Allocation of state contracts to small businesses moving far too slowly

One of the more significant clauses in the 2004 Small Business Act has to do with the provision that it makes to provide access for  small and medium-sized businesses to 20% of state contracts for the provision of goods and services. It goes without saying, of course, that there are caveats to this provision that would have to do, primarily though not exclusively, with the capacity of the businesses to meet the demands required under the conditions of the contract; and then, of course, there are the accustomed compliance-related considerations associated with tender procedures. The execution of state contracts will carry with them certain expectations with regard to quality of service which of course means that those small and medium-sized businesses that wish to benefit from state contracts must understand that they need to put their operational houses in order rather than (as so frequently happens) bellyache when slipshod service reputations do not attract contracts.

Where the allocation of contracts is concerned we may as well face the fact that even in the face of the strictest oversight there is the potential for manipulation, even outright corruption, and it is important that the government understands that with the best will in the world the 20% allocation to small businesses could come back to haunt it unless it puts stringent measures in place to ensure that those responsible for administering the system are above the kind of shenanigans which, regrettably, appear to persist in the public sector.

One of the positive potential outcomes of the 20% allocation decision is its capacity to raise the various diligent but still clearly struggling businesses ‘off the floor,’ so to speak and here it has to be said that once the arrangement comes into effect one would expect that commercial banks and other lending agencies would be much more inclined to engage smaller businesses on the matter of borrowing once those state contracts become accessible. Of course, once they find themselves in a position where there is funding available for investment in consolidation of their businesses to meet the weightier demands of state contracts, business owners will become better-positioned to undertake expansion. Contextually, it goes without saying that additional job-creation (and this could be considerable) is likely to be one of the main offshoots of this development.

In circumstances where the expeditious allocation of certain types of state contracts to small and medium-sized businesses can and will make a significant difference to both business expansion and employment generation, there is, from the perspective of the government, every incentive to ensure that the system is in place in the shortest possible time. This does not gainsay, of course, the importance of putting the various mechanistic and administrative things in place to ensure that once the system is up and running it goes smoothly. Frankly, even with the best will in the world there is the likelihood that it will probably not get off to a perfect start. The fact of the matter is, however, that given its potential significance it has taken far too long to get off the ground.  

If no one is suggesting that the preparatory work would not be time-consuming there is a persuasive case for stating that the extent of the urgency attached to this initiative ought to be measured against its significance as a mechanism for business growth and employment generation. This newspaper’s own ‘take’ on the situation suggests that the process of putting the ‘nuts and bolts in place’ is quietly chugging along.

While, just a few weeks ago we learnt through a Ministry of Business Column published in this newspaper that the 20% allocation to small and medium enterprises will now come into effect in 2019 there is still no specific time frame attached to that announcement. We believe too, that given the strong likelihood that there must be scores (perhaps many more) of small and medium-sized businesses that are looking to the materialization of this development as the door to their places in the sun there is much merit in providing regular updates on the pace of progress in this regard rather than leaving people to die wondering.


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