I wrote on this subject sometime in the past. It would appear that our system for the process of tendering for any kind of Government services and contracts is based on the lowest tender. I therefore wish to use the opportunity to articulate this ‘to open up the eyes of persons in authority and those responsible for tenders, to get a grip of the realities of low or lowest tender’.
I am more familiar with security, and therefore most of what I will say would be based on security, due to the fact that I have been a security practitioner in this country for almost four and a half decades. I have observed in recent times our company has been losing several contracts, and I am not complaining or criticising or attacking, except that I am trying to highlight a problem in the system of tendering.
It goes also for construction: construction of bridges, dams, schools, roads, etc., etc. We have seen recently that large awards went out to persons who build roads, especially roads in communities where the Government budgeted large sums of money to bring convenience and joy to people. It is a painful thing to see a school constructed and not too long after construction it begins to collapse. It is painful to purchase school furniture and to find later that they are of poor quality. It is painful to build a wharf or stelling and find it floating away.
Recently, we saw the Hon Minister Juan Edghill of the Ministry of Public Works has had to stop many road construction projects due to timeline factors, due to poor quality construction, due to unreliability or commitment issues, due to not paying the subcontractors and employees. We know that the Hon. Juan Edghill is a “no-nonsense” person.
The same goes for security services. Persons tendering at the lowest rates, and at times some of the newer guys on the block wanting to make as much as they can, and even some older ones, constantly tendering below cost. Our company recently lost a major security contract, which went to the lowest bidder. When we did the math, we found that it was grossly below cost, taking into account the National Insurance costs, administrative expenses, transport, uniforms, licences, etc.
So how do these companies manage to survive? Some do it by unethical and dishonest ways. I will highlight some points hereunder:
1. The theft of NIS (National Insurance Scheme) deductions has become a major revenue earner for some security services, and other businesses as well.
2. The theft of the VAT (Value Added Tax) or underpaying the VAT as if giving part of it as a donation to the Government in an attempt to “pull wool over their eyes” from the accurate job that they have to do in this area.
3. Stealing large sums of the PAYE taxes, and again giving a donation to GRA; rarely ever paying corporate taxes.
In the case of NIS, the theft of NIS is such a criminal act, in my opinion. To steal employees’ NIS, which has been deducted, and to fail to pay your two-thirds (2/3) as an employer, is a ‘mighty killing’ for a dishonest employer. Some companies are known to be paying for a small amount of employees in order to obtain compliance to tender. The same for the GRA: pay for a small amount to get the compliance. The theft of VAT hampers the country’s development. In addition, some companies are employing security guards as subcontractors or contractors, and offering them no insurance coverage. The salary looks attractive, but in time the employed persons get no protection under the National Insurance Scheme. This is a very unethical practice by companies.
At times, I wonder if the group or the department responsible for awarding of contracts – security, and otherwise – if they do the math, would realise that it is the Government of Guyana and the employees of the contractors would be the ones ultimately taken advantage of. Whenever there is tendering below the cost, it is always the country and the employees who will suffer. Employees suffer in the form of manipulation of overtime, wages, weekend premiums, annual leave, etc. Many Ministries and Departments become alarmed and confused when they see new security companies without an established record in the industry being awarded security contracts for their sensitive locations, because they now feel they have to become security tutors to train these new persons.
All I am advising is that it should not be that the lowest tender wins the contract, and that other factors should be taken into consideration when the awarding of contracts is being done. From the above points that I have raised, the fact has been clearly established that tendering below cost would be catastrophic to a number of projects, and to the lives and properties of the people of Guyana/Government of Guyana.
Haji Dr Roshan Khan