WHAT ABOUT THE SMALL GUYS?

Apr 12, 2009 Features / Columnists, Peeping Tom

Some years ago, the publisher of this newspaper, Mr. Glenn Lall learnt that the construction of a small school in Essequibo cost the taxpayers of Guyana some $50M. When Glenn looked at the building, he realized that he could construct the same school for less than half this sum.

This is a recurrent situation in Guyana. I am often staggered when I learn about the hundreds of millions of dollars that are required for the building of some of the new schools built by the government. And I too, like Glenn did a few years ago, asked myself what can be done to ensure that there are greater savings to the government in respect to the construction of these buildings.
Glenn once raised this issue of the exaggerated cost of contracts with a high-ranking official who explained that these contracts are tendered for and therefore the process is competitive. Glenn said that he knew contractors who could build the schools for far less. Glenn was encouraged to have these contractors tender for the schools.

The problem, however, is that many of these contractors do not know anything about the preparation of tender documents and are ill-prepared for the many procedures, which have to be undertaken, after winning a contract, in order to have the proceeds of the contracts disbursed.
When Glenn raised this issue, the official urged him to assist these unapprised contractors so that they can secure contracts for large projects. Such assistance, however, requires a great deal of time and would involve Glenn having to actually manage the projects himself, which is something for which he does not have the time.

The fact that securing government contracts requires certain skills which are not possessed by many small contractors means that these contractors have to either become employees of large contractors who hog government contracts or settle as sub-contractors for these larger contractors. In this process of course, the taxpayers of Guyana lose, because many projects are invariably over-priced.
I have not seen any training programme being launched for small contractors to help them with preparing contract documents. As such most of them are marginalized from the public tendering process even though they can do the jobs at a fraction of what larger contractors do the job.

Small contractors are also placed at another disadvantage. Even if they could prepare the tender documents and obtain the security deposits to tender for government contracts, they are going to find problems raising the initial capital required to mobilize for these projects. These capital requirements exclude a number of small contractors from tendering with the result that the bulk of government contracts go to a small group of contractors.

This exclusionary process is going to become more exaggerated because of the concerns that are presently being mooted over the slothful and poor work done by some contractors. At a recent meeting held with contractors, the issue of greater use of prequalification was raised. And once there is a move towards greater prequalification, then government contracts are going to be on a larger scale consolidated and this means that the process would become far more exclusionary.
Already there are complaints that the large contracts being awarded make it virtually impossible for small contractors to be involved since they cannot bid for such large contracts.

Within the agricultural sector, recently, we have seen extremely large contracts being awarded. The Stabroek News just a few days ago ran a headline which read that some $1.1 billion dollars was awarded in that sector. When I read the report, however, it became clear that the sum was not just $1.1 billion but $1.164 billion, and should therefore have been rounded off to $1.2 billion.
This point needs to be emphasized because sometimes we fail to take account of what may seem to be insignificant but which in reality (in this case) represents some $64 million, which could do a great deal of work.

And so we need to pay attention, very close attention, to what is taking in the award of public contracts. We especially need to question whether there is the human resource capacity within certain ministries to effectively monitor such large contracts.
Was it not the other day that we were being told about another $1.8 billion that was spent for drainage and irrigation? And yet when the December rains came there were floods. What assurances will we receive that we will obtain value for money in the billions that are now being spent in some ministries?

And should we not have greater skills available with certain ministries so as to effectively monitor these large amounts that will be spent. Should such large sums of money come under the jurisdiction of ministries headed by relatively young and inexperienced ministers who however well intentioned may never have dreamed that one day such funds could flow through agencies with which they are associated?

There is also a serious problem within ministries. Are we satisfied that these ministries have the requisite skills to effectively monitor projects or have they become over reliant on consultants for doing this?
We have to be careful with the management of these contracts and this is where those international agencies such as the Caribbean Development Bank and the Inter-American Development Bank come into play.

They need to ensure that the monies they lend to the government are effectively managed. They need to ensure that we get value for money and that the consultants who are paid to ensure that work is done as per specifications also ensure that there is value for money and that the system does not exclude small contractors because in the final analysis this would rebound to the detriment of local capacity building.