The ABC of tendering

Gerrit Davids, founder of TaranisCo Advisory

In his long and lucrative career, Cape Town born entrepreneur and businessman Gerrit Davids was a lawyer, a public relations official, and a marketing and communications professional, to mention but a few.

He has founded a number of companies and organisations including the likes of Promedia and the Western Cape Small Business Investment Corporation (WESBIC) and serves as a business support consultant and director on a number of boards, advising on among others, BEE and tendering regulations and bid document requirements.

The University of the Western Cape graduate found his niche five years ago when he researched the market for a less populated segment of law where no others plied their legal skills and started his mission to assist parties to understand the legal framework around tendering. Today, as founder and Managing Member of TaranisCo Advisory, he is actively involved in developing small businesses, combining his many passions and talents—especially helping with procurement facilitation between small and big business, organising trade missions, exhibitions and conferences.

Davids, who partook in the recent FP&M Seta Skills Development Summit, shared his thoughts and insights on one of his many passions in life—tendering and advisory—with Opportunity Editor, Lindsay King.

Tell us more about TaranisCo—what exactly do you do?

We are a consulting business focusing on assisting corporates and SMMEs with interpreting the regulatory aspects of tendering for government contracts, as well advising suppliers to government on the legal processes required when instituting legal proceedings against the state in a tender disputes. The consultancy has recently started to render advisory services to government departments and bodies on how to implement best practises around the regulatory framework of managing tendering and supply chain management processes.

What are some of the important aspects to keep in mind when it comes to the regulatory aspects of government contracts?

Suppliers to government need to understand the basic principle of ‘compliance’, since the process is highly regulated due to the fact that it is the public’s money that’s at stake and the prescript in law is that there must be full ‘accountability and reporting’ by the organ of state as to how it manages the “cash and assets in the fiscus when it procure goods and services. The law instructs organs of state that contracts may only be awarded to bids that are compliant and hence bidders must always strive to ensure that their tenders are responsive, valid and qualified” in order to be considered for a contract.

You deal quite extensively with tenders. What are some of the biggest potholes to look out for when tendering? 

Suppliers intending to bid for government contracts must read the tender document properly to comprehend as to what is the requirement, the specifications of the requirement, the conditions of contract, as well as what documents are considered as ‘returnables’. Many suppliers are of the opinion that ‘price is everything’, which is totally incorrect, since tenders are only awarded on the basis of points for the lowest price offered, combined with the supplier’s score for BBBEE. Too many people are under the wrong impression as to how tenders are scored, evaluated, adjudicated and eventually awarded. The biggest omission on the side of suppliers is that they do not spend sufficient time reading to comprehend the ‘demands and instructions’ of the bid document.

When it comes to tenders, corruption is often a problem. How does one go about tackling this issue?

Corruption is driven by both the corruptor and the corruptee and government and civil society should be more diligent within the tendering arena and be on the look out for activities which are dubious in nature, as well as contrary to the spirit of the constitution, which stipulates that all tender processes “must be fair, equitable, transparent, competitive and cost effective”. The best approach to curtail corruption in the tendering environment is for ‘losing-bidders’ to contact the organ of state’s accounting officer and request in-depth details on how the tender was awarded. The constitution and numerous court cases grant bidders the right to access information, especially in the case of the ‘losing-bidders’.

How can tendering be used as a mechanism for SMME growth?

The tendering regulations already provide an ‘advantage’ for SMMEs with the point systems where their BBBEE status could win them a tender, even if their price was not the lowest. Sub-contracting is also encouraged in the tendering regulations and ‘local absorption’ is often an instruction for mega projects where SMMEs can’t tender due to other grading restrictions. The concept of joint ventures and consortia is also a vehicle which SMMEs could use to improve their ‘capacity offer’ in a tender.

How important is it for big corporations, such as banks, to partner with small business?

It goes without saying that SMMEs could gain competency from working with banks and corporates, however the latter are merely encouraged to make use of SMMEs in tenders, but there is no regulatory prescript that makes it compulsory and for that reason we rarely see corporates partnering with SMMEs in tenders. There is no incentive to do so, unless government adopts a legally sound approach to incentivising big companies to partner with SMMEs in tenders.

Is government facilitating enough partnerships with small business?

Government has been battling with the aspect on partnering with SMMEs for years within the tendering arena, since the constitution does not really provide an enabling directive on how it could be done. In fact, various government departments and state-owned enterprises have recently started to implement ‘set-a-sides’ for SMMEs within the broader procurement spend, but the question begs whether the constitution allows for such set-a-sides. Government is doing more than its fair share when it comes to SMME development, whether its effective or not, is another matter for debate, but within the tender arena, one suspects it can’t do much without the existence of enabling legislation to guide it on how increase greater participation for SMMEs through tendering ‘set-a-sides’.

In your opinion, how can SMMEs be used to grow the economy?

Supplier Development Programmes should be encouraged and incentivised, like Anglo’s Zimele-Enterprise Development Fund, which places the focus on building capacity for the SMME suppliers. The BBBEE Codes of May 2015 is a big step in that direction, wherein around 40% of the combined points are allocated to corporates for buying and developing capacity of their SMME suppliers.

What are some of the most challenging aspects in your industry?

The most challenging aspect with tendering advisory and consulting services is that people have too many incorrect perceptions and the levels of ignorance on how the process unfolds. Some people are of the view that because they’ve been doing tenders for many years, they are supposed experts, but in the absence of being tested on their skills, that can’t be true. Also, people see any type of consulting as a ‘grudge purchase’, but they will spend thousands on buying tender documents and they will be reluctant to pay consultants for advice on how to submit compliant bids, which should be a investment rather than being seen as an additional cost factor.

What are some of the values you live by in business?

The founders of TaranisCo Advisory live by the values of self-empowerment of knowledge and once comprehending it, to apply it to one’s advantage. Continuous learning is vital for any business and it is important to understand that one is not in business for profit, but for cash flow, since the former can’t become a reality if the latter has not transpired as a consequence of winning contracts of tenders.  

Lindsay King

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