To allow small businesses access to 20% of government procurement, the National Procurement and Tender Administration Board (NPTAB) has implemented a 5% margin of preference to those businesses that qualify under law.
“What we have done is included in the bidding document that there be a 5% margin of preference advantage to small businesses. So if big businesses bid bigger, because of the economies of scale the small businesses can now compete,” Chairman of the National Procurement and Tender Administration Board, Tarachand Balgobin, told the Sunday Stabroek in an interview last Friday.
“When you award, you are awarding to the lowest responsive bidder. If this other person is not registered and his (bid) is 5% above yours, as a small business, you are deemed to be above him. The law allows for a margin of preference, up to 10%, for small businesses and we have started at 5%,” he explained.
And given the recent passage of the 2021 Budget which now paves the way for government procurement across all sectors, the NPTAB Chairman said that the initiative will be rolled out and assessed.
“We will see how it works out. The intent is to allow businesses that are small and coming into the market an opportunity to have an advantage in competition. If they had to compete neck and neck, they would lose out,” he asserted.
“We have sent out the standard evaluation criteria for that already to the entities and will be looking at it now. The Board will look and access how it is goes,” he added.
Guyana’s Small Business Act provides for 20 per cent of the procurement of goods and services to be set aside for small contractors. Given that this did not include ‘works,’ then Public Procurement Chairperson Carol Corbin had pointed out that small contractors would have had to still compete with big contractors for all construction projects.
She had urged that the laws be amended to include works.
Following promises to small businesses since late 2015 that they will able to access at least 20 per cent of government’s procurement of goods, services and works, the Small Business (Amendment) Act 2020 was passed in the National Assembly last month.
While it was the now opposition that had first taken the Bill to the Parliament, it boycotted the sitting that saw the eventual passage of the amendment.
Minister of Tourism, Industry and Commerce, Oneidge Walrond, had told the House that the amendment might be viewed as onerous and bureaucratic with small businesses having to now meet three criteria instead of two before qualifying for the status.
“[This] makes it mandatory and levels the playing field for all in the sector and eliminates the disadvantages,” she said, explaining that these businesses will have similar attributes and will make them able to compete against each other.
She asserted that the amendment creates the environment and improves opportunities for small businesses to prove that they are genuine small businesses that can compete and will not be overlooked or outnumbered by large enterprises.
Waldron explained further that the third amendment removes the ministerial power of approval and places it in the hands of a competent review council. The council will consist of skilled persons from a wide range of sectors. The minister also stated that the elimination of the ministerial provision guarantees that there will be no political interference and every applicant will be treated fairly and be given an equal chance.
With the amended bill, Walrond noted, small businesses will now have to provide evidence that they meet the criteria.
Database
Balgobin explained that the Small Business Bureau has a database of registered small businesses and in the bidding documents, those tendering would have to show that they qualify.
Walrond has said that these amendments are testimony to her government’s commitment to guaranteeing small enterprises are not neglected. She pointed out too, that the bill allows the small enterprises to have a “piece of the pie” while contributing to the development of the economy.
Minister within the Ministry of Public Works Deodat Indar, while supporting the amendment said the inclusion of the twenty per cent rule renews hope for small businesses.
He underscored that across the country, small- medium- and micro-businesses contribute significantly to the economy. The bill with the criteria outlined, defines what a small business is and eliminates the “crowding out effect by disparities by large businesses.”
“This provision of 20% gives them the assurance that they can bid to provide goods and services and works in all of the government. That is hope,” the minister declared.
He said that during the pandemic small businesses were hurt the most.
“Mr. Speaker, small businesses in Guyana have been subjected to some level of hardship added to the lack of opportunity… Businesses don’t need headache… they need assistance and an environment to operate. This amendment brought by the minister is a well-placed one and adds more to the basket or the pie, businesses can now access,” Indar stressed.
He noted that with the amendments, businesses will be able to achieve two goals, “one, of getting into a sector and two, closing the gap of disparity between large businesses. The pie is bigger so they have more for everybody,” he posited.
Speaking from an Indigenous point of view, Member of Parliament Yvonne Pearson said the amendment gives indigenous-owned businesses the opportunity to tap in to a revenue stream that never existed before.
It is unclear how indigenous small business owners will compete or what mechanisms would be put in place to allow for their registration with the Small Business Bureau, without having to travel to the office in the Capital, Georgetown.
The contracts will be for capital works $7 million and below and goods $3 million and under. “It (allows) small businesses to get their foot in and build the capacity and experience to expand. The intent is to allow them to grow while getting these contracts because if they are not allowed now they will never be able to,” Balgobin said.
