The 20% state contracts allocation for small businesses

This newspaper’s most recent updates on the provisions contained in the Small Business Act for the allocation of twenty per cent of state contracts to local small businesses provided by Minister of Business Dominic Gaskin and Chief Executive Officer of the Small Business Bureau Dr. Lowell Porter were published on separate occasions several weeks ago. The twenty per cent arrangement is, as we understand it, essentially a mechanism designed to afford modest-sized local businesses the opportunity to get access to state contracts within their areas of competence which, one assumes, would be mostly in the area of services though this would not necessarily exclude them from other areas including, for example, the construction sector.

The idea of the twenty per cent allocation to small businesses (and one assumes that a careful look will be taken at the issue of just what constitutes a small business) is a salutary one since what it does is to allow for greater access to opportunity for the execution of potentially lucrative state contracts. The official demands associated with the execution of such contracts are likely to improve – at least in some instances – the levels of efficiency of those small businesses competing for contracts. They will, presumably, come to understand, that when it comes to effective delivery of jobs that are being paid for out of public funds, higher levels of efficiency and reliability will be demanded of them. Put differently, they will then be operating in a kind of ‘swim or sink’ environment.

Based on our separate interviews with Minister Gaskin and Dr. Porter what became clear to us is that the twenty per cent small business allocation arrangement has to proceed within a structured paradigm which will now have to be designed and which will have to include issues of criteria (exactly which businesses legitimately qualify as small businesses), capacity (whether or not the businesses seeking government contracts are qualified to execute in the first place), legitimacy (whether or not the so-called small businesses are properly registered) as well as issues pertaining to the tendering process. We learnt too, that part of the creation of a prior infrastructure will be an attempt to create a register of small businesses for ease of reference when the time comes to accept tenders for jobs in various areas.

The Ministries and state agencies will also be required to create mechanisms to facilitate the process and this, we are told, will include a system designed to determine whether in fact they are meeting their respective twenty per cent targets. Here (and we may as well be frank about it) it will be necessary to, as far as possible, create systems that seek to minimize nepotism, kickbacks and various other forms of corruption that can fester within these arrangements. If it is almost certain that we will be able to remove them altogether, at least we need to work towards a system that guards against a well-intentioned initiative simply descending into squalor.

The whole idea behind this arrangement is 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. It could, for example, provide a new lease on life for the General Contractors Association of Guyana (GCAG) which has now been around for at least two years but which, up until now, has not made the kind of mark that it ought to have made, particularly given the fact that it comprises members, many of whom possess considerable experience in the various areas of the construction sector.

Our next concern is with the passage of time and with the fact that as far as we are aware, the process of creating the requisite structural environment in which the small business twenty per cent allocation can proceed efficiently appears to be taking its own time. This, while there is an obvious need for it to come on stream as quickly as possible so that its provisions can respond to the needs of emerging small businesses, to say nothing about bringing on stream the employment opportunities that will come with this opening. There will be a need as well to create monitoring mechanisms designed to ensure (and here we say, as far as possible) that this does not become a milking cow for the corrupt and the greedy.

All that being said, the process of bringing the arrangement on stream needs to be quickened…immediately.