As we prepare for the Turks and Caicos Empowerment Conference this weekend, one of the challenges I believe that will be highlighted is that many local businesses are not getting a piece of the pie. One of the primary reasons is the challenges with the Public Procurement Process and the other challenge is the fact that many resorts have concessions and no need to support local businesses.
Because of the challenges, many businesses refuse to participate in the procurement process and so sometimes it appears the same set of people are winning the bids. Perhaps it is because they are the only ones submitting bids. This article however, is not about other local business but about businesses operating outside of Turks and Caicos and are able to bid on Government jobs.
The Procurement Ordinance
Businesses outside of TCI can bid on tenders
Based on the current procurement ordinance and the tender evaluation criteria, it seems businesses outside of TCI are competing with locally registered businesses on the public tenders. Some of these international companies are the suppliers themselves and therefore have competitive advantages over the local businesses. In fact, I am aware of a few local businesses that lost the bid to the international supplier because the international supplier bid on the same job and of course the bid was lower. Is this fair? Is it right to have an outside business to compete with a local company especially if the local company can provide the services? How are we going to empower our local businesses?
Section 8 of the Procurement Ordinance specifically state they want to encourage completion and effective competition requires non-discrimination. In my opinion, the fact that the international suppliers can bid on a job is a discrimination in itself.
Also, the fact that local businesses are paying the local fees, local payroll costs, NHIB, NIB and are actively operating and participating in TCI, they have more overhead costs than the international suppliers. Isn’t this creating a disadvantage and in so doing isn’t this discrimination? Furthermore, local businesses are required to prove they are in good standing with NHIB and NIB when submitting tenders. What do the international companies have to prove?
For construction contracts in particular, the contractor is required to put up a bond of approximately 20% of the value of the contract. This can create major cash flows for businesses and so only a few businesses may be able to bid on the jobs due to their cash flow position. I understand the rationale for the bond as it is form of protection and surety for the completion of the job. Ironically though, some contractors do not have to put up any bond at all when bidding on jobs in the private sector?
I believe the tender process should be in a tiered process. Any projects that are expected to cost $2 million or less should be restricted to a Turks and Caicos Registered Company and that company should be in full operation for at least a year and of course have a valid business licence in the Turks and Caicos
Only specialized services or goods that local companies cannot source should be open to international companies if the value is less than $2million.
The construction bond should be set perhaps between 5 and 10 percent depending on the value of the job. This will provide an opportunity for other businesses to participate in the process.
Statutory Bodies need to follow the same recommendations as there are a number of them that they are ordering things from abroad and therefore do not support the local businesses.
If we want to empower our local businesses and see their companies grow, then we need to allow only local companies to participate in the tender process.
It is already a challenge for some local business to get business in the private sector and the only opportunity they perhaps have is to participate in the Public Sector bidding process.
I know Governments want the best value for their money. If the locals tender bid too high then re tender the jobs. The same way Governments want to ensure locals are hire before issuing a work permit, this same principle should apply to the tender process. Give the qualified local businesses the first opportunity.