Am I ready to tender?
First of all, you need to establish whether your business is capable of meeting the requirements of the tender. Usually, an invitation to tender is very specific about the practical tasks to be accomplished. Be realistic about your ability to accomplish those tasks. Remember, failure to deliver what is required at the stated costs and within the time agreed will probably make you liable for penalties in terms of the contract.
As a guideline, an enterprise that is ready to tender:
- Is a registered business
- Has a good banking record, credit history and relationship with its suppliers and clients
- Is able to deliver - on time, on budget and according to specifications
- Is up to date with its taxes
- Pays its bills on time
- Has the required cash-flow and other resources to complete the contract
- Is pro-active, actively looking for business opportunities
- Is able to deliver goods or services of consistent quality
- Has qualified employees
- Has, or can acquire, the right equipment, clothing and accessories to complete the tender
- Has registered its employees with the Department of Labour (UIF, Skills Development Levy, Workmen's Compensation etc.); and
- Has products that complies with SABS standards
Does my business have to be registered as a CC or company?
No. A sole trader or partnership may tender. However, the business has to be:
- Registered or licensed with the relevant local authority
- It must have a bank account; and
- It must be registered with the South African Revenue Services and must have an up-to-date tax clearance certificate.
What about tendering together with another business?
This is called a joint venture (JV). When two businesses form a joint venture (a partnership between two business) they each contribute to the project and share the profit. In this way two (or more) small businesses may be able to win a large tender that neither would have been able to take on alone.
Use the following guidelines when selecting a JV:
- Choose you partner very carefully. Like any partnership, a JV thrives on mutual trust and collapses when partners become suspicious of the others motives, agendas and ethics
- Enter into negotiations early
- Rather involve two or more smaller JV partners than one other firm that is much bigger than you are; and
- Draw up a formal JV agreement and state all expectations clearly, including usually vague notions such as the one partner empowering the other with skills.
How do I complete the tender documentation?
- With great care and precision! Follow the instructions carefully. Even the smallest error may result in the cancellation of your tender application.
Your nearest Tender Advice Centre (TAC) will help you get hold of and complete the tender documents.
- Be quite sure that you have enough time to prepare and submit an offer before the due date.
- It is up to you to deliver or post your tender documents to the correct address by the due date, and indeed at the correct time. If the closing time is 12 noon, your tender will be disqualified if it is handed in at one minute past 12.
- The tender will include all the requirements and specifications for the goods and services to be supplied. Be quite sure that you will be able to comply.
- Include in your tender details all the relevant experience you have in relation to the proposed contract.
- Do not forget to:
- Include your VAT registration number, if you have one.
- Guarantee the quality of your products or services. Also provide details of any SABS or ISO marks or sign of quality assurance that you are entitled to use.
- Offer substitute products or services where necessary
- Offer to make refunds if you fail to deliver as agreed.
- Declare the percentage or quantity of imported products
- State patents and details of any royalties
- Describe the packaging
- Give the time and place of delivery
- Provide samples of products or goods if required
- Use delivery documentation including delivery notes
- Complete the tender documents in ink and sign alterations in full.
- Obtain import permits for goods that were not made in SA; and
- Supply the prices that you paid for the goods.
You will need to complete the following standard forms for National and Provincial government tenders:
||Conditions for tendering with the state
||Also includes details of the addresses for delivery of your tender application. |
||Official cover page of the tender document
||To be signed in ink. Includes details of the buying department, validity period and closing date|
||Tax Clearance Certificate
||Obtained from SARS, should be valid at time of submitting the tender and should have a validity period longer than the validity period of the tender document.|
||Essential conditions relating to the tender
||Supplementary conditions to those laid out in ST36. Important to study carefully, as deviation from these conditions may invalidate your tender.|
||Closing dates, tender number, durability, price, delivery period etc.
||Also deals with the description fo the product of service concerned. Different ST7 forms may be use for different types of goods or services.|
||Asks questions that will help in the adjudication of the tender
||State any deviation in specification from those in the original tender; whether or not your quoted price is firm; whether you are an agent for the product or service; the amount of stock you carry; the type and location of the service facilities you offer; your VAT number (if any). |
||Promotes development of local businesses
||Preference Point Certificate to be signed. Applies only for services less than R2 million. |
||Prevents tendering on the basis of association
||Declaration of interest. EnPromotes development of local businesses suring fair and equal treatment, you must declare any relations with members of the tender board or government department.|
Note: These forms are part of the tender invitation and are also available at any procurement office.
How do I price my tender?
Keep in mind that you need to make a profit but that competing tenderers may offer a lower price.
In order to be competitive, experienced tender advisors normally suggest a cost plus 7.5% tender price. This may vary according the level of expertise and general availability (market) of the service or goods required.
Costing and estimation:
This often requires an educated guess based on the following researched tender specifications:
- Quantities of material needed
- Length of time to completion
- Minimum lead-time required (that is, the time before actually starting on the contract, often the time in which preparations are made)
- Insurances needed
- Depreciation of vehicles and equipment over the course of the contract
- Indirect costs
- Capacity to complete the contract
Some costs are variable - they may fluctuate as production fluctuates:
Other costs are termed fixed costs or overheads:
These costs do not fluctuate with increases or decreases in production. Examples of costs that are usually fixed are:
- Owners salary
- Vehicle leases
The following are also important considerations:
- Will the purchaser be making interim payments (so that your business maintains cash-flow and can pay the weekly salaries, materials and so on)? This is especially important for lengthy contracts.
- Will you require bridging finance? If so, do you have security for a loan?
- If you will need to borrow money to perform the contract, you should do the groundwork while you are preparing the tender. Then if you win the contract, you will be able to get a loan so much more quickly.
Do I qualify for Preference Points?
The law requires the application of a preference point system for tenderers who are Previously Disadvantaged Individuals (PDIs) or women.
- Generally, for government tenders under R500 000, 80% of the tender will be adjudicated on price and 20% on the PDI or gender status of the business owner(s).
- For tenders over R500 000, the 90/20 price system applies.
You have to complete the relevant section (ST 11) if you want to be eligible for consideration under this system.
The Letter of Acceptance
- If you submit your tender to the right address by the due date and time, the Tender Board will let you know in writing whether you have been successful or not.
- If your tender was accepted, you have to start planning to deliver the goods or services you offered.
Don't give up!
If at first you don't succeed, try and try again.
- Every time you complete a tender document you will learn more about the process and requirements of tendering.
- Once you have a won a tender, and built up a track record, things get a bit easier.
I need more help:
- Phone seda at 0860 103 703.
- Contact you nearest Tender Advice Centre. Get the contact details from seda.
Where do I find tender information?