how government tender proposals are evaluated in south africa

Knowing how government tender proposals are evaluated can help you put together proposals with the best chance of winning contracts.

While nobody sensible denies the existence of corruption in South Africa, it’s far from true that all tendering processes are unfair. If your business is a suitable candidate for a government project or purchase order, you DO have a shot.

Navigating the tendering process is a lot of work, but it can also be a ticket to massive growth, especially for South African SMEs with the right skills.

Three main types of criteria for evaluating government tender proposals     

Government uses three key metrics to determine whether a business entity is the best fit for a project or contract. They are functionality, price and B-BBEE compliance.

1. Functionality

Functionality refers to the bidder’s capacity to fulfil the contract. In other words, does the business have the required resources, skills and experience to execute the project or purchase order?

In South Africa, functionality is quantified through the prism of rules, regulations and Acts governing government supply chains and procurement, such as: 

  • National Treasury’s supply chain regulations
  • Preferential Procurement Regulations of 2017
  • The Preferential Procurement Policy Framework Act of 2000.

The functionality test

To establish capacity, all bidders are subjected to a functionality test. Points are awarded according to a set of prescribed functionality criteria.

Factors like a business’s track record, technical competencies, human capital and financial capabilities are all assessed and scored according to a transparent weighting system.

The minimum threshold set for the functionality test is 75 out of 100, but it can vary according to the government department or organ of state inviting the bids.

Making it to the Preference Points Scoring System

Only bidders with a score above the pre-determined threshold advance to the next stage of the tender evaluation process, the Preference Points Scoring System relating to price and B-BBEE.

2. Price

A more competitive price obviously makes your proposal more attractive. That said, price is not the only element government weighs up when awarding tenders.

A second, equally important factor is the active participation of historically disadvantaged individuals (HDI) in the contract or project.

Depending on the value of the tender, government uses a prescribed formula – the Preference Points Scoring System – to evaluate the price component of a tender proposal.

The 80/20 preference point system applies to tenders valued at between R30,000 and R500,000. In this scenario, 80 refers to the points scored for price and 20, the maximum number of points awarded in respect of HDI.

Tenders of R500,000 and above follow a 90/10 preference point system, where 90 is the points scored and 10, the maximum allowable points allocation for HDI.

3. B-BBEE contribution

The broad-based black economic empowerment (B-BBEE) component of the tender evaluation scoring mechanism is outlined above.

Tender proposals are evaluated according to the 20/10 points allocation for B-BBEE level of contribution.

Getting funding for government tenders     

If your SME requires capital to fulfil a government tender, BizFunding is the answer. The niche finance provider specialises in tender and purchase order funding, and operates on a power-sharing basis.

Call BizFunding on 012 001 0095 or apply for tender financing online. Applications are processed within five business days. Get funding now and give your government tender proposal the best possible chance of succeeding.

If you are a business owner on the road to success, or need funding to help start new projects or purchase orders, we can help you!

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