Change in City of Cape Town’s tender criteria excludes small businesses, bidders say

Small and medium enterprise business owners have accused the City of excluding SMMEs and allowing a single company to monopolise all maintenance work in the city.

This after drastic changes were made to a re-advertised tender on the Construction Industry Development Board (CIDB) grading requirement to 8GB from the previous tenders of 3GB. The tender relates to the repairs, maintenance, additions, alterations, and new building works to community services and health facilities, and other City facilities.

The current tender was awarded to Umkai Building and Civil Works (Pty) Ltd, Batsini (Pty) Ltd, AR Projects and Developments (Pty) Ltd, and Ilitha Painters and Decorations CC trading as The Construction Co, in August last year. However, on the re-advertised tender, the winner takes all. One of the business owners, who asked not to be named, said the manipulation of tender specifications has been a norm where the grading bar would be set high to exclude small but competent businesses.

“The reality is that this has been taking place for a long time. They set the criteria so high that it becomes impossible for us as small businesses to qualify. For a small company to upgrade its levels it is dependent on the contracts it secures. “The tender specifications are written in such a way that certain machinery and requirements only favours a specific company,” he said.

Another owner said: “Even if you have been in business for at least five years, but have more experience in the field and manpower to do the job, with a lower grading, they still won’t award you the tender. If you have numerous companies from small to big servicing the City for specific services, but still experience late deliveries, quality issues and others, how can one company be expected to offer those services?” he said.

South African Small and Medium Enterprises Federation (Sasmef) CEO Carl John Lotter said tenders, tender forms and processes by their arbitrary nature and complexity were not business friendly and were difficult for small businesses. Lotter said the legislative context has to be reviewed to ensure ease of doing business. Finance mayoral committee member Siseko Mbandezi said the tender was advertised as per CIDB regulation 25 (1) (B), a regulation by the National Department of Public Works.

“The value of the contract is R250 million/three-year contract period with a plus-minus R83m (annual value). This requires a CIDB grading of 8GB. The 3GB and 5GB of the previous tender were allocated based on the interpretation of the CIDB legislation at the time. “Subsequently, there was an appeal received, which geared the City to implement total contract value and/or annualised value to determine the CIDB grading,” he said.

Mbandezi said the City has to comply with CIDB regulations but has no role in drawing them up.