How Tenders Work In South Africa: A Step-By-Step Guide For SMEs And Suppliers

If you’ve ever wondered “how do tenders work in South Africa?” you’re not alone. Winning tenders can transform a small business, steady work, bigger invoices, stronger credibility, but the process can feel technical and slow. This guide breaks it down in plain English. You’ll learn where to find verified tenders, what paperwork you need, how evaluation really works (80/20 vs 90/10), and practical bid strategies that help you price right and avoid disqualification. You’ll also see recent policy shifts and what they mean for you in 2025. Let’s turn the tender maze into a pipeline you can manage.

The Tender Landscape: Public Vs Private And Legal Basics

Public procurement in South Africa is rule-bound and transparent by design. Private-sector RFPs are faster and more flexible, but still structured. Understanding the rules and who buys what is your first edge.

Key Laws And Policies (PFMA, MFMA, PPPFA, B-BBEE, SCM)

PFMA (Public Finance Management Act): Governs national and provincial departments and some public entities. Sets the tone for fair, equitable, transparent, competitive, and cost-effective procurement.
MFMA (Municipal Finance Management Act): Governs municipalities and municipal entities. Municipal tenders follow MFMA regulations and each municipality’s Supply Chain Management (SCM) policy.
PPPFA (Preferential Procurement Policy Framework Act): Establishes price–preference points (typically 80/20 or 90/10). Since 2023, new Preferential Procurement Regulations allow organs of state to set specific goals aligned to PPPFA, often linked to transformation, SMMEs, local content, or job creation.
B-BBEE: Codes of Good Practice influence preferential goals. Many entities now translate B-BBEE and SMME participation into “specific goals” under PPPFA rather than fixed formulas.
SCM Instructions/Guidelines: National Treasury issues Instruction Notes: entities publish SCM policies. Always read the specific policy in the tender pack.

What’s changed recently? After the 2017 PPPFA regulations were set aside, updated regulations (effective 2023) gave buyers more discretion to craft specific goals. The Public Procurement Bill (progressing through Parliament) aims to unify rules across spheres, but existing PFMA/MFMA + PPPFA remains your current playbook.

Procurement Methods And Thresholds (RFQ, RFP, Open Tender, Panels)

Petty cash/small purchases: Low-value buys under entity-specific limits.
RFQ (Request for Quotation): Short specs, quick turnaround: often for goods/services below set thresholds.
RFP/Competitive Bid (Open Tender): Formal tenders with full specs and evaluation criteria, used above certain thresholds or for strategic buys.
Panels/Frameworks: Pre-approved lists for categories (e.g., repairs, professional services). You apply once: orders are issued as needed.

Thresholds vary by entity. As a rule of thumb:

Municipalities (MFMA): Formal bids typically above ±R200,000: below that, formal written quotes (check the exact policy).
National/Provincial (PFMA): Competitive bids commonly kick in above ±R500,000, though some departments set lower thresholds.

Always confirm thresholds in the entity’s SCM policy, treat these as indicative, not universal.

Who Buys What: National, Provincial, Municipal, SOEs, And Corporates

National departments: Large-scale goods and transversal contracts (IT, fleet, uniforms). National Treasury may run national panels.
Provincial departments: Health, education, roads, recurring buys like textbooks, catering, maintenance.
Municipalities: Infrastructure, waste, water, fleet, facilities management, community projects. Good entry point for SMEs.
State-Owned Enterprises (SOEs): Eskom, Transnet, PRASA, SANRAL, capital projects, maintenance, logistics, energy. Compliance is strict: opportunities are big.
Corporates: Facilities, marketing, IT, professional services, manufacturing inputs. Shorter cycles, strong vendor due diligence.

Tip: Map your offering to the buyer who routinely purchases it. A plumbing SME will see higher volume at municipalities: a cybersecurity firm may focus on SOEs and corporates.

Where To Find Tenders And Set Up A Pipeline

Your goal is predictable deal flow. That means centralizing sources, using alerts, and tracking each opportunity through a pipeline.

National And Provincial Portals (eTender, Treasury, CIDB, SOEs)

eTender Publication Portal (National Treasury): Central hub for many national/provincial opportunities. Search by department, category, or province.
Departmental websites: Some departments still duplicate or post separately. Always cross-check.
CIDB (for construction): Registers contractors and lists certain construction bids: check grading requirements.
SOE portals: Eskom, Transnet, SANRAL, PRASA, ACSA and others run their own tender portals. Register early, verification takes time.

Municipal Notices And Supplier Databases

Municipal websites and notice boards: MFMA entities publish on their sites and/or eTender. Many require you to be on a supplier database.
Supplier databases/CSD linkage: Municipalities often pull from the Central Supplier Database (CSD). Keep your CSD updated to appear in their searches.

Private Sector RFPs And Vendor Portals

Corporate vendor portals: Bidvest, Shoprite, banks, insurers, mining houses, register as a vendor and set commodity categories.
Industry gateways: Engineering, ICT, facilities management portals often list private RFPs and pre-qualifications.

Alerts, Keywords, And Tracking Your Pipeline

Alerts: Set keyword alerts on eTender portals and industry boards. Use variations: “ICT support,” “network maintenance,” “server,” “LAN/WAN.” For construction, include “CIDB 2GB,” “rehabilitation,” “paving,” “stormwater.”
Geo filters: If you operate in KZN and Gauteng only, filter by province to avoid spread-too-thin bids.
Pipeline tracker: Use a spreadsheet or CRM with columns for buyer, closing date, briefing date, status (Go/No-Go, Drafting, Submitted), estimated value, and probability. Color-code deadlines. Simple beats nothing.

Supplier Readiness: Registrations And Compliance

Administrative readiness is your barrier to entry. Get this right once, and updates become routine.

CSD Registration, SARS Tax Compliance Pin, And CIPC

CSD (Central Supplier Database): Mandatory for most public-sector bids. Capture banking, directors, commodities, tax status, and attach supporting docs. Keep it active: some buyers validate CSD status at evaluation and award.
SARS Tax Compliance Status (TCS) PIN: Replaces printed tax clearance. Your PIN lets buyers verify you are tax compliant in real time.
CIPC: Company registration and up-to-date annual returns. Many tenders request CIPC disclosure of directors and shareholding.

B-BBEE, CIDB Grades, And Sector Certifications

B-BBEE certificate or sworn affidavit (for EME/QSE where allowed): Impacts scoring where specific goals include transformation. Ensure the issuing agency is SANAS-accredited when a certificate is required.
CIDB grading (construction): A must for construction works. Don’t bid above your grade unless joint venturing in line with CIDB rules.
Sector certifications: PSIRA (security), SAPS permits (firearms), SAHPRA (health products), ICASA (telecoms), NRCS or SABS approvals, ISO standards (e.g., ISO 9001 for quality). Match certs to the scope.

COIDA, UIF, Letters Of Good Standing, Safety And Insurance

COIDA (Workmen’s Compensation) registration and Letter of Good Standing: Common returnables for works and services.
UIF registration and compliance: Especially for labor-heavy contracts.
Safety: Construction Regulation appointments, safety plans, and baseline risk assessments where applicable.
Insurance: Public liability, professional indemnity, contractor’s all-risk, buyers often require minimum cover levels.

Banking, Financials, And References For Due Diligence

Bank confirmation letter and three months’ statements: Proves the account exists and is active.
Financial statements: Audited or independently reviewed depending on size. For startups, management accounts plus cash-flow plans help.
References: Signed reference letters or completion certificates. Use project sheets highlighting scope, value, period, and contact details.

Readiness checklist: CSD active, TCS PIN valid, B-BBEE current, CIDB graded (if needed), COIDA/UF compliance, insurances in place, and references packaged.

Reading A Tender Pack And Avoiding Disqualification

Most bid losses happen on compliance, not capability. Slow down, read everything, and complete every returnable.

Compulsory Briefings, Site Meetings, And Clarification Windows

Compulsory briefings/site visits: If it says compulsory, attendance registers count. Miss it and you’re out.
Clarification window: Email queries by the deadline only to the specified address. Don’t call line managers: stick to the protocol.
Addenda: Any change to scope or closing date comes via an addendum. Acknowledge these where required and update your proposal accordingly.

Scope, Specifications, And Local Content (SBD 6.2)

Scope and specs: Highlight mandatory features in one color and nice-to-haves in another. Your proposal must show conformance, not assumptions.
Local content (SBD 6.2): For designated sectors (e.g., uniforms, steel, valves, buses), you must complete the local content declaration and meet minimum percentages. Missing or incorrect SBD 6.2 = automatic disqualification.

Returnables And Forms (SBD/MBD), Eligibility, And Checklists

SBD forms (national/provincial) and MBD forms (municipal): Typical ones include SBD 1 (invitation), SBD 4 (declaration of interest), SBD 6.1 (preference points & specific goals), SBD 6.2 (local content), SBD 8/9 (past SCM practices/fraud). Fill, sign, and initial correctly.
Eligibility: Confirm CIDB grade, OEM letters, accreditation, track record, or financial minimums are met.
Build a checklist: List every returnable with a status column (Complete, N/A, Outstanding) and owner. Do a second-person check.

Submission Rules: Format, Seals, Electronic Portals, Deadlines

Format: Some buyers want physical files with dividers: others accept e-submissions. Follow file naming, PDF requirements, and number of copies.
Sealed envelopes: If physical, label exactly as requested (tender number, description, closing date/time). Late = non-responsive.
Electronic portals: Upload early to avoid bandwidth crunch in the last hour. Validate that all documents rendered properly after upload.

How Bids Are Evaluated In South Africa

Evaluation follows published criteria. If it isn’t in the tender, it shouldn’t be used to score you. Use this to reverse-engineer your proposal.

Functionality/Technical Scoring And Minimum Thresholds

Functionality (technical) is scored first where applicable. There’s usually a minimum threshold (e.g., 70/100). If you don’t meet it, price isn’t evaluated.
Typical functional criteria: Experience with similar projects, methodology and project plan, key staff CVs, equipment lists, references, and risk management.
Actionable tip: Mirror the scoring matrix headings in your proposal. Make it easy for evaluators to award points.

Price–Preference System (80/20 vs 90/10) Under PPPFA

For lower-value bids (threshold set by the organ of state), 80 points are for price and 20 for specific goals (often B-BBEE/SMME/local content goals). For higher-value bids, it’s 90/10.
Many national/provincial departments use ±R50 million as the 80/20-to-90/10 switch: municipalities may use different cut-offs. Always check the tender.
Price points are formula-based: the lowest acceptable bidder scores full price points: others score proportionally.

Objective Criteria, Risk, And Due Diligence Checks

Beyond price/preference, section 2(1)(f) of PPPFA allows “objective criteria” (e.g., risk, capacity, past performance, security vetting). These must be stated in the tender.
Due diligence: Site visits, reference checks, verifying CSD, tax status, and financial capacity. Have your ducks in a row.

Local Production Thresholds And Subcontracting Rules

Designated local production: You must meet the stated local content minimums or be disqualified, no partial credit.
Subcontracting: Some tenders require a minimum subcontracting portion (commonly 30%) to EMEs/QSEs or targeted groups as a specific goal. If you commit, name the subcontractors and include letters of intent.

Pricing And Bid Strategy For SMEs

Win rates improve when your price is defensible, compliant, and tied to delivery realities. Cheap-and-hope is not a strategy.

Building A Compliant BOQ And Costing Model

Start with the Bill of Quantities (BOQ) or pricing schedule. Create a master costing sheet linked to each BOQ line, labor, materials, plant, overhead, risk contingency, and margin.
Align your units to the BOQ exactly (m, m², lot, per month). Mismatched units cause disqualification or underpayment later.
Add a compliance note per line where specs demand brand, warranty, or SABS/NRCS approvals.

Market Research, Inputs, Escalations, And Indexation

Get three written supplier quotes for key inputs. Lock validity periods aligned to tender validity (often 90–120 days).
Factor diesel, transport, and electricity volatility. Use public indices (CPI, PPI, Fuel Price Adjustments) to justify escalation clauses where the contract allows.
For multi-year contracts, reference indexation rules in the tender. If silent, propose a fair, published index in your methodology.

Joint Ventures, Consortiums, And Subcontracting Strategy

JV to meet CIDB grades, capacity, or specialist skills. Formalize in a JV agreement covering roles, cash flow, and liability.
Consortiums work in services/professional bids. Showcase combined experience while nominating a lead bidder.
Subcontracting: Identify work packages early, get written commitments, and align pricing with your risk allocation.

Common Pricing Pitfalls And How To Avoid Them

Forgetting delivery/installation: Add logistics, rigging, commissioning, and training costs.
Underpricing to win: If it’s too low to deliver, risk of termination, penalties, and cash-flow failure rises.
Ignoring VAT: State whether prices include/exclude VAT: match the tender’s instruction.
Arithmetic errors: Cross-link BOQ and summary with formulas: perform an independent check. Where buyers require a “final amount in words,” make it match the numeric total.

Step-By-Step Application Workflow

Treat each bid like a small project. A simple workflow turns chaos into consistency.

Go/No-Go Decision And Compliance Screening

Fit check: Does it match your core services, geography, and capacity? If you’re stretching on all three, it’s a “No-Go.”
Hurdle check: Are you compliant with CSD, tax, B-BBEE, CIDB grade, OEM letters, mandatory site attendance? If not, can you fix it in time?
Competitive scan: Who else will likely bid? Can you differentiate on method, responsiveness, after-sales, or warranty?

Drafting The Response: Technical, Methodology, And Experience

Structure the file around the evaluation criteria: About us, understanding of scope, methodology/project plan, resourcing, risk and quality plans, references, price.
Use the buyer’s language: If they say “preventative maintenance,” don’t say “periodic service”, mirror their terms.
Show evidence: CVs with registrations, OEM letters, photos of past work, Gantt charts, QA processes, sample reports.

Quality Assurance: Cross-Checks, Signatures, And Packaging

Compliance sweep: Are all SBD/MBD forms fully completed, signed, and witnessed where required? Are all addenda acknowledged?
Technical sweep: Do you meet every mandatory spec? Include compliance matrices.
Packaging: Clear dividers and table of contents. For e-submissions, bookmarks and consistent file names (01_Forms, 02_Technical, 03_Price).

Submission, Receipts, And Post-Submission Clarifications

Submit 24 hours early where possible. Get a stamped receipt for physical submissions or a system confirmation email for portals.
Keep a “submission bundle” on file: the final PDF, original editable files, and proof of submission.
Clarifications: Respond promptly and formally. Do not add new information beyond what’s requested unless allowed.

After The Award: Contracting, Delivery, And Getting Paid

Winning is step one: delivering well is what builds references and repeat work.

Contract Types, SLAs, Performance Guarantees, And Penalties

Contract forms: GCC, NEC, JBCC (construction) or buyer-specific service level agreements (SLAs).
Performance guarantees/retention: You may need a bank guarantee (often 5–10%) or accept retention. Price the cost of guarantees into your bid.
Penalties: Late delivery, quality failures, downtime. Know the daily rate caps and mitigation process.

Mobilization, Delivery Plans, And Change Management

Mobilization plan: Kick-off meeting, safety files, onboarding staff, equipment staging.
Project controls: Gantt charts, milestones, weekly reports, and issue logs. Use a change-control form when scope shifts.

Invoicing, Payment Terms, Disputes, And Remedies

Invoicing: Follow the purchase order (PO) and contract. Include delivery notes, timesheets, completion certificates.
Payment terms: Government typically 30 days from receipt of a valid invoice. Track aging and escalate via SCM if overdue.
Disputes: Use contract dispute clauses first. If necessary, formal remedies include internal appeals or approaches under PAJA.

Ethics, Communications Protocols, And Right To Challenge

Ethics: No gifts, favors, or side communications. Report irregular approaches.
Communication: Keep to the contract manager and official channels.
Right to challenge: If you believe the award was irregular, use the objection/appeal window stated in the tender or the Promotion of Administrative Justice Act (PAJA) procedures. Be factual and timely.

Conclusion

Here’s the short version of how tenders work in South Africa: find the right opportunities, get your compliance tight, read the tender like a lawyer, build a costed and defensible offer, and submit exactly as instructed. The rest is consistency, pipelines, templates, and lessons learned after each bid.

Recent trends favor SMEs that are organized: more emphasis on specific goals (including SMMEs and local participation), stricter due diligence, and steady designations for local content in targeted sectors. If you’re serious about growth, treat tendering like a sales function with rules, not a lottery.

Ready to put this into practice? Visit eTender SA to search verified, up-to-date tenders, set custom alerts, and build a pipeline that actually feeds your business. Your next contract could be one click away.

Frequently Asked Questions

How do tenders work in South Africa for small businesses?

Tenders follow a set path: find opportunities (eTender, SOE and municipal portals), ensure supplier readiness (CSD, SARS TCS PIN, B-BBEE, CIDB if construction), attend compulsory briefings, complete all SBD/MBD forms, and submit on time. Evaluation typically checks functionality first, then applies the 80/20 or 90/10 price–preference points.

Where can I find verified tenders in South Africa?

Start with the National Treasury eTender Publication Portal, departmental websites, and SOE portals (Eskom, Transnet, SANRAL, PRASA). For municipalities, check their sites and notices; many draw from the Central Supplier Database. Construction firms should monitor CIDB. Set keyword and province alerts to build a steady pipeline.

What documents do I need to bid on South African tenders?

Core compliance includes CSD registration, a valid SARS Tax Compliance Status PIN, CIPC details, B-BBEE certificate or affidavit, and where applicable CIDB grading. Often required: COIDA letter, UIF compliance, insurance, SBD/MBD forms, references, OEM/accreditation letters, and SBD 6.2 local content forms for designated sectors.

How are bids evaluated under the 80/20 vs 90/10 system, and how do tenders work in South Africa during scoring?

Most bids first score functionality against a minimum threshold. Qualifying offers then compete on price and specific goals: 80/20 for lower-value and 90/10 for higher-value tenders (many departments use about R50 million as a guide). Lowest acceptable price gets maximum price points; others score proportionally.

Can foreign companies bid on South African tenders?

Yes. Foreign bidders must meet eligibility and compliance rules in the tender, which can include CSD registration, tax compliance verification, and sector certifications. For construction, CIDB grading or a compliant joint venture may be needed. Local content designations still apply, so plan sourcing or partner locally where required.

When are performance guarantees required, and what do they cost?

Many awarded contracts require a performance guarantee or retention, often 5–10% of contract value. Banks/insurers typically charge about 1–3% per annum of the guarantee amount, depending on risk and collateral. Price this financing cost into your bid and confirm the exact security requirements in the tender conditions.