Source: PREFERENCE POINTS CLAIM FORM IN TERMS OF THE PREFERENTIAL PROCUREMENT REGULATIONS 2022 as per Gazette 52957 dated 08 Jul 2025.
Thousands of businesses wish to do business with the government of South Africa, and a host of criteria and regulations exist, all of which are currently guided by the Preferential Procurement Policy framework.
A previous article, “Preferential Procurement and the Policy Framework,” published in April 2020, will be of use to the reader, too.
Procurement is legislated through the Public Finance Management Act (PFMA), which is applicable to national and provincial governments, while municipalities are regulated through the Municipal Finance Management Act (MFMA). Procurement of goods and services in South Africa by the state and organs of state emanates from s217 of the Constitution.
Section 217 of the Constitution accordingly is as follows:
“(1) When an organ of state in the national, provincial, or local sphere of government, or any other institution identified in the national legislation, contracts for goods or services, it must do so in accordance with a system that is fair, equitable, transparent, competitive, and cost-effective.
(2) Subsection (1) does not prevent the organs of state or institutions referred to in that subsection from implementing a procurement policy providing for –
(a) categories of preference in the allocation of contracts; and
(b) the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.(3) National legislation must prescribe a framework within which the policy referred to in subsection (2) must be implemented.”
The Preferential Procurement Policy Framework Act provides for the Minister of Finance to promulgate regulations regarding any matter that may be necessary or expedient to prescribe to achieve the objects of the Procurement Act.
When tendering for business with the government, a system of preference points will be used.
The following preference point systems apply to invitations to tenders:
- The 80/20 system for requirements with a Rand value of up to R50 000 000 (all applicable taxes included); and
- The 90/10 system for requirements with a Rand value above R50 000 000 (all applicable taxes included).
Points for the tender (even in the case of a tender for income-generating contracts) are awarded for:
(a) Price; and
(b) Specific Goals
Failure on the part of a tenderer to submit proof or documentation required in terms of this tender to claim points for specific goals with the tender will be interpreted to mean that preference points for specific goals are not claimed.
The organ of state reserves the right to require of a tenderer, either before a tender is adjudicated or at any time subsequently, to substantiate any claim regarding preferences, in any manner required by the organ of state.
DEFINITIONS
(a) “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;
(b) “price” means an amount of money tendered for goods or services, and includes all applicable taxes less all unconditional discounts;
(c) “Rand value” means the total estimated value of a contract in Rand, calculated at the time of bid invitation, and includes all applicable taxes.
(d) “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 (e) “The Act” means the Preferential Procurement Policy Framework Act, 2000 (Act No. 5 of 2000).
FORMULAE FOR PROCUREMENT OF GOODS AND SERVICES
POINTS AWARDED FOR PRICE
THE 80/20 OR 90/10 PREFERENCE POINT SYSTEMS
FORMULAE FOR DISPOSAL OR LEASING OF STATE ASSETS AND INCOME-GENERATING PROCUREMENT
POINTS AWARDED FOR PRICE
A maximum of 80 or 90 points is allocated for price on the following basis:
POINTS AWARDED FOR SPECIFIC GOALS
- In terms of Regulation 4(2), 5(2), 6(2), and 7(2) of the Preferential Procurement Regulations, preference points must be awarded for specific goals stated in the tender. For the tender, the tenderer will be allocated points based on the goals stated, as may be supported by proof/documentation stated in the conditions of this tender.
- In cases where organs of state intend to use Regulation 3(2) of the Regulations, which states that, 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) If 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, then the organ of state must indicate the points allocated for specific goals for both the 90/10 and 80/20 preference point systems.
Additionally, all tenderers must complete a table of specific goals for the tender and points claimed. The organs of state must also indicate whether either the 90/10 or 80/20 preference point system is applicable, and corresponding points must also be indicated as such.
DECLARATION WITH REGARD TO COMPANY/FIRM
- Name of company/firm
- Company registration number
- Type of Company Partnership/Joint Venture / Consortium
One-person business/sole propriety
Close corporation
Public Company
Personal Liability Company
(Pty) Limited
Non-Profit Company
State-Owned Company
