As he appealed for small contractors countrywide to tap into the opportunities afforded to them under the laws of Guyana, National Procurement and Tender Administration Board (NPTAB) Chief Executive Officer Arvind Parag says that nearly 80% of government contracts to date have gone to small and medium-sized businesses.
However, he explained that while the percentage number of overall contracts seems much, those contracts only account for about 10% of the overall government spending budget since mega projects account for about 90% of spending.
“The law says 20% for small contractors and from our data that you have there, as at October 20, 2022, we have awarded 1271 of 1591 tenders to SMEs [small and medium-scaled enterprises]. That accounts, in percentage to 79.89%. So we have long surpassed the required percentage,” Parag told the Stabroek News in an interview.
“But in terms of value, although we awarded 89% of contracts to SMEs, in terms of contract sum or value, we can only achieve 10% of the total spending going to SMEs, due to mega projects …because the SMEs do not meet the minimum requirement for. And if they did they won’t be SMEs,” he added.
Parag said that while the percentage numbers for small contracts has been achieved, it is NPTAB’s hope that more small businesses across the country bid for contracts. This, he reasoned, would not only help the competitive bidding process, but it will also increase the overall spending sums for small contracts.
To attract more small and medium-sized businesses, he said that NPTAB itself has set out strategies and has this year been working to achieve these.
“Regions are encouraged to engage with small and medium-sized businesses for quotations. We encourage community participation, especially in the hinterland communities. It makes no sense that you have a bridge or road and a contractor from another area has to go in to do it. The communities would see who can participate and they can bid. That way, money goes directly back into the communities,” he said.
In this way, he added, community oversight is also increased since persons are familiar with who is doing the project and can hold them accountable.
When procuring entities have mega road projects, they are advised to “segregate those into individual lots “so that SMEs can bid for specific lots and increase their chances at being awarded those.
For road projects below $20 million, NPTAB has a list of over 300 small and medium-sized contractors from across the regions and they are invited to bid for those.
Listing current and upcoming mega projects, such as the New Demerara Harbour Bridge, the Linden to Mabura Road, the Corentyne Highway Expansion project, New Water Treatment Plants building, Linden to Lethem Bridges project and others, Perag said that large businesses that win those contracts are encouraged to sub-contract small contractors for services that they can provide within those contracts.
A 5% margin of preference is also given to small businesses when bidding for contracts.
Guyana’s Small Business Act provides for 20% of the procurement of goods and services to be set aside for small contractors. Given that this did not include works, former Public Procurement Chairperson Carol Corbin had pointed out that small contractors would have had to still compete with big contractors for all construction projects. She had urged that the laws be amended to include works.
Following promises to small businesses since late 2015 that they will able to access at least 20% of government’s procurement of goods, services and works, the Small Business (Amendment) Act 2020 was passed in the National Assembly in February of last year.
While it was the now opposition that had first taken the Bill to the Parliament, it boycotted the sitting that saw the eventual passage of the amendment.
Minister of Tourism, Industry and Commerce Oneidge Walrond had told the House that the amendment might be viewed as onerous and bureaucratic with small businesses having to now meet three criteria instead of two before qualifying for the status.
“[This] makes it mandatory and levels the playing field for all in the sector and eliminates the disadvantages,” she said.
She asserted that the amendment creates the environment and improves opportunities for small businesses to prove that they are genuine small businesses that can compete and will not be overlooked or outnumbered by large enterprises.
Waldron explained further that the third amendment removes the ministerial power of approval and places it in the hands of a competent review council. The council will consist of skilled persons from a wide range of sectors. The minister also stated that the elimination of the ministerial provision guarantees that there will be no political interference and every applicant will be treated fairly and be given an equal chance.
With the amended bill, Walrond noted, small businesses will now have to provide evidence that they meet the criteria.
NPTAB Chairman Tarachand Balgobin had told this newspaper of the 5% advantage last year and had explained that the Small Business Bureau has a database of registered small businesses and in the bidding documents, those tendering would have to show that they qualify.
“What we have done is included in the bidding document that there be a 5% margin of preference advantage to small businesses. So if big businesses bid bigger, because of the economies of scale the small businesses can now compete,” he said.
“When you award, you are awarding to the lowest responsive bidder. If this other person is not registered and his (bid) is 5% above yours, as a small business, you are deemed to be above him. The law allows for a margin of preference, up to 10%, for small businesses and we have started at 5%,” he added.
He had noted that the system would have been periodically assessed. “We will see how it works out. The intent is to allow businesses that are small and coming into the market an opportunity to have an advantage in competition. If they had to compete neck and neck, they would lose out,” he asserted.
“We have sent out the standard evaluation criteria for that already to the entities and will be looking at it now. The Board will look and access how it is goes,” he added.
Parag said that assessment continues, even as new strategies are worked out.
In its encouragement of community participation drive, he said that heads of regions have been asked to be facilitating to contractors who want to learn how they can qualify and guidance on the latter process should also be given.
NPTAB itself, according to its CEO stands willing to help small, medium and micro businesses learn about the process. “We ask the regions to assist and even if the persons comes here, we can help. They can make contact with us and we will guide them,” he said.
