391. Bidders are required to submit original and valid B-BBEE Status Level Verification Certificates or certified copies thereof together with their bids, to substantiate their B-BBEE rating claims.
392. Bidders who do not submit B-BBEE Status Level Verification Certificates or are non-compliant contributors to B-BBEE do not qualify for preference points for BBBEE but should not be disqualified from the bidding process. They will score points out of 90 or 80 for price only and zero (0) points out of 10 or 20 for BBBEE.
393. However, should the municipality stipulate a specific B-BBBEE Status Level as prequalification criteria in terms of Regulation 4 and the bidders does not meet this requirement; municipality must disqualify such bidder as having submitted an unacceptable bidder.
394. A trust, consortium or joint venture must submit a consolidated B-BBEE Status Level Verification Certificate for every separate bid.
395. Public entities and tertiary institutions must also submit B-BBEE Status Level Verification Certificates together with their bids.
396. If an institution is already in possession of a valid and original or certified copy of a bidder’s B-BBEE Status Level Verification Certificate that was obtained for the purpose of establishing the database of possible suppliers for price quotations or that was submitted together with another bid, it is not necessary to obtain a new B-BBEE Status Level Verification Certificate each time a bid is submitted from the specific bidder.
69
397. Such a certificate may be used to substantiate B-BBEE rating claims provided that the closing date of the bid falls within the expiry date of the certificate that is in the institution’s possession.
398. Each time this provision is applied, cross-reference must be made to the B- BBEE Status Level Verification Certificate already in possession for audit purposes.]
396. AOs / AAs must ensure that the B-BBEE Status Level Verification Certificates submitted are issued by the following agencies3:
396.1 Bidders other than EMEs
(a) Verification agencies accredited by SANAS; or (b) Registered auditors approved by IRBA.
396.2 Bidders who qualify as EMEs
(a) Sworn affidavit signed by EME representative and attested by a Commissioner of Oaths.
(b) Accounting officers as contemplated in the CCA; or (c) Verification agencies accredited by SANAS; or
(d) Registered auditors. (Registered auditors do not need to meet the
(e) prerequisite for IRBA’s approval for the purpose of conducting verification (f) and issuing EMEs with B-BBEE Status Level Certificates).
VALIDITY OF B-BBEE STATUS LEVEL VERIFICATION CERTIFICATES 397. As a minimum requirement, all valid B-BBEE Status Level Verification
Certificates should have the following information detailed on the face of the certificate:
(a) The name and physical location of the measured entity;
▪ The registration number and, where applicable, the VAT number of the measured entity;
▪ The date of issue and date of expiry;
▪ The certificate number for identification and reference;
▪ The scorecard that was used (for example EME, QSE or Generic);
▪ The name and / or logo of the Verification Agency;
▪ The SANAS logo;
▪ The certificate must be signed by the authorized person from the
▪ Verification Agency; and
▪ The B-BBEE Status Level of Contribution obtained by the measured entity 398. The format and content of B-BBEE Status Level Verification Certificates issued
by registered auditors approved by IRBA must –
(a) Clearly identify the B-BBEE approved registered auditor by the auditor’s individual registration number with IRBA and the auditor’s logo;
70
(b) Clearly record an approved B-BBEE Verification Certificate identification reference in the format required by the SASAE;
(c) Reflect relevant information regarding the identity and location of the measured entity;
(d) Identify the Codes of Good Practice or relevant Sector Codes applied in the determination of the scores;
(e) Record the weighting points (scores) attained by the measured entity for each scorecard element, where applicable, and the measured entity’s overall B- BBEE Status Level of Contribution; and
(f) reflect that the B-BBEE Verification Certificate and accompanying assurance report issued to the measured entity is valid for 12 months from the date of issuance and reflect both the issuance and expiry date.
399. Confirmation of the validity of a B-BBEE Status Level Verification Certificate can
be done by tracing the name of the issuing Verification Agency to the list of all SANAS accredited agencies. The list is accessible on
http://www.sanas.co.za/directory/bbeedefault.php
Accounting officers as contemplated in section 60(4) of the CCA;
400. These certificates will be issued in the accounting officer’s letterhead with the accounting officer’s practice number and contact number clearly specified on the face of the certificates.
401. The content of B-BBEE Status Level Verification Certificates issued by accounting officers as contemplated in the CCA is detailed in paragraph 4.8.5 below.
VERIFICATION CERTIFICATES IN RESPECT OF EMEs
402. In terms of the Generic Codes of Good Practice, an enterprise including a sole propriety with an annual total revenue of R10 million or less qualifies as an EME.
403. In instances where Sector Charters are developed to address the transformation challenges of specific sectors or industries, the threshold for qualification as an EME may be different from the generic threshold of R10 million. The relevant Sector Charter thresholds will therefore be used as a basis for a potential bidder to qualify as an EME. For example the approved thresholds for EMEs for the Tourism and Construction Sector Charters are R2.5 million and R1.5 respectively.
404. An EME automatically qualifies as a level 4 contributor with B-BBEE recognition level of 100% in terms of the Codes of Good Practice.
405. An EME with at least 51% black ownership qualifies as Level 2 Contributor with B-BBEE level of 125% in terms of the Codes of Good Practice.
406. An EME with 100% black ownership qualifies as a Level 1 contributor with B- BBEE level of 135% in terms of the Codes of Good Practice.
71
407. An EME that is regarded as a specialized enterprise with at least 75% black beneficiaries qualifies as Level 1 contributor with B-BBEE level of 135% in terms of Codes of Good Practice.
408. An EME that is regarded as a specialized enterprise with at least 51% black beneficiaries qualifies as a Level 2 contributor with B-BBEE level of 125% in terms of the Codes of Good Practice.
409. An EME is required to submit a sworn affidavit confirming their annual total
revenue of R10 million or less and level of black ownership to claim points as prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017.
410. An EME that is regarded as a Specialized Enterprise is required to submit a sworn affidavit confirming their annual turnover/ allocated budget/ gross receipt of R10 million or less and level of percentage of black beneficiaries to claim points as
prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017.
411. An EME may be measured in terms of the QSE scorecard should they wish to maximize their points and move to a higher B-BBEE recognition level. It is in this context that an EME may submit a B-BBEE verification certificate
ELIGIBILITY AS QUALIFYING SAMLL ENTERPRISES (QSE)
412. The Codes define a QSE as any enterprise with annual total revenue of between R10 million and R50 million.
413. A QSE with at least 51% black ownership qualifies as a Level 2 contributor.
414. A QSE with 100% black ownership qualifies as a Level 1 Contributor.
415. A QSE that is regarded as a specialized enterprise with at least 75% black beneficiaries qualifies as a Level 1 contributor with B-BBEE level of 135% in terms of the Codes of Good Practice.
416. A QSE that is regarded as a specialized enterprise with at least 51% black beneficiaries qualifies as a Level 2 contributor with B-BBEE level of 125% in terms of the Codes of Good Practice.
417. A QSE is required to submit a sworn affidavit confirming their annual total revenue of between R10 million and R50 million and level of black ownership or a B-BBEE level verification certificate to claim points as prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017.
418. A QSE that is regarded as a specialized enterprise is required to submit a sworn affidavit confirming their annual turnover/ budget/ gross receipt of R50 million or less and level of
percentage of black beneficiaries or a B-BBEE level verification certificate to claim points as prescribed by regulation 6 and 7 of the Preferential Procurement Regulations 2017.
72 LOCAL PRODUCTION AND CONTENT Designated Sectors
419. Bidders in respect of goods or services that have been designated for local production and content, must contain a specific bidding condition that only locally produced goods or services with a stipulated minimum threshold for local production and content will be considered.
420. AOs / AAs must stipulate in tender invitations that the exchange rate to be used for the calculation of local content (local content and local production are used interchangeably) must be the exchange rate published by the SARB at 12:00 on the date, one week (7 calendar days) prior to the closing date of the bid.
421. Only the South African Bureau of Standards (SABS) approved technical specification number SATS 1286:201x must be used to calculate local content. The formula to calculate local content must be disclosed in the bid documentation.
422. The local content (LC) as a percentage of the bid price must be calculated in accordance with the SABS approved technical specification number SATS 1286: 201x as follows:
LC = 1 x 100 Where
x imported content
y bid price excluding value added tax (VAT)
Prices referred to in the determination of x must be converted to Rand (ZAR) by using the exchange rate published by the South African Reserve Bank (SARB) at 12:00 on the date, one week (7 calendar days) prior to the closing date of the bid.
423. For the purpose of paragraphs 422, 423 and 424 above, the MBD 6.2 (Declaration Certificate for Local Content) must form part of the bid documentation.
424. The Declaration Certificate for Local Content (MBD 6.2) must be completed and duly signed. AOs / AAs are required to verify the accuracy of the rates of exchange quoted by the bidder in paragraph 423 of this implementation guide.
425. In relation to a designated sector, a contractor must not be allowed to sub-contract in such a manner that the local production and content of the overall value of the contract is reduced to below the stipulated minimum threshold.
NON-DESIGNATED SECTORS
426. Where there is no designated sector, municipality may decide to include a specific bidding condition that only locally produced goods or services with a stipulated minimum threshold for local production and content, will be considered, on condition that such prescript and threshold(s) are in accordance with the specific standards determined by the dti in consultation with the National Treasury.
73
427. Municipality must stipulate in bid invitations that the exchange rate to be used for the calculation of local content must be the exchange rate published by the SARB at 12:00 on the date, one week (7 calendar days) prior to the date of closure of the bid.
428. Only the South African Bureau of Standards approved technical specification number SATS 1286:201x as indicated in paragraph 424 above must be used to calculate local content.
429. For the purpose of paragraphs 429, 430 and 431 above, the MBD 6.2 (Declaration Certificate for Local Content) must form part of the bid documentation.
430. The Declaration Certificate for Local Content (MBD 6.2) must be completed and duly signed. Institutions are required to verify the accuracy of the rate(s) of exchange quoted by the bidder in paragraph 13.2.2 of this implementation guide.
SUBCONTRACTING AS A CONDITION OF TENDER FOR PROCUREMENT ABOVE R 30 MILLION (Regulation 9)
431. “The regulation states that if feasible to contract above R 30 million, an organ of state must apply subcontracting to advance designated groups”.
432. The term “feasible” is used in recognition of the fact that it may not always be possible to subcontract in all tenders due to the nature of some tenders. (For instance it may not be possible to sub-contract one piece of machinery that is above R 30 million)
433. Municipality must therefore identify procurement opportunities for designated groups where compulsory sub-contracting must be applied to all contracts/ projects above R30 million.
434. The responsibility to determine whether it is feasible or not rests with the institution preparing the tender. Institutions must ensure participation of EMEs and QSEs in contracts or projects and not just dismiss this provision on the basis that it is not feasible without providing facts and objective analysis to substantiate their decision.
435. Notwithstanding the minimum 30% compulsory sub-contracting provision, municipality may identify procurement opportunities for participation of designated groups in contracts or projects below R30 million.
436. Bidders must be advertised with a condition that bidders who fail to comply with this requirement would be disqualified.
437. Municipality must conduct market or industry research to identify level of transformation in the sector or commodity, role players and their B-BBEE status level and availability of EMEs or QSEs who may be eligible for subcontracting.
438. The Central Supplier Database (CSD) has been upgraded to allow bidders/ contractors/
suppliers access to CSD for identification of potential sub-contractors from the pool of EMEs or QSEs to advance designated groups.
74
439. In the case of construction and built environment sectors, nothing prevents bidders/
contractors/ suppliers to select sub-contractors from the CIDB database who are registered on the CSD for the purposes of compliance with the minimum 30%
compulsory sub-contracting provisions.
440. Bidders or contractors must submit proof of subcontracting arrangement between the main tenderer and the subcontractor. Proof of subcontracting arrangement may include a subcontracting agreement between main tenderer and the subcontractor.
441. The responsibility for inclusion of compulsory subcontracting clause in the bid rests with the municipality.
442. The responsibility to sub-contract with competent and capable subcontractors’ rests with the main contractor/ supplier.
443. The contract will be concluded between the main contractor and the institution, therefore, the main contractor and not the sub-contractor would be held liable for performance in terms of its contractual obligations.
444. Main contractors/ suppliers are discouraged from subcontracting with their subsidiary companies as this may be interpreted as subcontracting with themselves and / or using their subsidiaries for fronting. Where primary contractor subcontracts with a subsidiary this must be declared in tender documents.
445. Bidders that do not meet subcontracting requirements are considered as being not acceptable tenders and must be disqualified and may not be considered for further evaluation or award.
446. The report containing the list of potential subcontractors may be drawn by accessing the following link: www.csd.gov.za
447. The Central Supplier Database (CSD) was enhanced to enable Institutions to search for suppliers based on the criteria as per Preferential Procurement Regulations, 2017.
The following steps can be followed:
PLANNING, STIPULATION OF PREFERENCE POINT SYSTEM TO BE UTILISED AND THE DETERMINATION OF DESIGNATED SECTORS
448. Prior to the invitation of bids, AOs/AAs are required to:
(a) Properly plan for the provision of services, works or goods in order to ensure that the resources that are required to fulfill the needs identified in the strategic plan of the institution are delivered at the correct time, price, place and that the quantity and quality will satisfy those needs.
(b) As far as possible, accurately estimate the costs for the provision of the required services, works or goods. This is in order to determine and stipulate the appropriate preference point system to be utilised in the evaluation and
75
adjudication of the bids and to ensure that the prices paid for the services, works and goods are market related.
(c) Estimated costs can be determined by conducting an industry and commodity analysis whereby prospective suppliers may be approached to obtain indicative market related prices that may be utilised for benchmarking purposes. Based on the findings, the relevant preference point system (80/20 or 90/10) to be utilized for the evaluation of the bid must be stipulated in the bid documents; and
(d) Determine whether the services, works or goods for which an invitation is to be made have been designated for local production and content in terms of Regulation 9 of the Preferential Procurement Regulations. This will entail the inclusion of a specific condition in the bid documents that only locally produced services, works or goods or locally manufactured goods with a stipulated minimum threshold for local production and content will be considered. This will subsequently have a direct impact on the evaluation of the bid.
(e) Must identify procurement opportunities where pre-qualification criteria as provided for in Regulation 4 must be applied.
(f) Must identify procurement opportunities where subcontracting as condition of tender for procurement above R 30 million must be applied.
BIDS BASED ON FUNCTIONALITY AS A CRITERION
449. In general, not all bids should be invited on the basis of functionality as a criterion.
The need to invite bids on the basis of functionality as a criterion depends on the nature of the required commodity or service taking into account quality, reliability, viability and durability of a service and the bidders technical capacity and ability to execute a contract.
450. When an institution invites a bid that will also be evaluated on the basis of functionality as a criterion, the AO/ AA must clearly specify the following aspects in the bid documents:
(a) Evaluation criteria for measuring functionality
The evaluation criteria may include criteria such as the consultant’s relevant experience for the assignment, the quality of the methodology; the qualifications of key personnel; transfer of knowledge etc.
(b) Weight of each criterion
The weight that is allocated to each criterion should not be generic but should be determined separately for each bid on a case by case basis.
(c) Applicable value
The applicable values that will be utilised when scoring each criterion should be objective. As a guide, values ranging from 1 being poor, 2 being average, 3 being good, 4 being very good and 5 being excellent, may be utilised.
76
(d) Minimum qualifying score for functionality.
EVALUATION OF BIDS BASED ON FUNCTIONALITY AS A CRITERION
451. Bids invited on the basis of functionality as a criterion must be evaluated in two stages – first functionality must be assessed and then in accordance with the 80/20 or 90/10 preference point systems prescribed in Preferential Procurement Regulations 6 and 7. The evaluation must be done as follows:
451.1. First stage – Evaluation of functionality
451.1.1. Bids must be evaluated in terms of the evaluation criteria embodied in the bid documents. The amendment of evaluation criteria, weights, applicable values and/or the minimum qualifying score for functionality after the closure of bids is not allowed as this may jeopardize the fairness of the process.
451.1.2. A bid will be considered further if it achieves the prescribed minimum qualifying score for functionality.
451.1.3. Bids that fail to achieve the minimum qualifying score for functionality must be disqualified.
451.1.4. Score sheets should be prepared and provided to panel members to evaluate the bids.
451.1.5. The score sheet should contain all the criteria and the weight for each criterion as well as the values to be applied for evaluation as indicated in the bid documents.
451.1.6. Each panel member should after thorough evaluation independently award his /her own value to each individual criterion.
451.1.7. Score sheets should be signed by panel members and if necessary, written motivation may be requested from panel members where vast discrepancies in the values awarded for each criterion exist.
451.1.8. If the minimum qualifying score for functionality is indicated as a percentage in the bid documents, the percentage scored for functionality may be calculated as follows:
a. The value awarded for each criterion should be multiplied by the weight for the relevant criterion to obtain the score for the various criteria;
b. The scores for each criterion should be added to obtain the total score.