Amending Procurement Act key to maximising local participation in oil sector-Tender Board Head

Apr 16, 2019 News

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Pull quote: “This is very important. If we are talking development and the good life, then this is a necessary step. I would think, and I am not a politician, but it is only fair for the people of Guyana to benefit as much as possible from the gains of the oil and gas sector. So this is a crucial step to propelling local businesses, and particularly women-owned businesses.”
By Kiana Wilburg
There are several tactics Guyana can employ to ensure local companies get a fair advantage in the tendering process for oil and gas contracts. In fact, Guyana’s procurement laws contain one of these tools called a ‘margin of tenderer reference’.
The law states, “The procuring entity may grant a margin of tenderer reference not exceeding 10 percent to tenders submitted by domestic contractors or for the benefit of tenders for domestically produced goods, provided that such preference is specified in the tender documents.”
“If the lowest evaluated tender was submitted by a foreign tenderer, the evaluating committee will apply the margin of preference to the prices submitted by all foreign tenderers, for evaluation purpose. If, after applying the margin of preference, the lowest evaluated tender was submitted by a domestic tenderer, such tenderer shall be awarded the contract.”
But considering the massive scale of Guyana’s oil wealth to come, Head of the National Procurement and Tender Administration Board (NPTAB), Berkley Wickham, says that perhaps it is time for amendments to be made to this provision, among others, since they date back to 2003.
During an exclusive interview with this newspaper, Wickham said, “There needs to be a national discussion on whether the 10 percent is good enough. We are in the process of modernizing the current Procurement Act. We had a consultancy to do that and we have reviewed the recommendations together with the Public Procurement Commission and those revisions are now with the Attorney General’s Chambers for drafting.”
The Tender Board Head added, “And I would think thereafter, there will be a public process for stakeholder engagements to look at what was recommended for amendment. So there will be ample opportunity at that stage for the people to have a say on what they think should be included to promote more local participation for the oil sector.”
Wickham also emphasized that amendments to the Act are crucial to ensuring local businesses benefit the most from the sector.
“This is very important. If we are talking development and the good life, then this is a necessary step. I would think, and I am not a politician, but it is only fair for the people of Guyana to benefit as much as possible from the gains of the oil and gas sector. So this is a crucial step to propelling local businesses, and particularly women-owned businesses.”
STRATEGY MODIFICATIONS
There are several tools emerging, which oil producers like Guyana can use to maximize the participation of local firms in the oil and gas sector. One of the most effective ways is through the modification of the procurement strategy that governs the sector. This is according to the International Petroleum Industry Environmental Conservation Association (IPIECA).
Headquartered in London, IPIECA develops shares and promotes good practice and knowledge to help the oil and gas industry of countries improve environmental and social performance.
According to IPIECA, there are several modifications a country can make to ensure local businesses are given a fair advantage. It outlined one option to be Reservation or ‘set aside’ provisions which mandate that only qualified local firms are allowed to bid for certain contracts. IPIECA also said that the procurement strategy can be improved by providing local companies with additional information, reducing the size and complexity of the scope, or simplifying procedures or processes to make it more likely for them to participate in the procurement process.
Further to this, the Association said that modifications can be made to the Bid Evaluation Process to help businesses have more participation. In this regard, it said that the General Preferencing provision can be used. This allows for a local bidder to be selected when it is relatively close to other competitors on quality and price.
Another effective change, which can be made to the evaluation process is called Price preferencing. This allows local bidders to have a set preference figure discounted from their tender price. IPIECA said that this provides a price advantage against outside competitors.
Significantly, the Association said that feedback should be given to unsuccessful bidders. IPIECA said that this enables local firms to improve and can also lessen potential grievances on the part of unsuccessful bidders.
IPIECA said, too, that the procurement strategy governing the sector should also be modified to ensure that there is maximum participation of local workers. It said that this can be done by making mandatory requirements for the employment of local enterprises or workers.

 

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