Guyana’s small business procurement programme

The Government of Guyana is seeking to maximize the impact of public spending on the economic well-being of its citizens and the Small Business Procurement Programme is one means of achieving this.

The purpose of the Small Business Procurement Programme is to ensure that small businesses have fair access to Government Procurement opportunities through a transparent and efficient process that is cost-effective to Government and conforms to the laws of Guyana.

As the biggest spender in the Guyanese economy by far, the Government is in a position to design and implement programmes that deliver benefits beyond the goods, services or works that it procures.

Public spending positively impacts the well-being of businesses that supply Government and, when used effectively, becomes a tool for economic empowerment. Traditionally disadvantaged groups and individuals can become economically empowered by becoming suppliers to the Government.

This is recognized in the Small Business Act of 2004 under Section 11 (1) which states that “The Government shall use its best endeavors to ensure that at least twenty percent of the procurement of goods and services required annually by the Government is obtained from small businesses …”.

While the Small Business Bureau (SBB) has been established since 2012, the Small Business Procurement Programme has not yet been developed. More recently, the Ministry of Business has included the development and implementation of the Small Business Procurement Programme in its five-year Strategic Plan (2016 – 2020). This programme is now in its final stages of completion.

Three main components of the programme are: measuring the levels of procurement from small businesses; developing strategic measures to provide small businesses with greater access to public procurement opportunities and better chances of winning contracts; and enhancing the capacity of small businesses to successfully manage and execute contracts. These are elaborated below.

Without a practical mechanism for measuring its outcomes, the programme’s effectiveness cannot be determined, nor can the extent of the problem that it seeks to address be ascertained.

While there is no current estimate of the level of government procurement contracted to small businesses, for the purpose of developing this programme, one has to assume that it is less than twenty percent of total government procurement and design measures to increase it.

The National Procurement and Tender Administration (NPTA) now has the capacity, through its software system to disaggregate procurement data and identify small businesses in the process. This therefore provides a feasible means by which to measure the levels of small business procurement. The SBB will annually verify and register small business suppliers eligible for participation in the Small Business Procurement Programme and the NPTA will identify them as such in the procurement process.

It is intended that quarterly reports on small business procurement will be made public once the programme is launched.

The Ministry of Business, through the SBB has designed a number of measures to be used to increase small business procurement for the purpose of achieving the objectives of the programme. One or more of the following measures will be used to ensure that the programme meets its objectives:

a) Basic set aside – A percentage of all procurements below a certain value and in specified sectors may be set aside for eligible small businesses only. This shall not negate the requirement for competitive tendering, but simply restrict the process to eligible small businesses. Analysis of procurement data will determine the percentage, threshold value and sectors to which this measure will apply.

b) Set aside for sub-contracting – Specified procurements within a certain value range may require the prime contractor to sub-contract to one or more eligible small businesses to the tune of at least 20% of the contract sum. This can be achieved by each bidder submitting a small business procurement plan, the terms of which shall be included in their final contract, if successful. It should be noted that the prime contractor may also be a small business.

c) Procurement allowance – An allowance for eligible small businesses can be built into the National Procurement and Tender Administration’s (NPTA’s) procurement evaluation process to create a weighting structure in favour of small businesses. This may take the form of a percentage off the price bid by small businesses or an additional score in the technical evaluation of bids submitted by small businesses to make them more competitive.

d) Procurement allowances for subcontracting - For contracts above a certain value a proportional allowance may be given to larger companies that subcontract to eligible small businesses. As with the set aside for sub-contracting described above contractors will be required to submit a small business procurement plan which can be built into the final contract with disbursals contingent on meeting the targets set.

e) Quotations - Where quotations are requested by a procuring entity, at least two thirds must come from eligible small businesses within the specified sector. This would require each procuring agency to utilize the List of Small Business Suppliers compiled and maintained by the Small Business Bureau to identify suitable small businesses.

Additionally, the Small Business Procurement Programme will mandate the SBB to ensure that sufficient information relating to procurement opportunities is shared or available to registered small business suppliers, and that small businesses understand the procurement process.

Ongoing capacity building is critical to the success and sustainability of the programme, and the SBB will be responsible for identifying deficiencies and providing training in areas where these are prevalent. This is aimed at ensuring that timelines, quality and efficiency are not compromised in the execution of contracts by small businesses, and that value for money is maintained as a core principle of public procurement.

The Small Business Procurement Programme has already been drafted and the Small Business Bureau is currently working on the Standard Operating Procedures for its implementation. The programme is likely to require legislative amendments and these are also currently being reviewed. As mentioned earlier, procurement data also needs to be analyzed for the purpose of defining numerical values for the various measures to be implemented by the programme.

Once up and running, the programme will apply to all agencies funded through the National Budget. It is anticipated that, once properly implemented and regularly reviewed, the Small Business Procurement Programme will eventually produce the outcomes intended by Section 11 (1) of the Small Business Act. A number of challenges have been identified and solutions are still being sought to reduce any negative impact on the programme’s effectiveness. The programme is expected to be implemented in full by the beginning of next year.