Subcontracting in Tenders: the 30% Rule No Longer Applies

Subcontracting is still one of the most direct routes into big-project work for small and black-owned businesses in South Africa. It no longer works the way it used to, and a lot of what is written about it is out of date. Here is what changed, and where the work comes from now.

What changed

For contracts above R30 million, the previous regulations made it compulsory for the winning bidder to subcontract at least 30% of the contract value to designated smaller firms. Under the Preferential Procurement Regulations, 2022, that compulsory 30% requirement no longer applies. Whether a contract is subcontracted is now up to each tender’s own conditions.

Where subcontracting work still comes from

• Tender conditions. A tender can still require or invite subcontracting in its own conditions. That is a verified requirement: the tender says who is wanted, and for what.
• Packages posted by main contractors. Some contractors advertise subcontract packages themselves, for example on SANRAL’s supplier development site (eSDD). They have closing dates, like any other tender.
• Awarded contracts. A company that has just won a large contract may need subcontractors. That is a lead, not a promise: an award does not guarantee any subcontract work, so ask early and expect the answer to be no some of the time.

If you’re the main contractor

• Price the subcontracted packages realistically, you remain liable for delivery.
• Identify compliant subcontractors before bidding; many tenders require named subcontractors and their compliance documents in the bid.
• Keep the paper trail, and where a tender names its subcontractors, changing them later usually needs the buyer’s approval.

If you’re the smaller firm

1. Watch both lists. The Sub-Con page on SA Tenders AI keeps verified requirements and awarded-contract leads apart, so a lead never reads like a promise.
2. Have your documents ready. CSD, tax pin, B-BBEE affidavit, CIDB registration for construction packages (see the document checklist). Main contractors pick the subcontractor whose paperwork is bankable today.
3. Package yourself by trade, “we do the electrical package” wins over “we do everything”.
4. Use the work to climb. Completed subcontracts build the track record that upgrades your CIDB grade, unlocking bigger direct tenders.

Where it goes wrong

• Fronting, lending your B-BBEE status while the main contractor does the work is a criminal offence, and it torches your reputation with buyers.
• Payment terms, negotiate them up front; the standard cascade is payment within 30 days of the main contractor being paid.
• Scope creep without variation orders, get changes in writing, same as any contract.

Your B-BBEE paperwork is the key that opens this door, the B-BBEE guide covers the free affidavit route for EMEs and QSEs.