1. GUIDELINES ON 20% SUB-CONTRACTING Presentation by:
Eng. Kanyuka Mumba
Director – Planning & Design
April 30, 2013
RDA
“Empowering Zambians through Enterprise and Job Creation”

2. Presentation Focus RDA Introduction Objectives Scope & Eligibility
Selection Criteria
Procurement
Administration
Road Map

3. 1. Introduction – About RDA
RDA was established by the Public Roads Act of and is responsible for Construction, Care and Maintenance of all Public Roads and Bridges in Zambia
RDA commenced operations in 2006
RDA’s core functions are to Plan, Manage and Coordinate the Road Network in Zambia

4. Introduction – Sub-contracting
RDA
Definitions
What is a Sub-contract?
“a contract assigning to another party some obligations of a prior contract”
“a subordinate contract under which the supply of materials, services, or labor is let out to someone other than a party to the main contract”
Who is a Sub-contractor?
“an individual or in many cases a business that signs a contract to perform part or all of the obligations of another's contract (General, Prime or Main Contractor)”

5. Sub-contracting (Cont’d)
RDA
Types of Sub-contractors
Domestic Sub-contractor
A Sub-contractor who contracts with the Main Contractor to supply or fix any materials or goods or execute work forming part of the main contract. Essentially this contractor is employed or ‘NAMED’ by the main contractor
Nominated Sub-contractor
A Sub-contractor who:
Is stated in the Contract as being nominated or
The Client or his representative instructs the Contractor to employ as a Sub-contractor

6. Background to Sub-contracting in Zambia
RDA
Not new phenomenon, most common type is DOMESTIC
Nominated sub-contractors are usually specialists on Bridges, piling, electricals, surfacing, etc.
Road Sector has seen increasing minimum threshold for sub-contracting in last 13 years
<1% 5%
10%
20% NOW
Increasing threshold for Sub-contracting

7. Sub-contracting in Zambia
RDA
Sub-contracting in Zambia
Ministerial Statement on July 25, 2012 directed RDA to ensure minimum of 20% sub-contracting on all major road contracts to Zambian-Owned Companies with shareholding structure as specified in the CEE Act No.9 of 2006
RDA has since developed Guidelines and Modalities for 20% Sub-contracting
To date (106 Sub-contracts)
54 Sub-contractors have been engaged and working
52 Sub-contracts are in Approval process

8. 2. Objectives - 20% Sub-contracting
RDA
Empower local contractors;
Create jobs for Zambian citizens;
Create sustainable local contracting capacity; and
Systematic and eventual upgrade of local contractors from grade six (6) through to grade one (1)
N/B: Sub-contractors MUST have
technical capacity with Engineering
background

9. 3. Scope & Eligibility - 20% Sub-contracting
RDA
3. Scope & Eligibility - 20% Sub-contracting
Scope (What to Sub-contract)
20% of the Contract sum of all major contracts (> KR 30 million)
RDA to specify initial items in the Bidding Document to be sub-contracted
Main Contractor can offer other items or alternatives (at Bidding stage or before contract signing)
Eligibility
Zambian citizen-owned companies with at least 50.1% Zambian Citizen shareholding, and in which citizens have significant control of management;
Registered with NCC in Grades 1 to 6

10. 4. Selection Criteria - 20% Sub-contracting
RDA
4. Selection Criteria - 20% Sub-contracting
DOMESTIC and/or NOMINATED Sub-contracting can apply depending on the nature, complexity, urgency and value of the main contract
Preferential treatment shall be applied to indigenous contractors domiciled in project area
Sub-contractors shall be selected based on minimum technical and financial capabilities, legality and experience

11. …Selection Criteria (Cont’d)
RDA
No Sub-contractor shall be committed to more than one Main Contractor over the same on-going works period, depending on and in relation to the scope of the sub-contracts and, the grades and categories of their registration with NCC
No sub-contractor shall be committed to the same Main Contractor more than twice within a period of three (3) years

12. 5. Procurement - 20% Sub-contracting
RDA
5. Procurement - 20% Sub-contracting
The works by proposed Sub-contractors may be classified in lots of different scopes provided they amount to the minimum total of 20%
Ideal No. of five (5) Sub-contractors shall be permitted per contract. However, depending on prevailing circumstances, RDA may approve more or less than five (5)
Should the Main Contractor’s submission fail to meet the prescribed criteria, opportunity shall be provided to re-submit or submit an alternative proposal within 14 days

13. 6. Administration - 20% Sub-contracting
RDA
The sub-contract shall be treated as part of the Main Contract
Main Contractor shall be responsible for all of the works
RDA to provide a standard form of agreement between the Main Contractor and Sub-contractor, which shall form part of the solicitation documents, where applicable.

14. …Administration (Cont’d)
RDA
The Sub-contractor’s rates shall be incorporated together with the Main BoQs on which the payments will be based
Bidders shall include in their rates a management fee for the Sub-contracts. The fee shall not be more than 5% of the value of the proposed Sub-contract

15. …Administration (Cont’d)
RDA
The Main Contractor shall appoint a Sub-contract Manager, whose responsibilities shall include, inter alia, management of all the Sub-contracts, including project management, contract management, financial management and operations management
The Sub-contract Manager shall be appointed subject to the approval of RDA and shall be paid directly from the fee for management of the Sub-contracts

16. …Administration (Cont’d)
RDA
Payments to Sub-contractor
The Main Contractor may advance the Sub-contractors at the same percentage (usually 15%) as the main contract, where the Sub-contractor has ability to provide advance payment security
Alternatively, the Sub-contractor may be advanced equivalent of materials, plant & equipment, etc.
Payments to Sub-contractors shall be made directly to the Sub-contractors by NRFA
The Main Contractor may advance funds to the Sub-contractor for certified works, whilst waiting for payment from NRFA

17. …Administration (Cont'd)
RDA
Chain of Instructions shall be from RDA’s representative or Project Manager to the Main Contractor and from the Main Contractor to the Sub-contractor, etc.
RDA/Representative
Main Contractor
Sub-Contractor
Responsibility
Instruction

18. …Administration (Cont’d)
RDA
Supervision of Sub-contractor
The Main Contractor shall be responsible for the supervision and management of the Sub-contractor on site
Works done by Sub-contractor will be certified by Main Contractor
Certification by Main Contractor will not imply acceptance of the works!!!
The works shall only be accepted by the Engineer or Project Manager as per normal process
KEY: For initiative to succeed, Main Contractors, Sub-contractors, NRFA and RDA must play their part.

19. Dissemination Workshop
7. Road Map
RDA
Road Map to finalisation of the Guidelines and Modalities...
Dissemination Workshop
Feedback from stakeholders
Review
ZPPA Accreditation
Section 60, PPA of 2008
Publication
All stakeholders
Media

20. Risk Warning!!!
This policy is targeted at genuine and hardworking Zambian construction firms
Aware of unscrupulous individuals who see this as an easy cash venture – i.e., Zero work done and maximum returns
RDA shall NOT permit sub-standard work and shall act sternly and severely punish Sub-contractors for poor works (Vendor Rating)
We must all be on guard against such selfish tendencies
KEY: The 20% is not a ‘CUT’! Sub-contractors to be adequately technically, financially and experientially qualified to undertake the works. First deliver the work, which must be inspected, verified and certified before payment.

21. RDA
Quote of the Day:
“Opportunity is missed by most people because it is dressed in overalls and looks like work” – Thomas Edison