22 Feb 2018

Supplier Development for Construction Sector

by | posted in: General, Recommended Reading | 0

Supplier Development for Construction Sector

Supplier Development for Construction Sector

How Construction Companies could effectively implement the Preferential Procurement and Supplier Development Element and achieve maximum points on the Scorecard.

The BBBEE Construction Sector Code, which came into effect in November 2017 stipulates that companies in the Sector must spend a calculated percentage on the Preferential Procurement and Supplier Development Element (PPSD) as well as implementing a deliberate skills transfer programme for their suppliers.

It must also be noted that “PSSD” is categorised as a “Priority Element” with a “sub-minimum of 40% of the total weighting points (excluding bonus points) of each of the three broad categories, namely ‘Preferential Procurement’, ‘Supplier Development Programmes’ and ‘Supplier Development Contributions”.

In essence, it means that a company must score a minimum of 40% of the total points afforded otherwise all its points achieved for this element will amount to zero.

The implementation of the PPSD element affords a business the single highest score on the Scorecard and it could graduate from a Level 6 B-BBEE Score to that of a Level One Contributor Status on condition that the minimum requirement for this and other similar elements have also been met as stipulated.

In essence, the PPSD is also an element for which the spend must occur prior to the end of the previous financial year before it could be included in the B-BBEE Audit.

For most companies, the end of this month would be the period on which its spend will be audited and a large number of them will lose points on the Scorecard if these “interventions” are not implemented prior to 28 February 2018.

The other big difference between the Construction Sector Code and that of its counterparts, is that Preferential Procurement and Supplier Development element does not provide for arbitrary Enterprise Development as it is in the case of the Amended Generic Codes of Good Practice, but restricts companies to only develop their own suppliers and not any other business it does not procure from.

Since the Code is highly prescriptive of what must be done it becomes critical that companies gain a full understanding of the “Preferential Procurement and Supplier Development directives” to properly plan its interventions to score maximum points under this element.

A failure to properly implement this element could lead to a company being penalised with up to 6 Contributor Levels on their Scorecard.

 

For more information please visit:

Web Site: http://taranisco.info
E-mail: advisor@taranisco.info

 

If you are interested in becoming one of our subscribers, please visit our website.
To view notes with screenshots on how to use our website, please visit our Wiki site.
To view more articles, please visit our blog.

 

About Gerrit Davids

Gerrit Davids is the Lead Advisor at Taranis Co Advisory with more than 20 years experience in government procurement regulations and having trained more than 2000 people on how to submit compliant tenders.

6 Feb 2017

Did you Know…? #DYK New Tendering Rules will change the way you do business.

by | posted in: Did You Know | 2

New Tendering Rules will change the way you do business.

Tenderers are required to make changes in the way they submit government tenders, especially in relation to sub-contracting.
Bids and tenders submitted without taking the below points into consideration stand to have their tenders deemed ‘unacceptable’ or could face hefty fines!
Gerrit Davids, owner and facilitator of a tender advisory consultancy, walks us through the new Preferential Procurement Policy Framework Act (PPPFA) Regulations.

 

 

  • The new Regulations from the outset grants an organ of state the authority to stipulate a ‘Preferred Minimum BBBEE Level’ in a tender, which will exclude certain companies with a lower BBBEE Level from submitting bids.

 

  • The Regulations will allow the state to include wide-ranging Sub-Contracting stipulations, which could force principle bidders to make use of up to 8 x different types of sub-contractors under the ‘Pre-Qualification Criteria’. Failure to do so will have the bid being declared ‘unacceptable’.

 

  • The value of the 80:20 and the 90:10 Preference Point Systems has been increased to below and above R50m respectively. However, it retains the current scoring of points for Price alongside that of BBBEE in tenders.

 

  • The new Regulations also place a 25% maximum on Sub-Contracting, which is done in the ordinary course of business with companies that have a lower BBBEE level than that of the principle bidder. Failure to comply with this stipulation will also cause tenders to be disqualified from consideration.

 

  • Regulations are introducing a new approach to pricing where a bidder scores the ‘highest points’ in a tender but its price is not market related and (the bidder) refuses to adjust it to be in-line with market related prices. The organ of state will have the right not to award the tender to such a bidder and it may even decide to cancel it.
  • An additional stipulation to the Regulations makes it obligatory for an organ of state issuing tenders to ‘make available a list’ of potential sub-contractors that qualify under the definition of ‘designated groups’ and such a list must be subject to approval by National Treasury.
  • The much-debated stipulation of compulsory Sub-Contracting of 30% for all tenders above R30m in value will also be allowed ‘where feasible’ to advance any one or more of the ‘designated groups’ as defined by these new Regulations.

 

  • Another key regulation stipulates that sub-contracting, which was not mentioned in the bidder’s tender could only be done with the permission of the organ of state ‘after a tender has been awarded’. A 10% penalty of the total value of the contract may be imposed where the correct sub-contracting procedures were not followed or where information was withheld, a ban on doing business with the state for 10 years could also be imposed by National Treasury under these new Regulations.

 

Davids says, “The meaning and understanding of the concept of ‘being proactive’ becomes a very relevant application with this new dispensation. Tenderers will be left behind if they do not make the required changes in the way they submit government tenders, especially in relation to sub-contracting”.

The Regulations will come into effect on 1 April 2017 giving tenderers less than 3 months to prepare for its impact.

Should you wish to contact the author:

Gerrit Davids – Lead Advisor at TaranisCo Advisory CC
Tel. 011-026 4891
Cell. +27 (0)82 496 1657
E-mail: advisor@taranis.co.za
Website: www.taranis.co.za

If you are interested in becoming one of our subscribers, please visit our website.
To view notes with screenshots on how to use our website, please visit our Wiki site.
To view more articles, please visit our blog.

 

About Gerrit Davids

Gerrit Davids is the Lead Advisor at Taranis Co Advisory with more than 20 years experience in government procurement regulations and having trained more than 2000 people on how to submit compliant tenders.

18 Aug 2014

Is there Value in attending Tendering Workshops?

by | posted in: Frequently Asked Questions, How To | 2

Is there Value in attending Tendering Workshops?

The question raised is similar to that for all other types of training where prospects question the wisdom of attending workshops. Depending on who’s answering the question, that in itself is a debatable one. If I were to be the one asking this question I would look for the following background checks on those offering the training.

Firstly, you have to look at the facilitators’ track record and here we are not referring to academic qualifications but for how many years has the person been presenting on the aspects of tendering. Secondly, you would have to request a Course Outline to determine as to whether the topics covered will indeed be in line with your expectations and thirdly, to check what kind of feedback past delegates’ are giving on the facilitators ability to bring the subject matter across in a manner that made them “happy”. I would say, that once you’ve ticked off all the boxes, then we are halfway there in answering the above question.

In essence it now becomes an issue as to what one should expect of such a workshop or training seminar. In the main, the facilitator has to cover the key legal aspects around the subject of tendering as well as bringing in other enabling legislation since the topic of tendering in itself is not a stand-alone issue. Depending on who one tenders for i.e. local, provincial or national government, parastatals or state owned enterprises, you need to be made aware by the facilitator that the applicable tendering-legislation has relevance to all these different spheres of government. Further, the facilitator needs to explain the different and various “stumbling blocks” found within the broader scope of the tendering process.

Primarily, those tendering for government contracts are challenged with submitting compliant bids since only those bids that are considered to be compliant will “graduate” to the short-list from which they will choose the successful bidder. The facilitator will also have to cover the aspects of the different committees systems, their structure, role and functions as well as how tenders are scored through the different point systems. Issues like the key pillars of tendering; BBBEE and sub-contracting, firm and non-firm pricing must also be covered in explaining the over-arching process of tendering.

Completing tender documents are not really open to varied interpretation since each bid document must consist of most of the 9 prescribed forms or returnables as issued by the national treasury. One of the areas that must be covered is the “declaration of interests” since delegates must be advised that by getting things wrong on this form could have serious legal repercussions such as being accused of what I call “inadvertent fraudulent declarations”. Also, the aspects of when to submit fixed prices and non-fixed prices coupled with the limitations on sub-contracting and the general conditions of contract, are also key issues to be dealt with in the workshop.

Overall, if you are happy that these key points will be covered in the workshop, then the answer to the above question should be in the “affirmative”

Gerrit is the Lead-Advisor at Taranisco Advisory CC and is contactable at advisor@taranis.co.za or www.taranis.co.za

About Gerrit Davids

Gerrit Davids is the Lead Advisor at Taranis Co Advisory with more than 20 years experience in government procurement regulations and having trained more than 2000 people on how to submit compliant tenders.