Twenty percent contract allocation to small businesses `biggest employment creation game changer’

—Small Business Bureau CEO says

—stresses need for GRA, NIS compliance for eligibility

While the implementation of the policy allowing for the ‘set aside’ of  20% of state contracts under the Small Business Act could face some “teething challenges,” its full and effective implementation could be “the country’s biggest ever job creation game-changer”, CEO of the Small Business Bureau, Dr. Lowell Porter has told the Stabroek Business.

The ‘set aside’ arrangement, which became functional this month when the Act came into effect, caters to a particularly wide range of small business pursuits and even allows for considerable sub-contracting, which adds even further value to its job-creation potential,” Porter told Stabroek Business.

And while he declined to speculate on envisaged figures for likely employment gains in the short to medium term, Porter said that what was important in the ‘set aside’ arrangement, was its potential to “change lives, alleviate poverty and transform the fortunes of struggling small businesses.” He said that once the initiative is “up and running”, it could quickly impact several sectors that are significant employers, and so will very likely have an immediate effect on the availability of a range of jobs requiring varying skills and abilities.

One of its key advantages, Porter says, is that the arrangement will open employment opportunities for ordinary people, some of whom possess skill sets that may not have traditionally provided significant numbers of job opportunities.

“Sub-contracting and joint tendering opportunities under the ‘set aside’ arrangement can provide additional job opportunities that would probably not have arisen under the traditional tendering arrangements,” Porter said.

Under the 20% ‘set aside’ arrangement, businesses with a maximum of 25 employees, will be afforded the opportunity to tender for state contracts of up to $30 million, a facility that creates a significant opening for traditional small businesses that have traditionally had to settle for lesser earning opportunities.

According to Porter, however, the facility will not be without its qualifying criteria, the most significant of which will be the need for small businesses to be registered operations, fully compliant with the Guyana Revenue Authority (GRA) and National Insurance Scheme (NIS) requirements.

Over the years, several local businesses have been delinquent insofar as their obligations to the GRA and NIS are concerned and Porter said that under the terms of the ‘set aside’ arrangement, compliance will be a “non-negotiable requirement.”

GRA and NIS-compliant small businesses seeking access to  the 20% ‘set aside’ programme, must have fewer than 25 employees, must have $20 million or less in total business assets and must be earning a total of $20 million or less in gross annual revenues.

And while Porter conceded that the effective execution of the tender process “in its earliest stages” was not unlikely to encounter some “teething problems”, he stressed that government’s and specifically the Bureau’s primary concerns “are with transparency and fairness”

“…What is important”, Porter says, “is that whatever initial challenges we encounter, we ensure, as far as possible, the programme seeks to meet the purpose for which it was established. That will be the Bureau’s primary monitoring responsibility.”

Porter told Stabroek Business that the Bureau continues to be open to engaging small businesses interested in becoming eligible to benefit from the 20% ‘set aside’ arrangement, adding that on approval to access the programme, those businesses will automatically become eligible for training to facilitate their involvement in the bidding process, access to the “supplier information portal,” building their respective supplier information profiles and securing information on issues such as sub-contracting and joint-tendering opportunities.

The Ministry of Business, in its position paper on what it titles the “Small Business Procurement Programme”, has listed as its objectives: developing the capacity of small businesses to successfully bid for contracts; to increase private sector capacity to execute procurement contracts; to increase the number of small businesses participating in public procurement; and to provide timely and reliable data on public procurement for small businesses.

The Small Business Bureau has been charged with overseeing the effective implementation of the ‘set aside’ initiative and Porter said that one of the Bureau’s concerns will be with ensuring that it is effectively monitored in order to, as far as possible, ensure effective administration.

According to Porter, the Bureau will be working in collaboration with the National Procurement and Tender Administration Board (NPTAB) in order to help monitor the effectiveness and transparency of the system, though he conceded that once the process of applying for and being awarded contracts under the 20 per cent allocation regime is up and running, it was not unlikely that there could be “teething problems”, though he added that given the “huge potential gains” that are likely to be derived from its full and effective implementation, it was important that it be “up and running” at the earliest time. He said that the monitoring responsibilities associated with fair, transparent and effective implementation assigned to the Bureau would require additional staffing and that this issue is under consideration with the Ministry of Business at this time.

The new ‘set aside’ arrangement,  Porter said, opens up potentially lucrative contractual possibilities for local businesses that might not, in the past, been considered for contracts under the state tender system. He listed “services” as being among those that would now be open to tenders, with small firms meeting the qualifying criteria. “There is no reason, why, for example, a small, capable farming operation cannot secure a tender to supply fruit to a state-run hospital or why some other service customarily considered the purview of a big contractor cannot be assigned to a smaller operation, Porter told Stabroek Business, though he stressed that it should not be assumed that this means automatic access.

“Everything will turn on meeting the qualifying criteria, notably those that have to do with GRA and NIS compliance and with evidence of competence on the part of the contractor to fulfill the contract to the satisfaction of the client,” he added.

With regard to compliances, Porter said that while individual businesses will be specifically charged with engaging  the GRA and NIS in pursuit of satisfying the requirements of those agencies, the Bureau is prepared to engage both agencies in order to help, where possible, in the expediting of those arrangements.

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