Explaining the new Preferential Procurement Policy Framework (Part 3)

Explaining the new Preferential Procurement Policy Framework (Part 3)
November 20, 2017 Chante Hobbs

Parts 1 and 2 of this series looked at the new Preferential Procurement Policy Framework Act (PPPFA). The last installment of this series will look at subcontracting after a tender (contract) have been awarded as well as the cancellation of a tender.

Section 12 of the PPPFA: the requirements for subcontracting after a tender have been awarded

It states that an entity that was awarded a tender can only enter into a subcontracting arrangement with the approval of the state. It further goes on to determine that if an entity is awarded a contract in relation to a designated sector, that entity may not subcontract 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.

The last requirement for subcontracting in terms of Section 12 states that an entity that has been awarded a contract may not subcontract more than 25% of the value of the contract to an enterprise that does not have equal or higher B-BBEE status level of contributor than the person concerned. Unless the contract is subcontracted to an EME. The EME must, however, have the capacity as well as the ability to execute the subcontract before it can be subcontracted to the particular EME entity.

Cancellation of tender

In terms of Section 13 of The PPPFA an Organ of State may, before awarding the tender, cancel a tender invitation if:

  • There is no longer a need for the goods or services (due to changed circumstances).
  • There is no more funds available to cover the project.
  • They did not receive any acceptable tenders.
  • There is a material irregularity in the tender process:
    • If they decide to cancel a tender, this decision must be published in the same manner as in which the tender invitation was published.
    • The tender can only be cancelled for a second time with prior approval of the relevant treasury.

As you have seen in the previous two articles of this series, it is very important for businesses to be aware of all the implications, requirements and regulations as stated in terms of the PPPFA.


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