficiaries;
  5. Direct costs incurred by a measured entity in assisting and hastening development of beneficiary entities;
  6. Contributions made to settling service costs relating to the operational or financial capacity or efficiency levels of beneficiary entities;
  7. Relaxed security requirements or absence of security requirements for beneficiary entities unable to provide security for loans;
  8. Settlement of accounts with beneficiary entities over a shorter period in relation to the measured entity’s normal payment period, provided the shorter period is no longer than 15 days;
  9. Providing training or mentoring to beneficiary communities by a measured entity;
  10. Payments made by the measured entity to suitably qualified and experienced third parties to perform Enterprise Development on the measured entity’s behalf.

Enterprise Development must not be confused with Supplier Development.  Any money spend on Enterprise Development cannot be claimed as Supplier Development as well.

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

Government Entities must use the Preferential Procurement Point System to calculate which tender response will be awarded the tender and if you do not have a good B-BBEE Score and if it is a close race, you are going to lose out with a low B-BBEE Score.

On 1 May 2015, the Amended B-BBEE Codes of Good Practice came into effect.  These Amended Codes place a lot of emphasis on Ownership and have a major impact on the B-BBEE Scores of all businesses that participate in B-BBEE in South Africa.  If your company is not going to score any points on Ownership you are also going to struggle to achieve a good B-BBEE Level.  This will negatively impact your tender response. 

Joint Ventures can be a great tool to use to increase B-BBEE Scores by joining forces with Black Owned companies thus increasing your Ownership. If you have the correct Joint Venture partner, with a good B-BBEE score, the overall score that you will achieve in the Preferential Procurement Point System can be much higher than going into the tender alone.

When bidding through a Joint Venture, the Joint Ventures must submit a Consolidated B-BBEE certificate if it is not an incorporated entity when responding to tenders.  This means that you will have to obtain a new B-BBEE certificate for the Joint Venture which consolidates each participant’s B-BBEE status level.  You apply for a Consolidated B-BBEE certificate at your B-BBEE Verification Agency who will issue the Consolidated B-BBEE certificate after combining the Joint Venture partners’ B-BBEE Certificates – this should not be a tedious task and it should not take long at all.

The Consolidated B-BBEE certificate must be tender specific – in other words it must contain the name and number of the tender that you are responding to.

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

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.

One of the major changes in the Preferential Procurement Regulations 2017, is the increase in the threshold value on the 80/20 and 90/10 Preference Point Systems.

The following Preference Point Systems are applicable from 1 April 2017, to all Organ of State bids:

  • the 80/20 Preference Point System for bids with a Rand value of more than R30,000-00 but not exceeding R50,000,000-00 (all applicable taxes included); and
  • the 90/10 Preference Point System for bids with a Rand value above R50,000,000-00 (all applicable taxes included).

 

This means that on the 80/20 system your B-BBEE status level will earn you a point out of 20, and on the 90/10 system your B-BBEE status level will earn you a point out of 10.

To earn these points a potential bidder must have a B-BBEE certificate that has been issued by a verification agency accredited by the South African Accreditation System (SANAS) or the bidder must submit an affidavit stating its B-BBEE status level.

Exempt Micro Enterprises (EME’s) must acquire an affidavit regarding their B-BBEE status level – no verification is required.  This is also applicable to Qualifying Small Enterprises (QSE’s) with 51% or more black ownership.

The various B-BBEE status levels that an EME can achieve, through an affidavit, are:

  • EME’s that are not Black-owned automatically qualifies as a Level 4 contributor to B-BBEE,
  • EME’s that have 51% or more (but not 100%) black ownership qualifies as a Level 2 contributor to B-BBEE and
  • EME’s that have 100% black ownership qualifies as a Level 1 contributor to B-BBEE.

 

A 100% Black-owned EME will therefor earn maximum points (either 20 or 10, depending on the value of the tender) on the Preference Point System.

A valid B-BBEE certificate or B-BBEE affidavit is especially important in the Tender Process.  Ensure your business scores the highest possible score on its B-BBEE certificate or B-BBEE affidavit.

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

According to Section 4 of the Revised Construction Sector B-BBEE Codes, any enterprise with a total annual Revenue of R10 million or less if it is a Contractor, or R6 million or less if it is a Build Environment Professionals (BEP’s), qualifies as an Exempted Micro Enterprise (EME). This is still more or less in line with the Generic B-BBEE Codes of Good Practice.

In Section 4.2, an EME is deemed to have the following B-BBEE status Level, under paragraph 8.3 of the new Codes:

  • If less than 30% Black Owned, then “Level Five Contributor” having a B-BBEE recognition level of 80%;
  • If 30% but less than 51% Black Owned, then “Level Four Contributor” having a B-BBEE recognition level of 100%;
  • If 51% but less than 100% Black Owned, then “Level Two Contributor” having a B-BBEE recognition level of 125%;
  • If 100% Black Owned, then “Level One Contributor” having a B-BBEE recognition level of 135%;

 

The best part of the Amended Construction Sector Codes is the Enhanced B-BBEE Status Level for an EME, whereby despite paragraphs 4.2, an EME is allowed (should they so wish) to maximise their points and move to a higher B-BBEE recognition level, by one of the following three means:

  • Obtain measurement in terms of the QSE Scorecard as a whole, and apply the B-BBEE Status Level and B-BBEE Recognition Level so determined; or
  • Obtain measurement in terms of the Skills Development expenditure category of the QSE Scorecard (paragraph 1.1 of Statement CSC603); only if full points (excluding the bonus points) are achieved for this category will the B-BBEE Status Level and corresponding B-BBEE Recognition Level of the EME be enhanced by one level.
  • Obtain measurement in terms of the Supplier Development Expenditure category of the QSE Scorecard (paragraph 2.1 of Statement CSC604); only if full points are achieved for this category, can the B-BBEE Status Level and corresponding B-BBEE Recognition Level of the EME be enhanced by one level.

 

All the above is great news for EMEs.  They can increase their B-BBEE status levels which was not the case in the previous Codes.

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

This article is about the fine script in tenders or request for proposals that one tends to overlook when confronted with a tender document and deadlines.

The specific fine script that we want to address is where the Organ of State make use of section 2(1) (f) of the Preferential Procurement Policy Framework Act (PPPFA).  This sections states: “the contract must be awarded to the tenderer who scores the highest points, unless objective criteria in addition to those contemplated in paragraphs (d) and (e) justify the award to another tenderer; and…”.

One specific Organ of State that utilizes this section of the PPPFA is ESKOM.  At Eskom it is especially important to promote and encourage Supplier Development and Localisation.  In a recent tender that was published by ESKOM, it was made clear that the specific tender will not be awarded to the highest point scorer but rather to businesses that fall into the following criteria:

  • Preference will be given to Black Owned companies; or
  • Joint Ventures where the lead firm or company is more than 50% Black Owned.

During the briefing session for this specific tender ESKOM officials made it clear that they will adhere to these conditions.  If you are a Black Owned business, it will be no problem adhering to these conditions but if your business has less than 51% Black Ownership you are going to struggle to be awarded this specific tender.  The thing is: this is not the exception to the rule, but it is the rule!

Remember to check for specific conditions in all tender documents, whether it is for black ownership or anything else.  Be sure not to get caught out by specific conditions.

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

Local Content, SBD 6.2

South Africa needs to create new jobs.  One way to do this is by ensuring that the manufacturing sector is constantly growing.  To encourage economic growth and to stimulate job creation the Department of Trade, Industry and Competition (the DTIC) has designated industries, sectors and sub-sectors for local production at a specified level of local content You can find out which these sectors are by visiting the DTIC’s website. 

What is Imported Content and why must we know what Local Content is?  For you to understand this better here are eight important things you need to know about Imported Content:

  1. According to SATS 1286:2011 (SATS stands for South African Technical Specification and SATS1286:2011 specifically deals with preferential procurement and the measurement and verification of Local Content), the local content of a product is the tender price less the value of imported content, expressed as a percentage.
  2. It is, therefore, necessary to first calculate the imported value of a product to determine the local content of a product.
  3. Identify the imported content, if any, by value for components or material or services (Goods).
  4. In the case of Goods sourced from a South African manufacturer, agent, supplier or subcontractor (i.e. third party), obtain that information and Declaration D (This is the imported content declaration (Annexure D) that must be completed during the tender process) from the third party.
  5. Especially important to know as stated in clause 3.2.4 of SATS 1286:2011: “If information on the origin of the Goods is not available, it will be deemed to be imported content”.
  6. Imported content of Goods are separated into two categories, namely:
    1. Goods imported directly by the tenderer; and
    2. Goods imported by a third party and supplied to the tenderer.
  7. When the tenderer supplies Goods that are imported by any third party (for example, a domestic manufacturer, agent, supplier, or subcontractor in the supply chain), the onus is on the tenderer to obtain verifiable evidence from the third party.
  8. Exemptions, if any, are granted by the Department of Trade and Industry (the DTI). Evidence of the exemptions must be provided and included in Annexure D.

 

Once you have determined the Important Content of your goods you can determine if you are within the Local Content limits set out in the Designated Sector list.

Remember that when you respond to a tender and your product has to comply with Local Content then you will have to complete Standard Bidding Document 6.2 as well as Annexures C, D and E. Failure to complete these Annexures (Declarations) will lead to disqualification of your tender.

To learn more about Local Content and many other tender conditions attend one of our “Specialised Local Content”or “Become a Tender Expert” 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

 

The National Government has introduced “designated sectors” which are sectors, sub-sectors or industries that have been designated by the Department of Trade and Industry in line with national development and industrial policies for local production, where only locally produced services, works or goods or locally manufactured goods meet the stipulated minimum threshold for local production and content.

What is Local Content and how must we apply it in our tender responses?

Local Content is Local Value Added in South Africa by South African recourses.  Where a tender response contains a combination of local and imported goods and/or services, the tender price must be separated into its local and imported components as per the Standard Bidding Document 6.2

Where it becomes tricky is Annexure C, D and E that needs to be completed before Standard Bidding Document 6.2 can be completed.  Because little of tender responders read the tender document very carefully this requirement is overlooked.  This makes it exceedingly difficult to complete Standard Bidding Document 6.2.

It is important to know the sequence in which these annexures must be completed.  Completing it in the wrong sequence is going to lead to much frustration on the side of the bidder.

Please remember that you as bidder will be contractually required to maintain records to certify imported content, for example, invoice of materials, expenditure records and income statements.

It must be emphasized that when you respond to a tender you must ensure you know which goods and/or services you can claim as Local Content.  Be aware that certain tenders will exclude cost such as the following from Local Content:

  • finance charges;
  • property; and
  • Deployment fees of the operations contractor.

The designated sectors together with its minimum thresholds can be found on the DTIC’s website.

There is an increase in the drive from National as well as Provincial Government to promote Local Content.  This drive is not a South African initiative but a world-wide trend.  In a South African context, it is good because it stimulates internal growth of the economy.

Local Content is a difficult item in any tender.  Many bidders do not know whether it is applicable to them.

To learn more about Local Content and many other tender conditions attend one of our “Specialised Local Content” or “Become a Tender Expert” 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

Designated Sectors are those sectors that have been identified to have a certain percentage of Local Content.  Meaning that Designated Sectors’ goods must be manufactured locally, or a certain percentage of these goods must be manufactured locally.

Recently the National Treasury added new sectors/industries to the list of Designated Sectors, which now includes:

Industry/sector/sub-sector

Buses (Bus Body)

Textile, Clothing, Leather and Footwear

Steel Power Pylons,
Monopole Pylons,
Steel Substation Structures,
Powerline Hardware,
Street Light Steel Poles,
Steel Lattice Towers

Canned / Processed Vegetables

Pharmaceutical Products:

·         OSD Tender

·         Family Planning Tender

Rail Rolling Stock

Set Top Boxes (STB)

Furniture Products:

·         Office Furniture

·         School Furniture

·         Base and Mattress

Solar Water Heater Components

Electrical and telecom cables

Valves products and actuators

Residential Electricity Meter :

·         Prepaid Electricity Meters

·         Post Paid Electricity Meters

·         SMART Meters

Working Vessels/Boats (All types):

·         Components

Conveyance Pipes

Transformers and Shunt Reactors:

·         Class 0

·         Class 1

·         Class 2

·         Class 3

·         Class 4

·         Components and conversion activities

Solar PV Components:

·         Laminated PV Modules

·         Module Frame

·         DC Combiner Boxes

·         Mounting Structure

·         Inverter

Two Way Radio Terminals and Associated Equipment:

·         Portable Radio

·         Mobile Radio

·         Repeater

·         Components

Rail Signaling:

·         Components

Wheely Bins:

Fire Fighting Vehicle

·         Crew Cabin

·         Super Structure

·         Assembly

Steel Products and Component for Construction

Steel Value-added Products

·         Fabricated Structural Steel

·         Joining/Connecting Components

·         Frames

·         Roof and Cladding

·         Fasteners

·         Wire Products

·         Ducting and Structural pipework

·         Gutters, downpipes & lauders

Steel Value-added Products

·         Plates

·         Sheets

·         Galvanised and Colour Coated Coils

·         Wire Rod and Drawn Wire

·         Sections

·         Reinforcing bars

Pumps, Medium Voltage (MV) Motor and Associated Accessories

·         Casting or Frame Fabrication

·         Fabrication and winding of the Rotor Core

·         Accessories

·         Assembly and testing of the fully-built unit

Rail Permanent Way

·         Rails and rail joints

·         Ballasts

·         Ballastless

·         Turnouts/switches and crossings

·         Railway sleepers

·         Rail fastening and accessories

·         Railway maintenance of way plant & equipment

·         Assembly and testing of fully build unitst

Plastic Pipes

·         Polyvinyl chloride (PVC) pipes

·         High density polyethylene (HDPE) pipes

·         Polypropylene (PP) pipes

·         Glass reinforced plastic (GRP) pipes

Air insulated MV Switchgear

·         Instrument Transformers

·         Busbars

·         Housing

·         Switching Devices

Bulk Material Handling

·         Conveyer Idlers

·         Structural Steel

·         Rubber

·         Conveyor Belt

·         Pulleys

Industrial lead Acid Batteries

If you are manufacturing or supplying any of these goods you will have to comply with the Local Content percentages.  You can find these percentages on the DTIC’s website.

When responding to a tender you will be required to complete a Standard Bidding Document 6.2 or Municipal Bidding Document 6.2 form, regarding Local Content.  These forms are difficult to complete, without the necessary knowledge.

You can obtain this knowledge by attending one of our How-to-Tender workshops, where we will teach you to complete these forms and others like them.

The National Treasury also considers other industries, sectors, and sub-sectors for designation.  Once thorough research and consultations have been concluded a decision to designate will be communicated to the public.

To learn more about Local Content and many other tender conditions attend one of our “Specialised Local Content” or “Become a Tender Expert” 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

The Tender Adjudication Process

All competitive Bids that are awarded by Government Entities must be awarded by a Bid Adjudication committee.

According to Treasury Regulation 16A6.2 a Government Entity’s supply chain management system must, inter alia, provide for the adjudication of bids through a bid adjudication committee, the establishment, composition and functioning of bid specification, evaluation and adjudication committees and the selection of bid adjudication members.

According to paragraph 2.4 of the Code of Conduct for Bid Adjudication Committees, the Bid Adjudication Committee must consider the recommendations/reports of the Bid Evaluation Committee and depending on the delegated powers make:

  • a final award; or
  • a recommendation to the accounting officer / authority to make a final award; or
  • Make another recommendation to the accounting officer / authority on how to proceed with the relevant procurement.

Furthermore, the Bid adjudication committee must ensure that (paragraph 2.5):

  • all necessary bid documents have been submitted;
  • disqualifications are justified and that valid and accountable reasons / motivations were furnished for passing over of bids;
  • scoring has been fair, consistent, and correctly calculated and applied; and
  • Bidders’ declarations of interest have been taken cognizance of.

If a bid other than the one recommended by the Bid Evaluation Committee is approved by the Bid Adjudication Committee, the accounting officer / authority or a senior official delegated by the accounting officer, must first be notified.  The accounting officer / authority or the delegated official may after consideration of the reasons for the deviation, ratify or reject the decision of the Bid Adjudication Committee.  If the decision of the Bid Adjudication Committee to approve a bid other than the one recommended by the Bid Evaluation Committee is ratified, the Auditor- General, the relevant provincial treasury and the National Treasury must be notified of the reasons for deviating from such recommendation.

These are just some of the rules that Bid Adjudication committees must apply when awarding a bid.

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

Many of you who have responded to Government tenders have been disappointed when a tender is cancelled.  You have put in many days and nights’ worth of effort just to receive the unwelcome news the tender is cancelled.

The question is – do Government entities have the right to cancel tenders?

Government entities do have the authority to cancel a tender before it has been awarded.  Regulation 13 of the Preferential Procurement Regulations, 2017 stipulates that a tender can be cancelled –

  • Due to a change in circumstances – for example there is no longer a need for the goods or services specified in the tender invitation;
  • There are no funds available to cover the cost of the expenditure;
  • No acceptable tender offerings have been received;
  • There is a material irregularity in the tender process.

The decision to cancel a tender must be published in the same way the original tender invitation was advertised.

If an Organ of State wants to cancel a tender invitation for a second time, it must get prior approval for National Treasury.

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

Those of you who are familiar with responding to tenders will know that it is common practice for procuring entities to extend the bid price validity period.  We received the undermentioned queries regarding the extension of the validity period of the bid price.

The client stated that they are 3 companies bidding on an Organ of State tender.  It is quite a complicated tender and the Organ of State asked for an extension of validity.  The client thinks that there are other forces at play and wants to request that the tender must be cancelled.  The question is: if they decline the extension of validity, is there any law forcing the Organ of State to cancel the tender?

We are not legal consultants or attorneys thus we cannot give a legal opinion.  We can give advice on the tender processes.  Here is our take on the scenario mentioned above:

  • Organs of State do have the authority to extend the validity period of a tender;
  • If you decline to meet the validity period, your tender response will be marked as non-responsive and your tender response will not be considered for evaluation;
  • There is no law which we are aware of that a tender must be cancelled if one of the responders declines the validity extension;
  • According to Regulation 13 of the Preferential Procurement Regulations, 2017, a tender can be cancelled:
    • Due to a change in circumstances;
    • There are no funds available;
    • No acceptable tender offerings have been received;
    • There is a material irregularity in the tender process;

The best advice we can give is to be aware of any extensions of validity that might arise from the tender that you are responding to.  Remember to keep an eye on your fax machine – if you still have land-line fax machine – Organs of State likes to fax extensions of validity.  Normally an email would be the preferred communication method.

If you do receive a request for extension of validity it is good practice to double check your cost prices from 3rd party suppliers to ensure that the prices are still in order.  If the prices are in order, then sign the extension of validity and sent it back before the deadline.

If you cannot extend the validity period and decline the extension of validity, your tender response will be marked as non-responsive and will not be evaluated any more.

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

The Tender Adjudication committee usually does a risk analysis before awarding a tender.

Prior to being recommended for acceptance, a tender should be subjected to a risk analysis to ensure that it would, if accepted, not place the Government Entity or the bidder, at undue risk.  The following features of the tender and the bidder should, inter alia, be considered:

  1. The tender price and its make up;
  2. Unduly high individual rates;
  3. Unduly low rates;
  4. The bidder’s ability to obtain the required performance guarantee, if applicable;
  5. The bidders previous experience;
  6. The bidder’s total resources;
  7. The resources which the bidder could mobilize for the contract;
  8. The bidder’s current commitments/availability of key employees;
  9. The bidder’s history on previous similar contracts;
  10. Ability to supervise and control labour and, if required, to supply materials and provide plant/transport;
  11. Understanding of the scope of work required;
  12. Imbalances in pricing;

Interviewing bidders is the best way to perform the risk analysis.  Tenders may be overlooked if the price make up of portions of the work differ substantially from the estimated price and the bidder is unable to account for such discrepancies.

Eliminating the risk factors will help you to be more successful in your tender responses.

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

Tenders in South Africa are based on three principles:

  1. Functionality
  2. Price
  3. B-BBEE

Functionality

All tenders, whether it is for the Public Sector or the Private Sector, will be evaluated on Functionality.  Functionality is the most critical part of any tender response.  If you get the Functionality part wrong during your response the changes are good that you will not advance to the following phase of the evaluation process – you will most probably fall out of the race.

When responding to tenders ensure that you understand exactly what is required in the Functionality part of the tender.  Read the scope of the tender carefully and respond to direct questions as well as indirect questions.  Functionality is the part where you advertise your company so make sure you do it properly.

Price

Most of the tenders that are awarded all around the world and for that matter in South Africa as well, Price will be the determining factor.  At the end of the day, all that buyers want is to procure the best product at the best price.

In South Africa we even have a formula to determine which tender response is ranked where in the tender awarding process.  The response or responses with the lowest price receive the most points and the more expensive tender responses receive fewer points.  Ensure that your tender response scores the most points in the evaluation process.

B-BBEE

Last but not least, all tender responses will be evaluated on its B-BBEE levels.  It does not matter if you respond to a Public Sector or Private Sector tender, your B-BBEE score will always be considered to determine the outcome of the tender award.

The Amended Codes of Good Practice that came into effect on 1 May 2015 is very stringent and obtaining a good or high B-BBEE score is going to take a lot of planning and hard work.  Ensure that you have a good B-BBEE score to have any say in the outcome of a tender award.

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

It is important to understand the adjudication process when one responds to a Tender or Request for Proposal.  If you have these 8 steps under control when responding to tenders, chances are good that you will proceed to the next round.

Here are 8 steps in the adjudication process that Organs of State will most often follow in determining which bidder will win the tender:

  1. Opening and recording of tenders

When tenders are opened in public, the following features of each tender usually are announced and recorded:

  • The name of the bidder;
  • The bid price as stated on the form of tender;
  • The number of B-BBEE points claimed by the bidder;
  • Tenders usually are endorsed and dated with the approved tender stamp of the Organ of State or Private Entity.

 

  1. Determine whether tender responses are complete

After the opening of tenders, the tender officials will determine the responsiveness of each tender by determining whether:

  • The tender complies with all the conditions of the Tender or Request for Proposal;
  • The tender has been properly completed and signed;
  • The tender meets the minimum resource objectives;

Above are just some of the requirements that must be met for your response to advance in the tender process.  Any tender that does not meet the stipulated requirements will be regarded as being non-responsive.  Non-responsive tenders will be eliminated from the adjudication process at this stage.  All responsive tenders will proceed to the next stage.

 

  1. Price Review

The prices of all responsive tenders are checked for errors.  The Organ of State can interview Bidders who have tendered an unrealistically low price to determine whether there is a valid reason for its tender price being unrealistically low.  If the bidder cannot supply a valid reason, the tender would most probably be eliminated from the tender adjudication process.

 

  1. Award of points for Functionality

Tenders that remain in contention will be awarded points for functionality.

 

  1. Awarding of points for Price

At this stage, the points for price will be awarded according to the Preferential Points System.  Prices are usually adjusted to a common base so that it can be comparable with each bidder’s price.

 

  1. Process review

At this stage, the legitimacy of the B-BBEE Levels claimed by the bidders will be validated and recorded.  If there are any reasons for eliminating tenders on the grounds of process review it will be recorded here.

 

  1. Summation of points

The points awarded for price and B-BBEE will be added for each tender and, subject to satisfactory risk analysis; the tender which has been awarded the highest total number of points will be recommended for acceptance.

 

  1. Risk Analysis

An Organ of State will do a risk analyses before acceptance of any tender to ensure that it would, if accepted, not place the Organ of State or the tenderer, at undue risk.

 

As one can see there are various elements that all contribute to the final awarding of a tender.

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

I cannot stress the fact to query Tender Results too much! You have the right to query the Tender Results of tenders that you have responded to and which you were not successful in winning.

 

The first stage where your bid can be non-response is at the Technical Criteria stage where you must score a minimum of 75 or 80 points out of a possible 100 points to move to the next stage of evaluation.  If your bid was non-responsive you should ask the Organ of State or the Private Sector Entity if you can have the results of the Technical Criteria Evaluation.

 

Ensure that when you receive the results, the correct number of points has been allocated to your business per Technical Criteria Item.  Experience has shown us that wrong points can be allocated to a specific Technical Criteria Item due to lack of knowledge by the Evaluation Committee.  This can cause your business to score less points and your tender response will be non-responsive.  Be careful how you answer questions because it can be misunderstood by the Evaluation Committee causing you to lose points.

 

When you respond to a Tender ensure that you calculate your Technical Criteria Points yourself.  By doing this, you will know if your business will make it through the first stage or not.  This will also ensure that you provide enough information in your response to be evaluated correctly.

 

Please take note of the correctness of the points allocated per Technical Criteria Item.  We have seen Tender Documents where the points that you could earn per Technical Criteria Item were indicated as 5, 3 and 0. What it should have shown was 5, 2.50 and 0. This meant that when you calculated your score and you had items where you earned 3 points, you actually only scored 2.50. This does not sound like much but if you end up on 74.50 points, that 0.50 makes a significant difference.

 

The point that must be reiterated is that you must take double care when responding to a Tender.  Ensure that you earn all the points that you eligible for by answering all questions clearly and preciously.  If you have done this, you more than likely go through to the next round of scoring.  But that is for another day.

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

More tender information, advice, hints and tips...

If you have ever responded to a request for quotation or a competitive bid you will have encountered a Briefing Session, Site Meeting, or Information Session.  These are meetings that are held before the quotation or a competitive bid (tender) is due.

Most of the time these sessions are compulsory and not attending it can and might most probably lead to your tender response being disqualified.

Here are a few things that you must remember or do when you attend one of these sessions:

  1. Be on time – in the old days you could arrive an hour late and you would still be allowed to enter the session. Not anymore. They lock the doors – you will not be able to get in.  The cut-off time is usually stated in the tender document or in the tender advertisement.
  2. Sign the attendance register – remember to sign the attendance register in the name of the company that you are going to respond in. Many people have multiple companies.  Ensure that you use the name of the company that will respond to the tender.  When attending the session and you know you are going into a Joint Venture to the tender then use the Joint Venture’s name.
  3. Buy the tender document – If you must purchase the tender document beforehand – especially at municipalities – go at least an hour before the sessions starts. Remember that you are not going to be the only person attending the session and there will most probably be other people queuing to buy the document as well.  This might cause you to be late and not be able to attend the session.
  4. Ask questions – the information session is the time to ask questions. You will not get a better opportunity to ask questions.  Quickly scan the scope of the tender as well as other requirements and ensure you know exactly what is required from you by asking questions during the session.
  5. Check out your competition – this is the time to see what your chances of winning the tender are. If there are only three or four attendees at the session, then you know you are in with a chance but if there are three hundred attendees you know it is going to be tuff to win the tender.
  6. Take your partner/subcontractor with – If you are going to respond using a Joint Venture partner or a subcontractor, it might be a clever idea to take them along to the session. Let them get the information first-hand as second-hand information is not as comprehensive.
  7. Evaluate the opportunity – sometimes tender descriptions are vague. You might think that the tender opportunity is for you but once you have attended the session you might think twice in responding to the tender.  Responding to tenders is time consuming and there is always a cost involved.  Evaluate the situation and determine if it is for you or not.
  8. Finally, we always recommend that the person or persons that are going to be responsible for responding to the tender must attend the Briefing session. Vital information is shared at these sessions.  If you are not there your tender response might be non-responsive because of information that you did not provide.  Do not send your driver or secretary to attend.  We have attended sessions during which new closing dates for tender submissions have been announced, and if you did not attend the session, you would have the wrong closing date. 

If you follow these guidelines your chances of being awarded a tender will increase tremendously.

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

One thing that has bothered me frequently is how bad Tender and Request for Proposal documents are compiled. 

Sometimes it seems like they had copy and paste a previous document that is more or less the same as their tender.  The reason I am saying this is because there are forms in the Tender document that is not at all applicable to the Tender that you must respond to.  This is confusing for the Responder.  You as the Responder to the Tender is already nervous and unsure, and putting unnecessary forms into the tender document are not helping ones’ cause.

We have responded to many tenders, request for proposals, request for quotations and request for bids during the last six years.  These responses to tenders were both for Private as well Public Sector Tenders.  During this time, we established a systematic approach in compiling our tender responses.  The steps that we follow are simple and easy to replicate.  We can certainly encourage our fellow tender responders to use the same system and steps when compiling your tender response.

The following steps can be followed to make sense out of your tender response:

  1. In a normal tender response (not electronic), it is important to compile your tender documents in a neat fashion;
  2. A professionally printed cover page on the front gives the tender response a professional look and feel; The cover page should indicate which tender you are responding to as well as your company information – this is for easy reference;
  3. It is always good practice to start your response with a cover letter; In this cover letter, which is addressed to the Purchasing Authority, mention the following:
    • The tender description and number;
    • The person responsible for the tender response;
    • And tell them why your company is the best for the job – but remember to keep it short;
  4. The cover letter is followed with the original tender documents received from the Purchasing Authority
  5. After the tender documents – follows an Index of your returnables. Ensure that you mark your tender response clearly. This can be done by using page numbers or partitions placed between each section of your response;
  6. Directly after the Index the Pricing schedule should follow – Evaluation committees do not want to search frantically for your pricing schedule;
  7. While Tax Clearance Certificates are still in play it should follow your Pricing Schedule;
  8. Your certified copy of your B-BBEE Certificate or EME/QSE Affidavit is up next;
  9. From here on in we recommend you follow the Purchasing Authority’s document and file your response according to their scope of work.
  10. Important to remember is to keep your compulsory documents together. Do not mix compulsory or additional documents with the Functionality response.
  11. It is always good to insert some form of partition between the original tender document and all other documentation;
  12. Finally – bind your tender response in to one tender response document.

    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

Through our experience in the tender environment we have encountered a lot of entrepreneurs who get nervous when they must respond to a tender or bid document.  We have witnessed people doing stupid things.  They are so afraid that they will do something wrong when responding to a tender that they end up making silly mistakes.

Our advice – STAY CALM!

Many of the entrepreneurs responding to a tender or bid document are well experienced in their business environment but when it comes to responding to a bid document, they strike a blank.  Suddenly they forget how to do costing or which services they provide.  We know the tender process can be daunting at times, but it is of utmost importance that you or the people in your organization that respond to the bid, must stay calm and focus on the work at hand.

We have encountered entrepreneurs that asked us how much they should charge for a specific product – the product they have been selling for the last ten years!  Our answer is usually something towards: “Stay calm, what do you usually charge for your product?  Now think about that and the fact that, should you be awarded this tender, you will sell a lot of your product.  So, you can either charge your normal price or you can charge a bit lower”.

Since most tenders are on tight deadlines, completing and responding to these tenders are stressful to say the least.  The average person will get stressed out when they must complete a tender within twenty-four hours.  That is the time when you make mistakes and you leave out crucial details to your response.

We say: Remember to stay calm.  Ensure that you have a tick list of all the material that must accompany your response.  In our Tender Manual, which is available on our website www.howtotender.co.za, there is a tick list which you can use to ensure that you do not forget anything in your response to the bid. In fact, this tick list can be used up to ten times.

Be prepared – ensure that all the documents that must accompany your tender response such as Tax Clearances and B-BBEE Certificates are up to date and that you have enough copies of everything.  If you leave it up to the last minute to gather all the necessary documents that must accompany your response, you are going to panic and to tell you then to stay calm would not work.

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

It is imperative for all potential bidders that they familiarize themselves with the tender process in South Africa.  There are procedures that need to be followed by Government Entities when they issue a request for quotation or competitive bid.  These procedures are governed by different Acts such as the Preferential Procurement Policy Framework Act (Act no 5 of 2000) and the Public Finance Management Act (Act 1 of 1999 as amended by Act 296 of 1999) to name but two.

Most of the Government Entities that issue tenders follow these procedures to the letter, but there are some Government Entities that do not follow all the procedures.  The reasons for this can be many but the main reason is that not all the procedures listed in the Acts are applicable to the specific request for quotation or competitive bid that has been issued.  It is therefore especially important that you as potential bidder ensure that:

  • You attend the briefing session;
  • You read the whole tender document because all request for quotations and competitive bids are different;
  • You make sure you take note of the closing date and closing time of the tender;
  • You have completed all the documents in the original bid document; and
  • You have attached all the compulsory documents.

It must be stressed that the tender environment is incredibly competitive and if you produce non-compliant tender documents or if your tender is incomplete your tender will be viewed as non-responsive and would not be evaluated.  Thus, make sure you understand exactly what is expected from you as bidder in terms of goods supplied or services rendered to a Government Entity.

If you understand the tender process and you spec your supply correctly and you make sure your tender is delivered on time, then you will have a good chance that your tender will reach the evaluation process.

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

Treasury Regulation 16A9 prescribes that the accounting officers and accounting authorities of Organs of State must take all reasonable steps to prevent abuse of the supply chain management system and authorises them to act against system abusers.

The Standard Bidding Document 9 – The Certificate of Independent Bid Determination –   serves as a certificate of declaration that are used by Organs of State to ensure that, when tenders are considered, reasonable steps are taken to prevent any form of bid rigging.

To give effect to this, the Certificate of Bid Determination (SBD 9) must be completed and submitted with the tender.

How to complete this form correctly:

  • On the first open line you fill in the tender number and the description of the tender that you will find in the Standard Bidding Document 1 in the tender document;
  • On the second open line you fill in the name of the Organ of State that has given out the tender;
  • The third open line is where you fill in your name or your company’s name or your joint venture’s name;
  • The authorized person must sign and date the document;
  • “Position” is the authorized person’s job title;
  • “Name of Bidder” is your company/joint venture/consortium/business entity’s name.

Remember that this Standard Bidding Document 9 must be part of all Organs of State tender responses.  If you respond to a tender and this document is not part of the tender documents, then get a copy of the Standard Bidding Document 9 and complete it.  Your tender response will stand out and you might just be one of a few whose tender response will be correct and accurate.  You can get a copy off all Standard Bidding Documents on the National Treasury’s website.

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

Each year, Organs of State invite the Private Sector to submit competitive bids for the supply of goods and services.  Organs of State bid requests attract SMME’s and large businesses across a wide range of sectors – from office supplies to major construction projects.

Here is an overview of 10 steps you should take to prepare a competitive bid.

  1. Register your interest

Follow the instructions in the bid document to register your interest with the purchasing agency.  This crucial step will help keep you up to date on any bid information sessions.

  1. Attend briefing sessions

If you registered through a bid website, monitor the website for updates about bids.  Attend any bid briefing sessions offered.  These are valuable opportunities to ask questions and make contact with Organs of State.  They may also give you a chance to meet potential subcontractors or make contacts that could participate in a consortium.  Organs of State are also usually under no obligation to otherwise make available copies of information, presentations, etc., that may be given at a briefing session.

  1. Develop your bid response strategy

If you are bidding for a high-value bid, plan your bid carefully and consider the requirements and resources involved.  For example, ask yourself:

  • How much will it cost to prepare the bid?
  • What information do we need to gather?
  • What resources will we need to fulfil the contract?
  • Who will manage the bid project?
  • How will we plan the workload, assign the work required, schedule the meetings?
  • Who is our competition and what are our chances of winning?
  • What is our plan for marketing our products and services and pitching our business?
  1. Review recent awarded contracts

 

If you are unclear about any requirements in the bid request, contact the bid coordinator to seek clarification.  What type of companies won similar bids in the past?  What does the contracting Organ of State look for?  What can you do to match their expectations?

  1. Write a compelling bid

Prepare your bid response.  This includes planning, drafting, and refining it.  Make sure that you use the response forms provided and answer all questions.  Stick to any word/page limits that there may be, and (generally) do not go altering things like fonts and font sizes and numbering unless expressly permitted.  Be clear about your structure and propositions.  Decide on several key propositions you can use to set your bid apart from others.  Review the evaluation criteria to gain a better understanding of what things the government agency is particularly looking for and will be evaluating your offer against.  If you are not a strong writer, think about engaging a professional (a range of businesses offer bid writing services).

  1. Understand the payment terms

When putting together your bid response, make sure you are aware of the payment schedule specified.  Organ of State payment schedules will vary from entity to entity and procurement to procurement.  You may not get paid as soon as the job is finished, or goods are delivered.  If you require payment different to that specified, you should detail this in your offer.

  1. Provide References

Provide References who know your business and can attest to your work.

Give your References clear information about the bid request so they know what points to emphasise in their reference.  If you have previously supplied goods or services to an Organ of State, ask them for a reference.

  1. Check and submit your bid

Make sure you check your proposal carefully before submitting it.  Use a checklist to make sure your bid meets all the requirements (some bids will include a checklist that you can also use).

  1. Present your bid

Bid panels responsible for high-value contracts may request a formal presentation from bidders.  If you need to present your offer to an evaluation panel, stay focused on the key messages in your proposal.  Most importantly, prepare.  Plan your presentation carefully, rehearse and, if you do not feel you are a strong presenter, get some coaching in presentation skills.

  1. Request a debriefing

You can request a debriefing on the bid after the process, especially if your bid is unsuccessful.  Feedback from the evaluation committee can be extremely useful in understanding how your offering can be improved and can assist you in preparing for your next bid.  Look for ways to improve your next bid.

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

There are certain guidelines you can follow when submitting your tender response.

Every tender has its own submission instructions.  It is of the utmost importance that you familiarize yourself with these conditions. Ensure that you comply with the process the Organ of State is requesting.  Ensure you are following the correct procedure, which the procuring entity is using. These instructions can usually be found at the beginning of the tender document and include instructions such as:

  1. Closing date – which is the last day that the tender response can be submitted.
  2. Closing times – VERY IMPORTANT – do not be late! If the closing time is at 11H00 it means 11H00:00 sharp.  Not 11:00:01 – this means not ONE second after eleven o’clock.  This point cannot be emphasized enough.  If you are late your tender response will not be considered. Most procurement entities will indicate on the tender invitation document that the time they use is the time given by dialling Telkom’s 1026 line.  This is the official time in South Africa.
  3. How many copies of the tender must be submitted? Ensure that you submit the correct number of copies required. You do not want the procuring entity to take your tender response apart to copy it.  Remember that there are several Bid Evaluation Committee members and each of them must have a copy of your tender response to evaluate it.
  4. Format – in which format i.e. hard copy or soft copy or both. Be mindful that the procuring entity can request different formats of your tender response.
  5. When you deliver your tender response ensure that it is into the correct tender box. This sounds silly, but tenders have been delivered into the wrong box. Many procuring entities have more than one tender box.
  6. If you must provide samples together with your tender response, ensure that the samples are also delivered to the correct address. Sometimes the samples need to be delivered to a different address as the tender response, ensure you follow the delivering instructions carefully.
  7. Envelopes – make sure your tender is in a sealed envelope and that it is addressed correctly. Sometimes it is a TWO envelope process.  An example of how your envelope must be addressed is:

           

 

(You complete this column)

Tender number

BIDUS4-44/2013-2014/01

Attention

Mr. Dlamini

Department

Supply Chain Management

Address line 1

Room 12 First Floor

Address line 2

Best Local Municipality

Address line 3

11 Church Street

Address line 4

Putsonderwater

Address line 5

9991

 

  1. Finally: Write the address in a readable handwriting. If they cannot decipher it – your tender will not be considered.

 

By following these rules, you will ensure that your tender response is considered for 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

If you are so fortunate to have reached the stage where Organs of State or Private Sector Companies want to do a site visit, you must know that you are in the final stage in winning that tender that you have responded to.

But what must you do to prepare for a site visit?

The first thing is to ensure that your place of business is in excellent order.  Be sure everything is clean and neat.  A clean workshop or office is a pre-requisite and non-negotiable.

Secondly ensure that your employees are prepared and that they are at work the day of the site visit.  You do not want to be in a situation where the Evaluation Committee Member asks you to demonstrate a procedure and you can’t because the specific employee that operates that specific peace of engineering or tool or computer is not at work the day of the site visit. You are going to end up with a red face and the Committee is not going to be impressed.

One of the main reasons the Evaluation Committee does site visits is to ensure your business do exists.  This may sound weird but believe me there have been horrifying stories of people that have been awarded tenders and then the Organ of State finds out that the vendor operates out of his vehicle!  It is imperative to have an operating business.  It is also a way to combat fraud; by doing a site visit, the Organ of State verifies that the Vendor is not just a person fronting.  There have been many instances in the past where tenders have been awarded to businesses that do not actually exist.

The Evaluation Committee will also verify many other things that are important in awarding the tender.  These may include:

  • How many employees you have?
  • Do you have the correct machinery?
  • Do you enough other resources to do the job at hand?

The best advice I can give you is to be prepared.  Ensure that everything is in order the day of the site visit.  Prepare your employees so that they know what to do and what to answer when asked that tough questions.  But most of all, be happy, because you have reached the final stages of the tender process, but keep in mind that at the end of the day a site visit can go wrong, and you might not be awarded that tender. So, be prepared!

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

It is imperative for all potential bidders that they familiarize themselves with the tender process in South Africa.  There are procedures that need to be followed by Organs of State when they issue a tender.  These procedures are governed by different Acts such as the Preferential Procurement Policy Framework Act (Act no 5 of 2000) and the Public Finance Management Act (Act 1 of 1999 as amended by Act 296 of 1999), to name but two.

Most of the Organs of State that issue tenders follow these procedures to the letter, but there are some Organs of State that do not follow all the procedures.  The reasons for this can be many but the main reason is that not all the procedures listed in the Acts are applicable to the specific tender or bid that has been issued.  It is therefore especially important that you as potential bidder ensure that:

  • You attend the briefing session
  • You read the whole tender document because all tenders are different
  • You make sure you take note of the closing date of the tender
  • You have completed all the documents in the bid document.

It must be stressed that the tender environment is incredibly competitive and if you submit incorrect tender documents or if your tender is incomplete, your tender will be viewed as non-responsive and would not be evaluated.  Thus, make sure you understand exactly what is expected from you as bidder in terms of goods supplied or services rendered to an Organ of State.  It is important to deliver the exact goods the Organ of State want to procure.  If the Organ of State wants to procure office furniture, ensure that you supply them office furniture and not something that looks like office furniture but is not.  The specifications of your product listed in your tender must be clear and precise.  The Supply Chain Management must be able to make an informative decision regarding your supply.  So, ensure that you understand what is required.

If you understand the tender process and you specify your supply correctly and you make sure your tender is delivered on time, then you will have a good chance that your tender will reach the evaluation process.  If you make it through the evaluation process you are in business because it is then up to the Adjudication Committee to award the tender to the best candidate.

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

We often attend tender opening sessions, but does anyone stop and ask what must be done at such events?  Here are the core steps that need to be followed when government entities open and record tender responses in public:

  • Name of tenderer;
  • The tender price as stated on the form of tender (if practical);
  • The number of B-BBEE points claimed by the tenderer (if practical);
  • Tenders must be endorsed with the approved tender stamp and the officials shall endorse their initials next to the value on the form of acceptance.

So next the time you attend a public tender opening ensure that these procedures are followed.  Be the watch dog for your fellow tender responders and ensure that no late tenders will be tolerated.

Tender responsiveness

After the opening of tenders, the responsiveness of each tender will be established by determining whether it:

  • Complies with the conditions of tender;
  • Has been properly completed and signed;
  • Provides such clarification and / or substantiation as is called for;
  • Meets the minimum resource goals, if any are laid down;
  • Contains no material deviation from, or unacceptable qualification to, the terms, conditions, and requirements of the contract, which could:
    • Detrimentally affect the scope, quality, or performance of the works, or change the government entities, or the contractor’s risks and responsibilities under the contract and would detrimentally affect the competitive position of other, responsive tenders, if it were to be rectified.

Please note that there are several other reasons for the disqualification of tenders apart from the above.  These should be clearly set out in the conditions of tender and may include failure to:

  • Attend the tender briefing session;
  • Submit correct pricing for items in the pricing schedule;
  • Adhere to any qualifications which may be laid down;
  • Complete the tender documentation in ink.

Any tender not meeting the stipulated requirements will be regarded as being non-responsive.  The reason for declaring a tender non-responsive will be recorded.  Nonresponsive tenders will be eliminated from further consideration.  All responsive tenders will proceed to the next stage of adjudication.

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