Frequently Asked Questions

Being an author on a blog certainly stretches you. Our Company started a blog this year to reach out to people and try address some of the questions we encounter in an informal manner.  It is harder than it looks.  We have some staff who are amazing authors and in doing so make it look so easy.  It isn’t you know.  But it does give you the opportunity to expand your skills somewhat.

That being said, one of the questions I encounter is “What do I need to Complete a Tender?”  There doesn’t seem to be a one-stop shop for all the tender documentation needed (if there is and I haven’t located it, please share, I would love to know).  So we have attempted to locate some tips of the trade from some websites and list some of the documentation needed.  Also find the link to our blog below the article where we have a list of all the electronic documents we could find.  So here goes….

Step-by-step guide to tendering for government

Get registered with relevant departments on their database.

Goods and services:

For tenders under R30 000 the relevant government department will usually approach three registered providers for a quote
Tenders of more than R30 000 must generally be advertised to all subscribers
Tenders over R20 0000 must be advertised and formally adjudicated
Building and engineering:

Tenders over R2-million have to be adjudicated and formally advertised
Tenders below R2-million are seen as minor and under R100 000 as micro

How do I know my business is ready to tender?

If it’s a registered business
If it has a good banking record and relationship with suppliers and clients
If it is able to deliver on all specifications
If there is no possible conflict of interest with the government body or anyone adjudicating on the tender application, in the form of directorships or shareholding or family relationships
If the business has the required cash flow
If there are qualified staff
If employees are registered with the Department of Labour
A sole trader or partnership can tender – however, the business must be licensed or registered with the relevant local authority, must have a bank account and must have up-to-date tax clearance

Keys to success:

Complete tender documentation in full
Ensure the business is properly registered and licensed, and that taxes have been paid
Preference points will be given to previously disadvantaged individuals (PDI) or women. Generally, for tenders over R50 000, 80% will be adjudicated on price and 20% on PDI or gender status. For tenders over R500 000, the 90% to 10% price system applies
Price plays an important role and the most expensive tenders are likely to be excluded first. Keep in mind that some costs can change, such as labour, material and equipment and this needs to be factored in

Tender documents must contain:

A VAT registration number

• Any proof of product guarantee – like SABS or ISO marks of quality
• Permits for goods not made in South Africa and prices for goods must be supplied
• A number of forms need to be completed for national and provincial government tenders. These include:
• Invitation to bid, in which the company agrees to be bound by terms and conditions of tender (eg Form ST 36)
• Official cover page of the tender document; (eg Form ST 8)
• Tax clearance certificate (eg Form ST 5)
• One form requires: closing date, tender number, price, delivery period (eg Form ST 7)
• Preference point certificate to highlight if there are previously disadvantaged candidates (eg Form ST 11)
• A declaration of interest – businesses are required to declare relationships with members of the tender board or government. A list of these forms can be found on: (eg Form ST 12)

Have you been accepted or rejected?

The Tender Board will notify companies as to whether they have been accepted. It’s important to note that sometimes this can take some time and may not leave unsuccessful companies time to appeal, so experts approached by Corruption Watch advise keeping in contact with the government department and checking on the status of the tender process.

The departments or parastatals are not required to list on their websites who has been appointed, which many feel is a weakness, particularly for small businesses.

Objections:

Companies can also object to the department or government entity if they feel the period for application is not sufficient, or they may request a copy of the decision by the tender board.

For a further blog article with links to the various documents, click here.

 

 

 

Some helpful websites:

http://www.l2b.co.za/ProductInformation/Proformas

http://www.seda.org.za/MyBusiness/Factsheets/Pages/HowdoItender.aspx

http://www.westerncape.gov.za/tenders/how_to_tender

Source information:

http://www.corruptionwatch.org.za/

GUIDELINES FOR CONTRACTOR REGISTRATION

Who must apply?
All contractors seeking to participate in public sector infrastructure delivery must be registered on
the cidb Register of Contractors.

Contractors who are exempted from registration are:
• Home builders, unless they also wish to tender for other kinds of public sector construction work.
• Those who undertake contracts consisting substantially of the provision of labour.
• Those who undertake contracts consisting substantially of the provision of supplies.

Why register?
According to the cidb Act 38 of 2000 no public sector client may award construction contracts to
a contractor who is not registered. The Register grades and categorises contractors according to
their capability to carry out construction projects. There are 9 different grading levels according to
which contractors can be registered. A grade determines the maximum Rand value of a project as
well as the type of construction works a contractor is capable to perform.
Can a contractor be registered in different grades?
A contractor may apply to be graded in one or several grades. However a contractor can only be registered in 1 grade per class of works.

Providing sufficient evidence to support your application
The CIDB evaluates applications for grading and registration based on evidence of works and financial capability provided by the
contractor. Evidence is then used to determine which grade and class of works a company qualifies for. Once a grade has been
determined and approved by the Board a contractor is then able to tender for construction contracts within the approved grade. Should a contractor fail to provide sufficient evidence to support the grade applied for the cidb will determine an appropriate grade based on the information at its disposal.
A contractor has the right to appeal the decision of the cidb.

To determine grading the cidb evaluates a contractor’s financial and works capability.

A. Financial capability requirements:

To determine financial capability the cidb takes into consideration:

1. The best annual turnover over the two financial years immediately preceding the application and available capital.
2. Available capital. The cidb calculates available capital by adding any financial sponsorship to the sum of the net asset value of a
contractor as indicated in the most recent financial statements. Net Asset Value is the difference between the total assets and total
liabilities of a company as reflected in the company’s most recent financial statements.
3. Financial sponsorship. Financial sponsorship must be a collectable financial guarantee by one person (a sponsor) to another, (the
beneficiary).

Financial sponsorship must be:

• A determined amount to support operations of the contractor concerned in order to complete projects. Any sponsorship from another
• company other than a financial institution may not exceed 15% of the sponsor’s net asset value;
• Available to the beneficiary as and when required;
• If applicable, it must be available to a third person, such as a bank, to advance funds or such as a supplier, to advance a line of credit;
• If applicable, it must be in a form acceptable to any financial institution in South Africa as defined in the Financial Services Board Act,
• 97 of 1990; and

Please note that:
a) where the sponsor is a registered contractor or owns 50 percent or more of the applicant contractor, sponsorship may constitute
up to 100 percent of the total required available capital;
b) where the sponsor is not a registered contractor and owns 25 percent or more of the applicant contractor, sponsorship may not
exceed 75 percent of the total required available capital; and
c) where the contractor is not a registered contractor and the sponsor owns less than 25 percent of the applicant contractor,
sponsorship may not exceed 50 percent of the total required available capital.

B. Works capability requirements explained:

Works capability is determined by:

• The largest contract undertaken and completed in the relevant class of construction works within the 5 years immediately preceding
the application;
• The total number of full time registered professionals employed
• The fulfilment of relevant statutory requirements.

Types of grading methods used:
There are two methods that a contractor’s grade may be assessed on:

• Method A is based on financial capacity and works capability and is applicable to all grades.

• Method B is based on available capital and the number of registered professionals employed and is only applicable for grades 5 – 9.
(There are no turnover and track record requirements for Method B). The requirement for available capital and registered professionals
for Method B is higher than the requirement for Method A.

• The contractor must employ the minimum number of registered professionals permanently (full time) or the equivalent number of
persons on a part time basis (totalling 40 hours a week).
• The “full-time equivalent” means that, for example, two part time engineers, each working 20 hours a week, would equal one
full-time engineer.
• A registered professional is recognised by virtue of his or her training and experience as having the necessary qualifications to undertake
construction works in a specific class. All registered professionals (e.g. architects, quantity surveyors, etc.) employed by a contractor are
required to be registered with relevant built environment councils.

Source information:
http://www.cidb.org.za/documents/kc/cidb_publications/brochures/brochure_contractor_registration_guidelines.pdf