Tenders, Bids, Quotations, Evaluations and Contacts explained for South African Tenders.

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And now for the video script... :)

Right, lets jump right in. There are two main categories of tender providers namely the government and private companies. The government has over 900 different departments which include national, provincial and municipal departments. If you want to apply for a tender from any of these departments, you first have to register on the Central Supplier Database or CSD. If you haven’t registered with CSD already; I would recommend you watch my video on this topic. The good news is that you only have to register once on the CSD as all the government departments refer to this database for compliance, so if all your data is accurate and up to date, you are good to go.

The second major category of tender providers is the private sector. For private companies it is not a requirement to register on the CSD database, but you have to register on the respective vendor databases of each company this means you will have to repeat the registration process for each individual company, should you wish to register with them. Most private companies have closed tenders meaning only bidders registered on their database are invited.

For both Government and the private sector B-BBEE certification is a key requirement for all tender applications. If your company turnover is less than R50m per year you only need an affidavit and not a certificate issued by an accredited verification agency which can be very expensive.

If you would like more information on BEE certification, I have made a video on this topic too. But just to recap, small businesses with turnovers of less than R10m are defined as an Exempt Micro Enterprise and depending on the percentage of black ownership in the company; the BEE level will be either Level 1 for 100% black owned companies or level to 2 for between 99 -51% black ownership and Level 4 for everything less than 50% black ownership companies.

So how does your BEE status effect your tender? To understand this question, you must first get to grips with the tender evaluation points system. Let me explain, each tender is ranked out of a maximum of 100 points and the bidder with the most points is awarded the tender.

Now, depending on the value of the tender, different procedures are followed. For tenders valued at between R30k and R50m the 80/20 points system is used. What this means is that 80 of the 100 points are based on the price of the tender and the remaining 20 points are based on your B-BBEE status. For tenders above R50m the points system changes to a 90/10 ratio.

This may all sound a bit complicated so let give you an example. In this table you will see the BEE statuses on the left ranging from one all the way down past 8 to non-compliant. The middle and righthand columns reflect the number of points allocated for the 90/10 and 80/20 systems respectively. Therefore, if you have a level 4 B-BBEE status and you are tendering on a job valued below R50m you will have look at the 80/20 column, where you will be awarded 12 points out of a possible 20. I hope this makes some sense to you.

Now most importantly, the evaluation committee still needs to award the points for the price of your tender. To do this, your price is compared to the lowest acceptable bid and expressed in points using the following mathematical formula: Points = 80 x (1-((Your price-lowest acceptable bid)/lowest acceptable bid)) This formula determines how many points you get out of 80 for your tender price, with the lowest bid receiving the most points. Remember this example is based on the 80/20 system because the tender value is below R50m.

Now that both the price and the BEE points have been calculated, the committee adds them together and the bid with the highest score will be awarded the tender.

So, where do you find the tenders? There are a multitude of website such as etenders, greengazette, cidb and the dtic. The challenge with looking for tenders using this method is that it is time consuming and tedious as the tender information is scattered across these websites. So to make life easier for you, we have developed a tender notification service were we search, capture and index all government tenders and then make them available to you in one place in a user friendly format. This is updated on a daily basis so the information is fresh and relevant.

Our notification service has a free tender search facility so just click on our website www.swiftreg.co.za and navigate to the tenders section. You can search all government tenders by selecting the region and typing in any keyword.