Preference Points Explained: The 80/20 and 90/10 Systems in South African Tenders
Most South African government tenders are not awarded to the cheapest bid. They are scored out of 100 points, split between price and 'specific goals'. Under the Preferential Procurement Regulations, 2022, the 80/20 system applies to lower-value tenders (80 points for price, 20 for specific goals) and the 90/10 system to higher-value tenders (90 for price, 10 for specific goals), with the threshold between them set in the regulations. The important change in 2022 was that the preference points are no longer automatically tied to your B-BBEE level: after the Constitutional Court's ruling in the Afribusiness matter, each organ of state now decides and states in its own tender documents which specific goals it will award points for. So the only reliable answer to 'how will I be scored?' is the one written in the tender document in front of you.
How is the price score actually calculated?
Price is scored relatively, not absolutely. The lowest acceptable bid receives the full price points (80 or 90), and every other bid receives proportionally fewer points based on how much higher it is than that lowest bid. The formula in the regulations compares your price to the lowest price and reduces your score in proportion to the difference. The practical consequence is that a small price gap costs you only a small number of points, while a large gap becomes very difficult to recover through specific-goal points alone. If you are bidding 20% above the lowest price on an 80/20 tender, the points you lose on price will usually exceed the entire specific-goals allocation.
When does 80/20 apply and when does 90/10 apply?
The split depends on the value of the tender: lower-value tenders are evaluated on 80/20 and higher-value tenders on 90/10, with the monetary threshold set out in the Preferential Procurement Regulations. Because that threshold has been revised over time and further change is expected under the Public Procurement Act 28 of 2024 and its regulations, you should confirm the current figure from National Treasury rather than relying on a number you remember from a previous bid. The tender document itself will state which system applies to that specific tender — that statement is what governs your bid.
What are 'specific goals' and how did 2022 change things?
Before 2022, the preference points were effectively a B-BBEE score conversion: your B-BBEE contributor level mapped to a fixed number of points. In February 2022 the Constitutional Court confirmed the invalidity of the 2017 Preferential Procurement Regulations in the Afribusiness matter, and the 2022 Regulations that followed moved to a 'specific goals' model. Under this model each organ of state identifies, in each tender, the goals it will award preference points for — which may include B-BBEE status, but may also include factors such as ownership by historically disadvantaged persons, women, youth or people with disabilities, or locality. The result is that two tenders of similar value from different departments can score preference quite differently, and you cannot assume your B-BBEE certificate alone secures the full 20 or 10 points.
Does functionality scoring change the picture?
Often, yes. Many tenders are evaluated in stages: administrative compliance first, then functionality (technical capability, experience, methodology, resources) against a stated minimum threshold, and only then price and preference. Where functionality applies, failing to reach the minimum functionality score eliminates you before price and preference are considered at all — so the 80/20 or 90/10 calculation never happens for your bid. The functionality criteria and their weightings must be stated in the tender document. Reading them carefully is usually a better use of your time than fine-tuning your price, because functionality is where bids are most often lost.
How should this change how you price a bid?
Treat the scoring system as part of the commercial decision rather than an afterthought. On a tender where you have strong specific-goal credentials, you have a limited amount of room to price above the lowest bidder and still win — but that room is smaller than most bidders assume, because price carries 80 or 90 of the 100 points. On a tender where you score poorly on the stated specific goals, you effectively have to be the lowest or near-lowest acceptable price to be competitive. Working out roughly how many points a given price difference costs you, before you bid, tells you whether the tender is genuinely winnable or whether your time is better spent on the next one.
What is changing under the Public Procurement Act?
The Public Procurement Act 28 of 2024 consolidates public procurement into a single framework and provides for preferential procurement, with detail to be set out in regulations and in National Treasury instructions as provisions are brought into operation. Because commencement and regulations are phased, the practical position for any given tender is governed by what that tender document states and by the instructions in force when it was advertised. If you are relying on a specific threshold, formula or preference category for a bid decision, verify it against the current National Treasury publication rather than a summary — including this one.
FAQs
Is the cheapest bid always the winner?
No, but price dominates. Price is worth 80 or 90 of the 100 points, so the lowest acceptable bid starts with a substantial advantage that specific-goal points rarely overturn on their own. Bids are also frequently eliminated earlier, on administrative compliance or functionality, before price is considered.
Do I still need a B-BBEE certificate?
In practice you usually should have one. Even though the 2022 Regulations moved to a 'specific goals' model rather than automatic B-BBEE point conversion, many organs of state include B-BBEE status among the specific goals they score, and some tenders require the certificate or a sworn affidavit as a submission document regardless. Check the tender document.
Where do I find which system a tender uses?
In the tender document, usually in the section dealing with evaluation criteria, and often summarised on the standard bidding forms. If the document is ambiguous, ask the contact person named in the advert in writing before the closing date.
Can an organ of state award to someone other than the highest scorer?
Only on reasonable and justifiable grounds, as provided for in the applicable legislation and regulations, and the decision must be defensible. It is the exception rather than the norm — the default is award to the highest-scoring acceptable bid.
Sources: www.treasury.gov.za, ocpo.treasury.gov.za, www.gov.za, www.concourt.org.za, www.etenders.gov.za