Gov’t quota for small contractors a no-go without change to law
-Procurement Commission head
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.