1. Preferential Procurement
 Enabling Legislation: The National Government has
introduced an intervention to foster active participation of
targeted groups in the economic mainstream through public
tenders at all levels including organs of the state.
 PPPFA : Preferential Procurement Policy Framework Act No 5
of 2000
• The Act was in line with Preferential Procurement
Regulations 2001
• The above has been repealed and replaced by Preferential
Procurement Regulations 2011 with effect from 07 December
2011 in line with Broad Based Black Economic Empowerment
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2. Challenges and constraints
 Lack of training
 Lack of skill
 Lack of information
 Lack of networking
 Lack of resources
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3. Proposed interventions
 Practical hands-on training
 Weekly sessions
 Formation of consortia by SMMEs
 Formation of joint ventures
 Formation of partnerships
 Monitoring and evaluation of submitted tenders
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4. The Process
 Identification of tenders
 Request for tender documents
 Identification of suppliers
 Request for quotations
 Compliance –Tax clearance certificates
 Pricing of document
 Calculation of preference points
 Completion of document
 Submission of tender
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5. BID PRICE POINTS
 90/10
 90 points based on lowest responsive bid prices in excess
of R1m
 80/20
 80 points based on lowest responsive bid prices up to
R1m
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6. BID PRICE POINTS
 90/10
90 points
R1m
0
80 points
 80/20
Formula Ps = 80/90 1- Pt – Pmin
Pmin
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7. BBBEE ADJUSTED PIONTS
BBBEE Status level of Contributor Number of Points Number of Points
80/20 90/10
1 20 10
2 18 9
3 16 8
4 12 5
5 8 4
6 6 3
7 4 2
8 2 1
Non Compliant contributor 0 0
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8. POINTS ALLOCATION
BIDDER PRICE PRICE BBBEE BBBEE TOTAL
POINTS CONTRIBUTOR POINTS POINTS
LEVEL
A
B
C
D
E
F
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9. BBBEE LEVELS POINTS
CONTRIBUTION LEVEL QUALIFICATION
Level One Contributor ≥ 100 points
Level Two Contributor ≥ 85 points but < 100 points
Level Three Contributor ≥ 75 points but < 85 points
Level Four Contributor ≥ 65 points but < 75 points
Level Five Contributor ≥ 55 points but < 65 points
Level Six Contributor ≥ 45 points but < 55 points
Level Seven Contributor ≥ 40 points but < 45 points
Level Eight Contributor ≥ 30 points but < 40 points
Non Compliant Contributor < 30 points
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10. SITES FOR TENDERS
 www.treasury.gov.za –free
 www.tenderscan.co.za – subscription
 www.tradeworld.net – subscription
 www.dailytenders.co.za – subscription
 www.onlinetenders.co.za – subscription
 www.info.gov.za/documents/tenders/index.htm - free
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11. SITES FOR SUPPLIERS
 www.safindit.co.za
 www.findsa.co.za
 www.sayellow.co.za
 www.easyinfo.co.za
 www.sabs.co.za
 www.specifile.co.za
 www.kellysearch.com
 www.africatrade.co.za
 www.infomine-africa.com
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12. EXERCISE 1
Company A responds to a tender to supply hospital
equipment and receives a quotation of R750 000
excluding value added tax. Calculate the price if the
company adds mark up of 10% and value added tax of
14%
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13. EXERCISE 1
Company A responds to a tender to supply hospital
equipment and receives a quotation of R750 000
excluding value added tax. Calculate the price if the
company adds mark up of 10% and value added tax of
14%
Cost price =R750 000,00
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14. EXERCISE 1
Company A responds to a tender to supply hospital
equipment and receives a quotation of R750 000
excluding value added tax. Calculate the price if the
company adds mark up of 10% and value added tax of
14%
Cost price =R750 000,00
Mark up 10% = R 75 000,00
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15. EXERCISE 1
Company A responds to a tender to supply hospital
equipment and receives a quotation of R750 000
excluding value added tax. Calculate the price if the
company adds mark up of 10% and value added tax of
14%
Cost price = R750 000,00
Mark up 10% = R 75 000,00
Total price (exc) = R825 000,00
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16. EXERCISE 1
Company A responds to a tender to supply hospital
equipment and receives a quotation of R750 000
excluding value added tax. Calculate the price if the
company adds mark up of 10% and value added tax of
14%
Cost price =R750 000,00
Mark up 10% = R 75 000,00
Total price (exc)= R825 000,00
VAT = R115 500,00
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17. EXERCISE 1
Company A responds to a tender to supply hospital
equipment and receives a quotation of R750 000
excluding value added tax. Calculate the price if the
company adds mark up of 10% and value added tax of
14%
Cost price =R750 000,00
Mark up 10% = R 75 000,00
Total price (exc)= R825 000,00
VAT = R115 500,00
Total price (incl) = R940 500,00
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18. EXERCISE 2
Company B responds to a tender to supply farming
equipment and receives a quotation for R969 000 including
value added tax. Calculate the price if the company adds
mark up of 15% and value added tax of 14%.
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19. EXERCISE 2
Company B responds to a tender to supply farming
equipment and receives a quotation for R969 000
including value added tax. Calculate the price if the
company adds mark up of 15% and value added tax
of 14%.
Cost Price = R969 000,00
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20. EXERCISE 2
Company B responds to a tender to supply farming
equipment and receives a quotation for R969 000
including value added tax. Calculate the price if the
company adds mark up of 15% and value added tax
of 14%.
Cost Price = R969 000,00
Less Vat (Input) = R 119 000,00
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21. EXERCISE 2
Company B responds to a tender to supply farming
equipment and receives a quotation for R969 000
including value added tax. Calculate the price if the
company adds mark up of 15% and value added tax
of 14%.
Cost Price = R969 000,00
Less Vat (Input) = R 119 000,00
= R850 000,00
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22. EXERCISE 2
Company B responds to a tender to supply farming
equipment and receives a quotation for R969 000
including value added tax. Calculate the price if the
company adds mark up of 15% and value added tax
of 14%.
Cost Price = R969 000,00
Less Vat (Input) = R 119 000,00
= R850 000,00
Mark Up 15% = R127 500,00
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23. EXERCISE 2
Company B responds to a tender to supply farming equipment
and receives a quotation for R969 000 including value added
tax. Calculate the price if the company adds mark up of 15%
and value added tax of 14%.
Cost Price = R969 000,00
Less Vat (Input) = R 119 000,00
= R850 000,00
Mark Up 15% = R127 500,00
Total = R977 500,00
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24. EXERCISE 2
Company B responds to a tender to supply farming equipment
and receives a quotation for R969 000 including value added
tax. Calculate the price if the company adds mark up of 15%
and value added tax of 14%.
Cost Price = R969 000,00
Less Vat (Input) = R 119 000,00
= R850 000,00
Mark Up 15% = R127 500,00
Total = R977 500,00
Add Vat (Output) = R136 850,00
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25. EXERCISE 2
Company B responds to a tender to supply farming equipment
and receives a quotation for R969 000 including value added
tax. Calculate the price if the company adds mark up of 15%
and value added tax of 14%.
Cost Price = R 969 000,00
Less Vat (Input) = R 119 000,00
= R 850 000,00
Mark Up 15% = R 127 500,00
Total = R 977 500,00
Add Vat (Output) = R 136 850,00
Total price =R 1 114 350,00
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26. Vat Payable
Vat payable = Output tax less Input tax
Formula = Price x rate/ 100 + rate
Output = R 1114350,00 x 14
114
R 136 850,00
Input = R 969 000,00 x 14
114
R 119 000,00
Vat payable = R 136 850,00 - R 119 000,00
R 17 850
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27. Tools required
 Laptop
 Access to internet – 3G data card
 Data projector
 Training venue
 Will to learn
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28. Thank You
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29. Sello & Associates
booksysello@mweb.co.za
f www.facebook.com/tender.opportunities
www twitter.com/BooksySello
Mobile : 0847976212 Fax : 0865152849
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