Tendering in South Africa can be quite lucrative for individual freelancer contractors, small businesses and independent entrepreneurs. This is what makes the space particularly attractive for scammers. We’ve been playing in this space for the past 3 years and as a result, we’ve come across a couple of scam orders and tactics. Here are a few things you can look out for in order to protect yourself from the forms of financial exploitation AKA “scamming”.

But first, let’s run through a few key terms:

1) Central Supplier Database (CSD)

The Central Supplier Database (CSD), is as the name suggests – all supplier information for every level of government, can be found in the CSD. Major government and corporate bodies, such as SARS, the National Departments of government including home Affairs, and CIPC, verify it, to simplify the process of registration. (Click on this link to find out more on supplier registration)

By now you’re wondering why we’ve explained the various terms and meanings in tendering. It’s because the scammer prevention tactics can be applied across all spheres of the tendering process so it’s crucial to stay vigilant from start to finish.

2) What is a tender?

 Sidenote: If the definition below is not your original wording, please quote it and credit the source)

A tender is an invitation or offer to provide goods or services at a fixed price – set by the company issuing the tender. The process of bidding for a tender is built in a way that allows all bidders to challenge for the tender fairly. Scammers capitalise on an over eagerness to compete.

A tender notice or advert will usually give the following information:

·  Type of item/work in question;

·  Name and address of the tender authority;

·  The tender enquiry reference number and/or date;

·  The cost of and the last date for collection of bid document; 

·  Due date and/or time for submission of tender papers;

·  Information on how to obtain the tender documents;

·  Any other Instructions or information

The following section outlines, are terms of the documents involved in the tender application and procurement process.

3) What is a Request For Quotation (RFQ)?

Also known as an invitation for bid (IFB), it’s the process where a company requesting services/goods invites select suppliers and contractors to submit price quotes and bids for the chance to fulfill the project or parts of it. … RFQs can be sent alone but usually they come before a request for proposal (RFP). RFQ responses detail the cost of fulfilling the project’s needs

4) What is a Request For Proposal (RFP)?

The RFP is the document that announces the tender and provides details about a project that needs fulfilling. It’s sometimes seen as an invitation to bid by contractors who can complete the project. Government is known to use RFPs a lot to try and get lower bids. A request for proposal requires the interested companies to consider bidding based on whether the project is worth it, and whether the company can actually do what is proposed. RFP responses compare which vendors are best for  completing the project

5) What is a Request For Information (RFI)?

The RFI is a document used by companies that require information about the nature of the project, the industry/market it belongs to and some of the general questions surrounding things like the challenges and tasks that define the project. The RFI is a document that offers a platform to gain the facts of the project where the vendor will explain their offerings. RFI responses detail how each bidder would go about fulfilling the project.

6) What is a Purchase Order (PO)?

A purchase order is a commercial document that details an official order placed by a buyer (from either corporate or government) to a seller indicating types, quantities, and agreed-upon prices for products or services required. After the fulfilment of that order, the seller is then paid by the buyer’s organization that issued out the order.

You can watch the following video to get more clarity https://www.youtube.com/watch?v=nw9GqfSmI6E

Now that we’ve run through the definitions, let’s get into how to conduct your own due diligence.

Spotting a fake can be tricky, but careful analysis could be your saving grace. Start with a simple online search of the company to verify their validity. Compare the contact details and names of officials. The information should always match the information available on the relevant Department’s website. In the case of verifying a phone number, the first 6 digits on your PO should match those on the official government site. 

The banking details provided with the tender document should not belong to a private individual, they should be in the company name. The Government will never ask you to pay to secure a tender.

Snuffing out scams

1. When seeking clients: Email and website domains are the biggest indicator of validity. Even the slightest spelling mistake in a name or domain is a red flag. Verify using Google. For instance, TransNet’s email domain will always be@transnet.net, it can never be a .gov, .org, .co.za, or .com domain.

2. Procurement policies are also a good start, as they guide you through selecting tenders that are right for you. Once a tender has been accepted the seller and buyer operate on the agreed upon fixed price, so any changes in price down the line should alarm you immediately.

3. Government orders are generated by a government system called BAS (Basic Accounting System). Therefore the numbers will always add up and NEVER change. REMEMBER the price is FIXED.

a. If they promise you a 100% margin, which definitely sounds too good to be true – because it is.

b. A discount from a supplier recommended by a non credible source could be a scam. 

4. Only security firms like the SANDF, would request a faxed quote/proposal. Most departments use email services. Even if it looks legit at first glance, scrutinise it more. You can never be too careful. Hackers can still find the real names of actual officials by hacking email servers.

5. Look into payment terms. No one pays in 2-3 days. The offering company always gives themselves time to pay. Government, especially, lists a minimum of 30 days after the job is done. Private sector and some SOEs like Eskom usually list 14 days. When looking over initial payment terms, and its less than 14 days – exercise caution.

6. With POs you always have at least 30 days to deliver. Only an award letter might suggest that you have 2 days to deliver and even then it’s highly unlikely.

7. Be very weary of threats and ultimatums. The moment an official implies  “or Else we’ll give it to someone else”, you’re better off leaving.

8. The RFQ is never alone. Departments also send SBD forms to complete. And even if the SBD forms are there, call the supply chain manager or another official (not the sender) to validate the order number and RFQ.

9. The CSD will request that you list your specific offering, because it’ll connect you to departments interested in requesting that exact specific offering that you provide. If you provide consulting services and the requester asks for electrical meters, that should alert you

a. In case you’re still unsure, visit the department to see an official face to face to verify the documentation.

b. Departments with the same CSD can issue out orders form one another, its easier and more affordable. Example: if you’ve just started out, it’s unlikely that you’ll be the middleman between the two government departments when you have no history of working with either.

10. Make sure the physical address on any document is the correct one. Remember that Google is your friend. You can save a lot of time and money with research, all it takes is a little bit of work but it’s worth it. Also check the delivery address. If it doesn’t match the head office address then it’s not the one. The SANDF could never request that you deliver to any location without any publically known ties to the SANDF. If they were to employ a middleman, you would be told about it.  Location is crucial so it’s either you meet them at their official offices or you don’t, period.

11. Things that seem too good to be true usually are. When it comes to scams, the risk always outweighs the reward

Eskom wouldn’t issue out an order for ready-made meters. They’ll send a PO for materials and then assemble the meters according to official Eskom specification and regulations, after they may request a delivery service to distribute the finished product. So keep your eyes open and your senses ready to check your excitement.

COVID has complicated things and made the need to deliver on services quite urgent, but the best thing for you to do is to take 5-10 minutes to do some due diligence. Make sure that what you’re getting yourself into is legit. 

At the end of the day, discernment will save you from finding yourself in tricky situations, If something feels off, look into it. If after all your Due diligence is done and you find that the PO is legit, come apply for funding! Sikhona skhokho!
You can apply on https://thepeople.co.za/purchase-orders/ 🙂

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