Understanding the 80/20 and 90/10 Preference Point Systems

If you've ever submitted a government tender in South Africa and wondered why your competitive price didn't win the contract, the answer may lie in the preference point system.

South Africa's procurement framework doesn't simply award contracts to the lowest bidder. Instead, it uses a scoring system that balances price against specific goals—like B-BBEE status, black ownership, women ownership, youth ownership, and local economic development.

Two systems govern this process: the 80/20 and 90/10 preference point systems. Understanding how they work is essential to pricing your bids correctly and positioning your business to win.

This guide explains both systems in plain language, shows you how points are calculated, and reveals how the rules are changing under the new Public Procurement Act.

What Are Preference Points?

Preference points are extra points awarded to bidders who meet certain transformation or empowerment goals. They are added to your price score to determine your total evaluation score.

The principle is simple: Government wants to achieve two things at once—get the best value for money (price) and advance previously disadvantaged individuals and businesses (preference).

The Preferential Procurement Policy Framework Act (PPPFA) of 2000 establishes this system. Section 217 of the Constitution mandates that government procurement must be fair, equitable, transparent, competitive, and cost-effective, while also allowing for preferential procurement policies .

The 80/20 System: For Tenders Up to R50 Million

The 80/20 preference point system applies to tenders with a Rand value of up to R50 million (all applicable taxes included) .

How Points Are Allocated

Under this system, price carries the most weight—80 out of 100 points. But the 20 points for specific goals can be decisive in a competitive tender .

How Price Points Are Calculated

The formula for calculating price points is:

Ps = 80 × (1 - (Pt - Pmin) / Pmin)

Where:

• Ps = Points scored for price of the tender under consideration
• Pt = Price of the tender under consideration
• Pmin = Price of the lowest acceptable tender

In simple terms: The lowest bidder gets the full 80 points. Every other bidder gets fewer points based on how much higher their price is compared to the lowest bid.

What Are "Specific Goals"?

Specific goals are the criteria used to award the remaining 20 points. They are stated in the tender document and typically include :

• B-BBEE status level (often the primary criterion)
• Black ownership percentage
• Black women ownership
• Youth ownership
• People with disabilities ownership
• EME or QSE status
• Local economic development

The exact allocation of these 20 points varies by tender. Some tenders may allocate all 20 points to B-BBEE status. Others may split the points across multiple goals—for example, 4 points for B-BBEE, 4 for black women ownership, 4 for youth ownership, 4 for EME/QSE status, and 4 for 51% black ownership .

The 90/10 System: For Tenders Above R50 Million

The 90/10 preference point system applies to tenders with a Rand value above R50 million (all applicable taxes included) .

How Points Are Allocated

Under this system, price carries even more weight—90 out of 100 points. The 10 points for specific goals are less influential, meaning larger contracts are awarded more heavily on price competitiveness .

How Price Points Are Calculated

The formula for calculating price points is:

Ps = 90 × (1 - (Pt - Pmin) / Pmin)

Where:

• Ps = Points scored for price of the tender under consideration
• Pt = Price of the tender under consideration
• Pmin = Price of the lowest acceptable tender

80/20 vs 90/10: Key Differences at a Glance

The strategic implication: If you're an SMME with a strong B-BBEE level, the 80/20 system gives you a better chance to compete against larger, lower-priced competitors. Under the 90/10 system, price becomes much harder to overcome .

How B-BBEE Status Translates to Points

Under the current system, your B-BBEE status level directly determines how many preference points you receive. Here's how the points typically break down :

Important: Most SMMEs that are 51% or more black-owned automatically qualify for Level 1 or Level 2 status through the EME or QSE affidavit route, giving them a significant advantage in the 80/20 system .

A Practical Example: How Scoring Works

Let's say three businesses bid on a tender valued at R30 million (80/20 system applies):

Step 1: Calculate Price Points (Ps = 80 × (1 - (Pt - Pmin) / Pmin))

• Bidder A: 80 × (1 - (25M - 25M) / 25M) = 80 points
• Bidder B: 80 × (1 - (27M - 25M) / 25M) = 80 × (1 - 0.08) = 73.6 points
• Bidder C: 80 × (1 - (30M - 25M) / 25M) = 80 × (1 - 0.20) = 64 points

Step 2: Calculate Preference Points

• Bidder A: Level 4 = 12 points
• Bidder B: Level 1 = 20 points
• Bidder C: Level 2 = 18 points

Step 3: Calculate Total Points

Winner: Bidder B — despite not having the lowest price, their Level 1 B-BBEE status gave them enough preference points to overtake the lowest bidder.

This example shows why understanding the scoring system matters. Pricing too low without considering your B-BBEE status—or failing to claim all the preference points you're eligible for—can cost you the contract.

How to Claim Preference Points

To claim preference points, you must complete the SBD 6.1 form (Preference Points Claim Form) and submit the required proof .

Required Documentation

Important: If you fail to submit proof of the preferences you claim, zero points will be allocated for those specific goals . You must attach the required documentation to your tender submission.

What Happens If You Claim Fraudulently?

Claiming preference points you're not entitled to—or submitting fraudulent documentation—carries serious consequences. If the specific goals are claimed or obtained on a fraudulent basis, the organ of state may :

• Disqualify you from the tendering process
• Recover costs, losses, or damages
• Cancel the contract and claim damages
• Restrict you (and your directors) from obtaining government business for up to 10 years

The Future: How the Public Procurement Act Changes the System

Important update: The Public Procurement Act 28 of 2024 was signed into law on 18 July 2024, but it is not yet in force . Until it is proclaimed, the PPPFA and the 80/20 and 90/10 systems continue to apply to all government tenders .

However, the draft regulations published in April 2026 propose a fundamental shift away from the preference point system.

The Proposed New Model

Under Regulation 25, procuring institutions must assign weight across four criteria :

1. Capability and capacity to deliver
2. Functionality and technical requirements
3. Preference (B-BBEE and other goals)
4. Price

Each of the first three criteria is subject to a mandatory minimum threshold of 70%. A bidder who fails any one is excluded before price is even considered .

Set-Asides and Subcontracting

The proposed regulations also introduce threshold-based mechanisms :

What This Means for You

Under the proposed system, B-BBEE status changes function. Instead of converting to preference points on a sliding scale, it becomes a qualifying condition—a binary "yes" or "no" for whether you fall inside a set-aside or meet a pre-qualification threshold .

Practical implication: A business that relied on a strong B-BBEE level to offset a less competitive price under the old 80/20 formula may find that advantage no longer exists in the same form. Under a set-aside, only eligible bidders compete at all, and price becomes the primary differentiator among them .

Strategic Tips for Maximising Your Score

1. Know Which System Applies Before You Bid

Check the tender document. It will state whether the 80/20 or 90/10 system applies based on the estimated contract value .

2. Get Your B-BBEE Status Right

If you're an EME or QSE, get your sworn affidavit. If you're a larger enterprise, ensure your B-BBEE certificate is valid and current .

3. Claim All Preference Points You're Eligible For

Review the specific goals in each tender. If you qualify for multiple goals (e.g., black women ownership, youth ownership, local enterprise), claim them all and submit the required proof .

4. Price Strategically

Under the 80/20 system, a strong B-BBEE level can overcome a slightly higher price. Under the 90/10 system, price is much harder to overcome—so focus on competitiveness .

5. Prepare for the New System

Even though the Public Procurement Act isn't in force yet, start preparing for a capability and compliance-driven evaluation model. Document your track record, build case studies, and ensure your ownership structure is accurately reflected in your CSD profile .

How QuickTenders Helps You Navigate Preference Points

Understanding the scoring system is one thing. Applying it correctly to every tender is another. QuickTenders simplifies the process:

Tender Matching

We score every open tender against your business profile—province, sector, CIDB grade, B-BBEE level, and more—so you spend time on bids you can actually win.

Compliance Tracking

Your B-BBEE certificate, CSD registration, and tax clearance are tracked in one place with reminders before anything expires. A single Readiness Score tells you at a glance whether you're tender-ready.

Document Vault

Store your B-BBEE certificate, affidavits, CIPC documents, and ID copies once and reuse them across every bid.

Tender Workspace

Start a workspace for any tender and build your submission in a focused editor. SBD forms are pre-filled from your profile, and a completeness check ensures nothing is missing—including your SBD 6.1 preference claim form.

Best of all? You can browse tenders and prepare your first bid for free. No credit card required. Plans start at R350/month when you're ready to apply for more.

👉 Get started with QuickTenders today

The Bottom Line

The 80/20 and 90/10 preference point systems are the foundation of South Africa's tender evaluation process. They balance price against transformation goals—and understanding how they work gives you a strategic advantage.

Key takeaways:

• 80/20 applies to tenders up to R50 million: 80 points for price, 20 for specific goals
• 90/10 applies to tenders above R50 million: 90 points for price, 10 for specific goals
• B-BBEE status directly converts to preference points (up to 20 under 80/20, up to 10 under 90/10)
• You must claim preference points and submit proof—or receive zero
• The system is changing under the Public Procurement Act, shifting toward capability-driven evaluation

Master the current system while preparing for the future. That's how you stay competitive in South Africa's tender market.