Gov’t quota for small con­trac­tors a no-go with­out change to law

-Pro­cure­ment Com­mis­sion head

Stabroek News Sunday - - FRONT PAGE -

While gov­ern­ment is mov­ing to en­sure 20% of all con­tracts go to small con­trac­tors from Jan­uary 1st, 2019, Pub­lic Pro­cure­ment Com­mis­sion (PPC) Chairperson Carol Corbin says that it will need to change the pro­cure­ment law to do so.

“It is in the Small Busi­ness Act but not in the Pro­cure­ment Act. The Pro­cure­ment Act is the prin­ci­pal act that gov­erns pro­cure­ment and which guides procur­ing en­ti­ties,” Corbin told Sun­day Stabroek in an in­ter­view.

“There is noth­ing wrong with giv­ing pref­er­en­tial treat­ment… many other ju­ris­dic­tions do it but it is in their act—South Africa, Tan­za­nia, Trinidad and other places… We have done the re­search …but it must be in the law. The opin­ion of the PPC is that the Pro­cure­ment Act must be amended be­fore this can be im­ple­mented prop­erly,” she added.

Asked if she be­lieved that the pro­gramme should wait un­til the law is changed, Corbin said that amend­ments could be en­acted in a short time­frame. “What does it take for the amend­ment to be made? If the leg­is­la­tors want that to hap­pen, then they have to do what is nec­es­sary,” she stressed.

Corbin said that while she has no prob­lems with quo­tas to cater for spe­cific groups, that mech­a­nism must be guided by law since it is cur­rently dis­crim­i­na­tory to shut out large con­trac­tors or any other group from bid­ding or awards.

In De­cem­ber of last year, Min­is­ter of Busi­ness Do­minic Gaskin had told this news­pa­per that the gov­ern­ment’s cam­paign prom­ise to en­sure that small con­trac­tors are given at least 20% of all state con­tracts was on track and that 2018 would be “the year for small con­trac­tors.”

Gov­ern­ment had made ref­er­ence to the Small Busi­ness Act, which speaks to small busi­nesses ac­cess­ing at least 20% of con­tracts. The Min­istry of Busi­ness, through its Small Busi­ness Bureau, was charged with for­mu­lat­ing a plan that would see this gov­ern­ment ini­tia­tive im­ple­mented.

It fol­lowed an an­nounce­ment made by Min­is­ter of Fi­nance in 2015, dur­ing the first bud­get the APNU+ AFC ad­min­is­tra­tion pre­sented.

The ra­tio­nale be­hind the ini­tia­tive was to create more em­ploy­ment op­por­tu­ni­ties and to ex­pand those op­por­tu­ni­ties across a wider swathe of busi­ness in­ter­ests. If it is al­lowed to func­tion as it should, it should also create op­por­tu­nity for the open­ing up of new small busi­nesses based on op­por­tu­ni­ties that will emerge over time for new con­tract ar­eas within the state sys­tem.

At the be­gin­ning of 2016, Min­is­ter of State Joseph Har­mon met with mem­bers of the Gen­eral Con­trac­tors As­so­ci­a­tion of Guyana (GCAG) and he again re­it­er­ated the gov­ern­ment’s com­mit­ment to work­ing closely with the min­istries of Pub­lic In­fra­struc­ture and Busi­ness to en­sure that small con­trac­tors were awarded 20% of all gov­ern­ment con­tracts as en­shrined in the law.

“If the coun­try gives out $10 bil­lion in con­tracts per year, 20% of that should go to small con­trac­tors,” Har­mon was quoted by the De­part­ment of Pub­lic In­for­ma­tion as say­ing.

The mat­ter was dis­cussed dur­ing a Cab­i­net sit­ting in Oc­to­ber, 2016 and a com­mence­ment date was es­tab­lished. This was ac­cord­ing to Har­mon who, dur­ing a post-Cab­i­net press con­fer­ence on the 19th of Oc­to­ber, said that Cab­i­net gave its ap­proval.

He re­ferred to the Small Busi­ness Act of 2004, which pro­vides for at least 20% of all con­tracts re­quired an­nu­ally by the gov­ern­ment, to be ob­tained by small busi­ness. “Cab­i­net has ap­proved the im­plan­ta­tion of a small busi­ness pro­cure­ment pro­gramme for im­plan­ta­tion by the Min­istry of Busi­ness by Jan­uary 1st, 2019. In this re­gard, a ba­sic set aside mea­sure for all gov­ern­ment pro­cured goods ser­vices and works, up to $30 mil­lion; a set aside for sub-con­tracted mea­sures for all gov­ern­ment pro­cure­ment within $30 mil­lion and $200 mil­lion; and that all the min­istries, agen­cies and re­gional au­thor­i­ties will par­tic­i­pate in the im­ple­men­ta­tion of the pro­gramme,” he said.

“Specif­i­cally, the min­is­ters agen­cies and re­gional au­thor­i­ties be re­quired to pro­vide an­nu­ally, pro­jec­tions of the value of small busi­ness pro­cure­ment by sec­tors, based on their an­nual pro­cure­ment plans to the Small Busi­ness Bureau… set aside mea­sures ap­proved and pro­vide a quar­terly re­port on pro­cure­ment pay­ments to the SBB. This pro­gramme will en­sure that small busi­nesses have a fair ac­cess to gov­ern­ment’s pro­cure­ment op­por­tu­ni­ties through a trans­par­ent and ef­fi­cient process and will also en­hance the eco­nomic im­pact of pub­lic spend­ing,” he added.

Breach­ing the law

But Corbin says that Small Busi­ness Act is at vari­ance with the Pro­cure­ment Act. She quoted from Sec­tion 5 (4), which states, “Sub­ject to sec­tion 39 (6)(b), the procur­ing en­tity shall es­tab­lish no cri­te­rion, re­quire­ment or pro­ce­dure with re­spect to the qual­i­fi­ca­tions of sup­pli­ers or con­trac­tors that dis­crim­i­nates against or among sup­pli­ers or con­trac­tors or against cat­e­gories thereof on the ba­sis of na­tion­al­ity.”

This news­pa­per un­der­stands that al­ready large con­trac­tors are com­plain­ing about the pol­icy, with some even mulling tak­ing the mat­ter to court, as they claim that the Min­istry of Pub­lic In­fra­struc­ture has al­ready in­sti­tuted the pol­icy.

Pub­lic In­fra­struc­ture Min­is­ter David Pat­ter­son had told this news­pa­per that dur­ing 2018 pre­qual­i­fi­ca­tion process the min­istry had re­ceived 900 ap­pli­ca­tions and was proac­tive in keep­ing a prom­ise made to the small con­trac­tors.

“We have a pre­qual­i­fi­ca­tion that is go­ing on right now. As you know, we have over 900 ap­pli­ca­tions and per­sons for 2018. It goes to NPTAB [the Na­tional Pro­cure­ment and Ten­der Ad­min­is­tra­tion Board] and they grade them and it comes to us…,” he said.

At the time, he said about 12% of all min­istry con­tracts go to small con­trac­tor.

Ac­cord­ing to him, small pro­jects that are dealt with at the level of the min­is­te­rial ten­der board are set aside for the small con­trac­tors.

These con­tracts, Pat­ter­son ex­plained, usu­ally re­quire zero equip­ment and in­clude pro­jects such as re­paint­ing airstrips, con­struct­ing foot bridges, etc.

Pat­ter­son had said too that the sys­tem is very ben­e­fi­cial, es­pe­cially since to takea large con­trac­tor into small com­mu­ni­ties to un­der­take works that the small con­trac­tors there are ca­pa­ble of do­ing hin­ders lo­cal in­dus­try de­vel­op­ment and lo­cal con­tent.

How­ever, Corbin is adamant that the law must pro­vide for the process. “You have to put it in the law. The pro­cure­ment act is say­ing that you can­not dis­crim­i­nate against any par­tic­u­lar group. So, if you say to a con­trac­tor from any other part of Guyana that ‘you can’t par­tic­i­pate in con­tracts in Re­gion 5 that is be­ing awarded by the RDC,’ [you] are breach­ing the law. We can only be guided by what is in the Act,” she said, while also not­ing that a con­sul­tant that was hired by the Min­istry of Fi­nance, through funds pro­vided by the IDB, made such a rec­om­men­da­tion.

Corbin said she would have told the Min­is­ter of Busi­ness of the PPC’s po­si­tion and he told her that he is be­ing guided by the At­tor­ney Gen­eral.

Gaskin had said that amend­ments were fac­tored in dur­ing the plan and if there were need he would go to Cab­i­net for ap­proval. “If there is need for leg­isla­tive amend­ments I would say once we get ap­proval from cab­i­net I think we can fast track the ap­proval of the amended leg­is­la­tion. It doesn’t pre­clude im­ple­men­ta­tion of some as­pects of the pro­gramme. We still would need a quar­ter to do some bench­mark­ing and do some anal­y­sis of the data to see what are the kinds of con­tracts that are ac­tu­ally get­ting a big­ger bite of the cherry than the 20 % and those can prob­a­bly be set aside for small busi­nesses,” he said.

Carol Corbin

Do­minic Gaskin

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