Section 1 : Definitions

In terms of the Preferential procurement regulations 2022, unless the context indicates otherwise, any word or expression to which a meaning has been assigned in the Act must bear the meaning so assigned—

  • “highest acceptable tender” means a tender that complies with all specifications and conditions of tender and that has the highest price compared to other tenders;
  • “lowest acceptable tender” means a tender that complies with all specifications and conditions of tender and that has lowest price compared to other tenders;
  • “price” means an amount of money tendered for goods or services, and includes all applicable taxes less all unconditional discounts;
  • “Rand value” means the total estimated value of a contract in Rand, calculated at the time of the tender invitation;
  • “specific goals” means specific goals as contemplated in section 2(1)(d) of the Act which may include contracting with persons, or categories of persons, historically disadvantaged by unfair discrimination on the basis of race, gender and disability including the implementation of programmes of the Reconstruction and Development Programme as published in Government Gazette No. 16085 dated 23 November 1994;
  • “tender” means a written offer in the form determined by an organ of state in response to an invitation to provide goods or services through price quotations, competitive tendering process or any other method envisaged in legislation;
  • “tender for income-generating contracts” means a written offer in the form determined by an organ of state in response to an invitation for the origination of income-generating contracts through any method envisaged in legislation that will result in a legal agreement between the organ of state and a third party that produces revenue for the organ of state, and includes, but is not limited to, leasing and disposal of assets and concession contracts, excluding direct sales and disposal of assets through public auctions; and
  • “the Act” means the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000).

Section 2 : Application

The Preferential Procurement Regulations 2022 apply to organs of state as defined in section 1 of the Act ( Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000).

Section 3 : Identification of Preference Point System

  1. An organ of state must, in the tender documents, stipulate—

(a) the applicable preference point system as envisaged in regulations 4, 5, 6 or 7;
(b) the specific goal in the invitation to submit the tender for which a point may be awarded, and the number of points that will be awarded to each goal, and proof of the claim for such goal

2. If it is unclear whether the 80/20 or 90/10 preference point system applies, an organ of state must, in the tender documents, stipulate in the case of—

(a) an invitation for tender for income-generating contracts, that either the 80/20 or 90/10 preference point system will apply and that the highest acceptable tender will be used to determine the applicable preference point system; or
(b) any other invitation for tender, that either the 80/20 or 90/10 preference point system will apply and that the lowest acceptable tender will be used to determine the applicable preference point system.

Section 4 : 80/20 preference point system for acquisition of goods or services with Rand value equal to or below R50 million

(1) The following formula must be used to calculate the points out of 80 for price in respect of an invitation for a tender with a Rand value equal to or below R50 million, inclusive of all applicable taxes:

80/20 preference point system

80/20 preference point system

Where

Ps = Points scored for price of tender under consideration;
Pt = Price of tender under consideration; and
Pmin = Price of lowest acceptable tender.
(2) A maximum of 20 points may be awarded to a tenderer for the specific goal specified for the tender.
(3) The points scored for the specific goal must be added to the points scored for price and the total must be rounded off to the nearest two decimal places.
(4) Subject to section 2(1)(f) of the Act, the contract must be awarded to the tenderer scoring the highest points.

Section 5 : 90/10 preference point system for acquisition of goods or services with Rand value above R50 million

(1) The following formula must be used to calculate the points out 90 for price in respect of an invitation for tender with a Rand value above R50 million, inclusive of all applicable taxes:

90/10 Preference Point System

90/10 Preference Point System

Where

Ps = Points scored for price of tender under consideration;
Pt = Price of tender under consideration; and
Pmin = Price of lowest acceptable tender.
(2) A maximum of 10 points may be awarded to a tenderer for the specific goal specified for the tender.
(3) The points scored for the specific goal must be added to the points scored for price and the total must be rounded off to the nearest two decimal places.
(4) Subject to section 2(1)(f) of the Act, the contract must be awarded to the tenderer scoring the highest points.

Section 6: 80/20 preference points system for tenders for income-generating contracts with Rand value equal to or below R50 million

(1) The following formula must be used to calculate the points for price in
respect of an invitation for tender for income-generating contracts, with a Rand value equal
to or below R50 million, inclusive of all applicable taxes:

80/20 preference points system for tenders for income-generating contracts

80/20 preference points system for tenders for income-generating contracts

Where

Ps = Points scored for price of tender under consideration;
Pt = Price of tender under consideration; and
Pmax = Price of highest acceptable tender.
(2) A maximum of 20 points may be awarded to a tenderer for the specific goal specified for the tender.
(3) The points scored for the specific goal must be added to the points scored for price and the total must be rounded off to the nearest two decimal places.
(4) Subject to section 2(1)(f) of the Act, the contract must be awarded to the tenderer scoring the highest points.

Section 7: 90/10 preference point system for tenders for income-generating contracts with Rand value above R50 million

(1) The following formula must be used to calculate the points for price in
respect of a tender for income-generating contracts, with a Rand value above R50 million,
inclusive of all applicable taxes:

90/10 preference point system for tenders for income-generating contracts

90/10 preference point system for tenders for income-generating contracts

Where

Ps = Points scored for price of tender under consideration;
Pt = Price of tender under consideration; and
Pmax = Price of highest acceptable tender.
(2) A maximum of 10 points may be awarded to a tenderer for the specific goal specified for the tender.
(3) The points scored for the specific goal must be added to the points scored for price and the total must be rounded off to the nearest two decimal places.
(4) Subject to section 2(1)(f) of the Act, the contract must be awarded to the tenderer scoring the highest points.

Section 8: Criteria for breaking deadlock in scoring

(1) If two or more tenderers score an equal total number of points, the contract must be awarded to the tenderer that scored the highest points for specific goals.
(2) If two or more tenderers score equal total points in all respects, the award must be decided by the drawing of lots

Section 9: Remedies

(1) If an organ of state is of the view that a tenderer submitted false information regarding a specific goal, it must—
(a) inform the tenderer accordingly; and
(b) give the tenderer an opportunity to make representations within 14 days as to why the tender may not be disqualified or, if the tender has already been awarded to the tenderer, the contract should not be terminated in whole or in part.

(2) After considering the representations referred to in subregulation (1)(b), the organ of state may, if it concludes that such information is false—
(a) disqualify the tenderer or terminate the contract in whole or in part; and
(b) if applicable, claim damages from the tenderer.

Section 10: Repeal of regulations

(1) Subject to this regulation, the Preferential Procurement Regulations, 2017 published in Government No. 40553 of 20 January 2017, are hereby repealed with effect from the date referred to in regulation 11.
(2) Any tender advertised before the date referred to in regulation 11 must be dealt with in terms of the Preferential Procurement Regulations, 2017.

Further Reading

The Preferential Procurement Regulations 2022 should be read together with the Preferential Procurement Policy Framework Act of 2000 to make sense of it. Click here to read it