LOCAL CONTENT AND LEGAL CONTEXT

Sep 26, 2016 Features / Columnists, Peeping Tom

The government is stumbling from one scandal to the next. Hot on the heels of the revelations about GECOM is another scandal, one involving the award of the contract for the supply of juices for the local School Feeding Programme.
So far the arguments against the tender have been primarily concerned with the absence of local content in the award of the contract. A local company, Demerara Distillers Limited, which produced local juices, has been dissed in favor of a Surinamese company.
The loss of the contract by DDL means that local farmers who supplied the raw materials for the juices will now be affected. The government will have to explain why it has de-emphasized local content in public procurement.
How does the government expect to boost local industry and to create new jobs when its procurement policies do not encourage local content instead of local producers?
Local content does not count for anything in Guyana. It is not illegal for governments to favor local content in procurement, but these requirements are being increasingly challenged within the European Union and at the World Trade Organization.
Guyana is a developing country and is not likely, however, to come under any pressure or challenge to de-emphasize local content in public procurement. The government of its own choosing has decided that it is not going to emphasize local content in public procurement.
The arguments in favor of local content are political and economic arguments, not legal ones. People want to see more local content because they feel it is good for the country and it is necessary to support local producers.
The legal arguments concern the procurement method chosen, the basis for rejecting the lowest and second lowest bids.
The government for some inexplicable, and so far unstated, reason opted to go for restricted tendering for this contract. The law is very clear as to when selective tendering should be employed.
The Public Procurement Act states that restricted tendering is to be used where the goods and services being procured are of a highly specialized nature and are only available from a few suppliers.
The act also states that in such instances, all such suppliers have to be invited to tender.
There is nothing highly specialized about the fruit juices. The reversion to restricted tendering is therefore not in accordance with the Public Procurement Act. It is unlawful.
Open tendering would have allowed more companies, including possibly other international companies to compete for the supply of the fruit juices. The resort to restricted tendering is therefore anti-competitive.
The government invited companies to tender for the contract.
The government therefore cannot turn around and reject any of those companies on the basis of their track record in terms of what was supplied in the past. It was the government that invited these companies to tender under a restricted tendering process.
This means that the government had to have been satisfied about the quality of the products being supplied by all of the suppliers. To therefore reject the bid of a company on the basis of perceptions of previous experience is therefore bizarre.
How can you invite a company to tender under a restricted tendering process and then turn around and say to the lowest bidder- the one who should receive the award- and say that we have concerns about your record?
The three issues which must now be addressed concerns the legality of the use of restricted tendering, the basis of the rejection of the lowest bidder and why the second lowest bidder was not awarded the contract.
A contract of this size would have had to have had a no- objection from Cabinet before an award could have been made. A member of Cabinet sits on the Bid Protest Committee.
While therefore those affected by the award of this contract to a Surinamese firm have the option to appeal to the Bid Protest Committee, they have to deal with a situation where a member of the cabinet which is supposed to give a no-objection sits on the same committee.
If the appeal to the Bid Protest Committee fails, the only other resort would be to challenge, in a court of law, the use of restricted tendering and the rejection to the lowest and second lowest bids. Arguments about local content have no legal weight.

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