Unbundling contracts

Nov 06, 2026 Editorial, News

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(Kaieteur News) – The Local Content Act was supposed to be a vehicle through which Guyanese businesses could secure a meaningful share of the opportunities generated by the country’s burgeoning oil and gas industry. Yet, years after its enactment, local companies are still confronting barriers that threaten to undermine the very objectives of the legislation.

One such barrier is the practice of bundling multiple procurement opportunities into single contracts, effectively shutting out businesses that may have the competence to perform some, but not all, of the services being requested.

It is therefore encouraging that the Local Content Secretariat is considering legislative changes to address this practice. If Guyanese participation is to be more than a convenient talking point at industry conferences, the Government must be prepared to establish clear, enforceable requirements that prevent procurement practices from unnecessarily excluding local businesses.

At the Guyana Supplier Forum, Director of the Local Content Secretariat, Michael Munroe, made a compelling case for oil and gas companies to rethink how they package procurement opportunities. He urged companies to ensure that requests for proposals and quotations are structured in ways that allow Guyanese businesses to participate. His observation that companies must be mindful of how they package procurement opportunities deserves serious attention. As he put it, “when you package these RFQs that you do it in a way that allows Guyanese companies to participate.”

The problem is easily understood. An oil company may advertise a contract covering pest control, sanitation and security services under one request for proposal. A Guyanese company that is fully capable of providing excellent pest control services may nevertheless be excluded because it does not offer sanitation and security services. There is little justification for creating such an arrangement when the individual services can be procured separately.

This is not simply an administrative inconvenience. It creates an artificial barrier to participation and gives larger, more established companies an advantage over smaller Guyanese businesses. The result is that opportunities which should be accessible to local enterprises become concentrated among a relatively small pool of contractors.

Munroe himself acknowledged this danger, warning that procurement opportunities, if packaged incorrectly, can create an artificial barrier to local content. His call for companies to identify where local competencies and capabilities exist and tailor their procurement accordingly is therefore an important one. But the Government must now move beyond advocacy. Munroe disclosed that unbundling is already featured in the Secretariat’s bid evaluation guidelines, but that elevating the requirement into the Local Content Act or subsidiary legislation is an active consideration.

That is precisely where it belongs. Guidelines can provide direction, but legislation provides a stronger foundation for accountability. Oil companies should not be left to determine, at their convenience, whether local businesses receive a genuine opportunity to compete. There must be clear parameters governing when contracts should be unbundled, with adequate safeguards against artificial arrangements designed to circumvent the law.

At the same time, local content must not become a system of entitlement without accountability. Guyanese businesses must demonstrate competence, efficiency, reliability and the ability to meet industry standards. The objective is not to award contracts simply because a company is locally owned, but to ensure that qualified Guyanese enterprises are not excluded by procurement arrangements that serve no legitimate purpose. The director also made an important point about financing, suggesting that oil companies consider paying trusted suppliers before the statutory 30-to-45-day period. This is practical advice. Small businesses frequently struggle with cash flow, particularly when they must first finance labour, equipment and materials before receiving payment. Early payment arrangements could strengthen their working capital and allow them to expand their operations.

Government has already indicated that it intends to expand the 40 areas currently ring-fenced under the Local Content Act by adding another 20. That expansion is welcome, but the effectiveness of the legislation will ultimately depend on its enforcement and the willingness of policymakers to confront practices that undermine its objectives.

Unbundling contracts is not a favour to Guyanese businesses. It is a necessary step towards ensuring that local content legislation fulfils its intended purpose. The Government must turn this consideration into law, establish meaningful oversight and hold companies accountable.

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• Editorial, Local Content Act, Local Content Secretariat, Unbundling contracts

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