The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
Preferential procurement 2 (2)
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• The above has been repealed and replaced by Preferential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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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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