Helpful information on Tenders
What is a Tender?A Tender is best described as an offer to carry out work and or supply materials or another defined asset
at a stated fixed price.
Tenders on offer are normally by public, open offer or invitation (usually announced in a newspaper
advertisement) by a prospective acquirer to all interested parties. However, private tenders do exist,
where members are invited to bid.
Tendering is a great way to generate new business for your company.
Tender documents consist of:
- Tender number, closing date and vailidity period.
- A description of the product(s) and or service(s) required
- Bid Cover Page
- Point System Form
- Instructions to Bidders
- Bid Commitment and Declaration of Interest
- Compulsory Site Inspection – Declaration of Attendance (only part of the tender document, when a compulsory site inspection is applicable)
- Specification Cover Page
- RFP Price Schedule
- Non-firm Prices
- Vendor Information
- Tax Clearance – Application Form
- National Industrial Participation Programme form (Onlyrequired when an imported component in excess of US $ 10 million is expected)
Does a framework exist for construction procurement processes and procedures?Yes, there is a set of standards as established by the South African National Standards SANS 294:2004
What is the objective of Government Tendering?The objective is to obtain the best market response to the requirements for supplies and services, in terms of quality, timeliness and cost. Other key items of consideration are: the ability to reduce business and technical risks, satisfiy government's actual need, achieve socio-economic objectives such as BEE , maximise competition; while creating a base of responsible suppliers and an environment in which suppliers become sustainable and a transparent tendering process, specifically by maintaining integrity: ensure that government officials deal fairly and in good faith and do not play one supplier against another and to avoid conflict of interest.
What are the five pillars of Tendering?
- Value for money
- Open and Effective Competition
- Ethics and Fair Dealing
- Accountability and Reporting
The Tendering ProcessWhen submitting a tender it is very important to remember that it's a highly competitive process, so it's crucial that you
meet all the requirements, put your best quote forward as well as include all supporting documentation.
On the tender notice there will be critical information your company needs to take note of, particularly:
- The description of work to be carried out
- The site inspection date ( which is often compulsory in order to tender)
- The tenders document collection details as well as tender deposit amount if it applies
- Where the completed tender document must be delivered to
- CIDB Grading if applicable
- Contract period
- Tender restrictions
- Contact details of the client
Important factors to consider before submitting or completing a tender:Preparing and writing your response to a tender can be daunting, expensive and time consuming, and furthermore there is no guarantee of success.
Before your company decides on whether or not to submit a response, take a moment to consider the following:
- Does your company meet the requirements specified in the Tender?
- Is this tender financially viable for your company?
- Does your company already have the necessary financial resources to deliver the requirements of the tender or will you need a loan?
- Does your company have the necessary human resources for the job?
- Is your company able to fulfil all of the requirements or will there be a need to
sub-contract some of the work to another company?
If so, to whom will the work be contracted and how much will it cost?
- Is there an actual or potential conflict of interest that could prevent you from submitting a response to this tender?
- Is your company familiar with all of the organisation's policies on purchasing or at the very least, have access to their documentation to establish their parameters?
Where can I find Tenders?There are a number of resources available for finding tenders.
Tenders are generally widely published in newspapers. Therefore, you can subscribe to multiple newspapers, the government gazettes in the country of interest, alternately there are provincial gazettes and some companies will publish information on their website access to which can be either paid or free.
If all the fees for multiple subscriptions sounds beyond the scope of your pioneering company and the daily research sounds like you need to employ someone in a full time position, there is always the option of subscribing to one of our Leads 2 Business services. We do the research, collate the information and and place relevant tenders in your Inbox on a daily basis.
Documents you may require for Tenders:
Primary Preference Claim Forms:
- PREF FORM 01: Purchases - Ownership and Management of Organisations by Historically Disadvantaged Individuals (HDls)
- PREF FORM PREF 02: Sales - Ownership and Management of Organisations by HDIs
Secondary preference claim forms:
- PREF FORM 03: The Promotion of Small Businesses
- PREF FORM 04: Locally Manufactured Products
- PREF FORM 05: The Empowerment of the Work Force by Standardising the Level of Skill and Knowledge of Workers
- PREF FORM 06: The Development of Human Resources including by assisting in Tertiary and Other Advanced Training Programmes in line with Key Indicators such as the Percentage of Wage Bill spent on Education and Training and Improvement of Management Skills
- PREF FORM 07: The Upliftment of Communities through, but not limited to Housing, Transport, Schools, Infrastructure Donations and Charity Organisations
- PREF FORM 08: Export Oriented Production to Create Jobs
- PREF FORM 09: Promotion of Enterprises located in a specific Province
- PREF FORM 10: Promotion of Enterprises located in a specific Region
- PREF FORM 11: Promotion of Enterprises located in a specific Municipal Area
- PREF FORM 12: Promotion of Enterprises located in Rural Areas
Legislation governing procurement / tenders:
- The Constitution of the Republic of SA (Act 108 of 1996) Chapter 13 - Section 217
- The Public Finance Management Act, Act 1 of 1999, (As amended by Act 29 of 1999)
- The National Small Business Act No 102 of 1996 (Schedule of categories of Small, Medium and Micro Enterprises)
- The Preferential Procurement Policy Framwork Act (Act 5 of 2000) & Regulations August 2001.
- The Municipal Systems Act No 32 of 2000.
- The Municipal Finance Management Act of 2003.
- Municipal Supply Chain Management Regulation of 2005.
How are tenders awarded?
- Subsequent to the closing date, all the tenders which have been submitted are checked
for basic compliance to the tender regulations.
Tenders can be disqualified during this process due to non-compliance.
- The compliance of the products or services offered in relation to the tender specifications and price are considered. All tenders which comply with the specifications are listed in order of price.
- Initially preference points allocated to suppliers on the list of lowest price tenders are verified. Preference points are only awarded after the most expensive tenders have been excluded, as this makes the process quicker and fairer.
- Those with verifiable information come out with the best preference points and are therefore awarded the contract.
Tips for tendering
- Provide all the information required.
- Calculations for tender prices need to be checked and correct.
- If unsure about the tender, enquire and obtain all relevant information.
- Do not make misinterpretations or false statements.
- Present the information in a neat, well organised manner.
Maximizing your tender pointsThe winner of a tender usually scores the highest number of points in the tender evaluation process. All tenders will state how these points are allocated but they are usually for the following:
- BEE status - the higher the number of previously disadvantaged people who own shares
in the company submitting the tender, the more points are scored.
Extra points are often awarded to youth, woman and disabled too.
- Location - most organizations requesting tenders would like to award tenders to businesses operating within the local region. Thus if Cacadu District Municipality is requesting a tender, a business based in the district or surrounding areas will earn more points than a business based elsewhere.
- Past experience - a significant portion of points allocated in a tender evaluation are for past experience. Businesses that have completed at least three or more tenders similar to the tender requested will score maximum points.
- Project management team - the team of people who will manage the tender need to have as much experience as possible. The tender will usually state the type of experience and qualifications required.
- Submission of examples - some tenders may ask that the samples of previous work, samples of goods or services or technical statistics of the goods or services must be submitted in the tender.
- Price - another big decider in who wins the tender will be the price quoted. The tender documents will usually give an exact example of what needs to be submitted so that, in the evaluation process, exactly the same items are compared.
There are a number of ways of maximizing these points and they include the following:
- Joint ventures - This is when two or more companies pool their resources to score maximum points. Thus a company that is entirely white owned that would score high points under past experience may want to create a joint venture with another company with less experience but with a high BEE status.
- Low pricing - companies that lack past experience may try to score high points by submitting a low price. This can be risky as, if the price is too low, the tendering company may not be able to pay their staff and suppliers.
- New staff - highly qualified staff may be contracted as part of the management team and thus increase points in this area.
They may award the tender to an organization with which they feel most comfortable. Thus neatness of presentation can count for a lot. Make sure your tender is always accurate, easy to read and well presented.