“Empowering Zambians through Enterprise
and Job Creation”
Presentation Focus
1.
Introduction
2.
Objectives
3.
Scope & Eligibility
4.
Selection Criteria
5.
Procurement
6.
Administration
7.
Road Map
1.
Introduction – About RDA
 RDA was established by the Public Roads Act of
2002 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
Introduction – Sub-contracting
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)”
Sub-contracting (Cont’d)
Types of Sub-contractors
1.
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
2.
Nominated Sub-contractor
A Sub-contractor who:
a)
Is stated in the Contract as being nominated or
b)
The Client or his representative instructs the Contractor to
employ as a Sub-contractor
Background to Sub-contracting in Zambia
 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
Increasing threshold
for Sub-contracting
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
2.
Objectives - 20% Sub-contracting
 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
3.
1.
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)
2.
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
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
…Selection Criteria (Cont’d)
 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 subcontracts 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
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 resubmit or submit an alternative proposal within 14 days
6.
Administration - 20% Sub-contracting
 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.
…Administration (Cont’d)
 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
…Administration (Cont’d)
 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
…Administration (Cont’d)
 Payments to Sub-contractor
 The Main Contractor may advance the Sub-contractors at the same
percentage (usually 15%) as the main contract, where the Subcontractor 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
…Administration (Cont'd)
 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.
Main Contractor
Sub-Contractor
Responsibility
Instruction
RDA/Representative
…Administration (Cont’d)
 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.
7.
Road Map
 Road Map to finalisation of the Guidelines and Modalities...
Dissemina
tion
Workshop
• Feedback
from
stakeholders
• Review
ZPPA
Accreditat
ion
Section 60,
PPA of 2008
Publication
• All
stakeholders
• Media
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.
20
Quote of the Day:
“Opportunity is missed by
most people because it is
dressed in overalls and
looks like work” – Thomas
Edison