Implementing 20% of state contracts to small businesses

It is widely believed that if smoothly implemented and scrupulously monitored the actualization of the provision in the Small Business Act of 2004 for a 20% allocation of government’s “goods and services” contracts to small businesses could make a major, positive difference to the country.

What is immediately apparent is that it will open up billions of dollars’ worth of opportunities for a number of modest but energetic business persons who have, up until now, slipped through the cracks as far as landing what they consider to be big contracts is concerned. Certainly it will create a more competitive environment as a host of small businesses compete energetically to gain the nod with state agencies. Setting aside the efficiency of their operations the competing small businesses will, presumably, be expected to be NIS and income tax compliant, a circumstance that ought to infuse a higher level of discipline into business houses who, over the years have simply been unmindful of those obligations.

One would expect too that government would use the opportunity of being the employer to try to raise the bar as far as operating standards are concerned. Small businesses seeking state contracts should be required to be compliant with health and safety rules and be mindful of the minimum wage and other requisites necessary to ensure the enhancement of worker welfare. So that apart from bringing small businesses ‘into the loop’ so to speak as far as access to a piece of the pie is concerned, there are lots of changes that can be brought about on account of the 20 per cent allocation.

We are told too that the government, through the Small Business Bureau will be monitoring this mechanism not only to ensure that the small businesses benefit as the Act dictates but also to ensure that state agencies execute as directed under the Act. Here, it will clearly be desirable if not very necessary to put mechanisms in place to ensure that the cake is shared fairly if not necessarily, equally. Frankly – and we may as well accept it – leaving in the hands of ministries and other state agencies the responsibility for managing the 20% small business allocation carries with it certain risks, including the risk that a thick layer of discriminatory and nepotistic practices could encrust the process. No one is saying, of course, that these concerns must put a hold on the implementation of the new regime. On the other hand it is important that we be mindful of what are, in fact, very real dangers and as far as possible guard against them. What we can expect, hopefully, is that the full and effective implementation of the 20% small business allocation will be attended by regulations and policing mechanisms that will minimize attempts to exploit it.

Local small-scale building contractors will doubtless be disconcerted over the fact that up until now the 20% allocation only takes account of “goods and services” so that the large numbers of small building contractors are, at least for the time being, left out of the 20% ‘loop.’ The irony of this is small contracting firms have been among the loudest lobbyists for the early implementation of the scheme. We are told that if the contractors are to be included there will have to be an amendment to existing legislation and in this regard we can only hope that a move to amend the present legislation does not fall victim to the customary extended official prevarication.

In the particular case of building contractors there must be pressure to perform. What the SBB and the NPTAB must ensure is that the lawlessness and irregularity that so frequently informs relationships between big contracting firms and government agencies in the process of the execution of major state contractors (some of these arrangements are characterized by corrupt practices, a wanton waste of state resources and an indifference to effective execution) do not seep over into relationships with the smaller firms when their turns would have come to benefit from the 20% allocation. As it happens, of course, nothing can be taken for granted. Mechanisms must be put in place and scrupulously monitored in order to ensure that the state and the people of Guyana get their due. It is either that or we continue on our merry way in the direction of mediocrity and mismanagement.

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