The adjudication process for two large tenders issued by Transnet Freight Rail (TFR) for the procurement of 599 dual-voltage electric locomotives and 465 diesel locomotives for its general freight business is under way and the preferred bidders should be named during the second half of this calendar year.

TFR CEO Siyabonga Gama told Engineering News Online that the bids were submitted on April 28, but that the identities of the bidders would not be released until the tender was awarded.

Initially, the tenders were due to close on October 1, 2012, but had been delayed in order to secure sanction from the National Treasury on the final adjudication criteria.

It had been agreed that the adjudication would be conducted using a 60:20:20 formula, with price accounting from 60%, black economic empowerment (BEE) 20% and local content 20%.

The formula deviated from the prevailing Preferential Procurement Policy Framework Act (PPPFA) ratio stipulating a 90% weighting for price and 10% for empowerment.

Gama confirmed reports carried in the Business Day suggesting that the National Treasury had approved the formula slightly ahead of the closing date.

The National Treasury had granted a similar dispensation for the Renewable Energy Independent Power Producer Procurement Programme, where a price weighting of 70% was stipulated, with economic development, including local content, and BEE comprising the 30% balance.

Gama insisted that the comprehensive nature of TFR’s tender meant that the final evaluation criteria “did not make a major difference” to the bidders.

He also confirmed that TFR was aiming to achieve minimum local content of 60% and that the BEE component needed to be built into the overall offer.

The National Treasury had scrutinised the adjudication formula mainly over concerns that it could raise the costs of the programme.

However, it also recognised the fact that rail rolling stock had been among the ‘first wave’ of products designated for local procurement following the December 7, 2011, revision to the PPPFA.

Gama indicated that there might be a marginal price differential, but said that “1% to 2% translated into around 68 000 additional jobs”.

Gama confirmed that multiple bids had been received for both programmes and that these included proposals from leading original equipment manufacturers.

In total, 1 064 locomotives would be bought, with some having estimated the overall price tag at around R35-billion.

The procurement was, therefore, a major component in a larger R200-billion-plus capital expenditure programme being undertaken by TFR, under Transnet’s R300-billion Market Demand Strategy (MDS) for rail, ports and pipelines.

Locomotives were expected to comprise about R75-billion of the TFR programme’s costs, with infrastructure expected to account for R84.5-billion and wagons R48-billion.

The MDS was a rolling programme that would continue until 2018/19.