Understanding Local Content and Production in tenders
28-05-2021
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Taranis
Source
The 2017 Preferential Procurement Policy Framework Act Regulations (PPPFA), prescribes that in certain instances only, “Locally produced services or goods or locally manufactured goods”, which “Meet the stipulated minimum threshold for local production and content”, will be considered in tenders.
Organs of state are in such instances, thus obliged to “Advertise the invitation to tender with a specific condition that only locally produced goods or locally manufactured goods, meeting the stipulated minimum threshold for local production and content, will be considered.”
It may also in certain cases, in liaison with the Department of Trade and Industry in consultation with the National Treasury, where products or services are not designated, include a stipulation in a tender, that also, only “Locally produced services or goods or locally manufactured goods with a stipulated minimum threshold for local production and content, will be considered.”
Bidders would then be obliged to complete the tender form, SBD6.2 or MDB6.2 as well as Annexures C, D & E, respectively.
According to Gerrit Davids, Lead Advisor at TaranisCo Advisory, tendering agency, “Bidders would primarily have to make a distinction on the Annexures as to what is Imported Content, Imported Products, special payments made to foreign suppliers and differentiating that from goods, which were manufactured locally.”
Davids says, “All designated sectors have specific thresholds placed on importation and if not met, bidders would either have to apply for an “Authorisation” or “Exemption”, which must accompany their respective bids.”
“Many bidders are summarily disqualified for not completing the Annexures correctly, since no clear guidance is given by the organs of state, as to which data must be inserted on it, with the result their bids are not considered to be compliant to the targeted thresholds as per the applicable designated sector.”
“Essentially, Annexure C is an amalgamation of the data inserted on Annexures D and E, and the former is normally submitted with the bid document, while bidders must retain and keep on record the latter, which will be audited should the bidder win a contract from an organ of state”, said Davids.
For more information on how to complete Annexures C, D and E, Click Here
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