Guidelines to Increase SME's Participation in Contracts Awarded by Akwa Ibom State Government

GUIDELINES TO INCREASE SME’s PARTICIPATION IN CONTRACT AWARDED BY AKWA IBOM STATE GOVERNMENT

INTRODUCTION OR PREAMBLE

The purpose of this guideline is to address the challenges that Small and Medium Enterprises (SMEs) face in participating and winning contracts awarded by Akwa Ibom State Government by providing solutions to how such challenges/barriers can be overcome by SMEs not only to participate in such contracts but also to be able to submit responsive bids that will lead to award of contracts in the state.

SMEs represent an increasing important sector of any economy and can be key drivers of its economic growth and employment. As a result of this, it is necessary to encourage and facilitate their participation in public procurement procedures subject to the application of the provisions of the state Public Procurement Law (PPL) 2020.

SMEs DEFINITION

The classification adopted in the National Policy on Micro, Small and Medium Enterprises is as shown in the table below:

Classification adopted by National Policy on MSMEs:

GUIDELINES_TO_SMEs

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sNo. SIZE CATEGORY EMPLOYMENT ASSETS (n MILLION (excluding land and buildings)

1 Micro enterprises Less than 10 Less than 5

2 Small enterprises 10 - 49 5 - less than 50

3

Medium enterprises

50 - 199

50 - less than 500

For the purpose of this guideline the employment-based classification for medium enterprises will be adopted. Therefore, SMEs will be defined as enterprises employing less than 200 persons.

COMMON BARRIERS TO THE PARTICIPATION OF SMES IN PUBLIC PROCUREMENT

The table below contains the most common obstacles faced by SMEs in the procurement process and how they can be overcome.

OBSTACLES AND PROBLEMS

SUGGESTED SOLUTIONS

Value of contracts too high for SMEs to participate due to inability of SMEs to meet financial (cash flow, average turnover)

and similar experience requirements

Breakdown the package in lots in quantitative and qualitative terms

The qualification criteria should be relaxed and should be the required minimum for the estimated value of the contract being bided.

SMEs should be encouraged to participate as joint ventures and subcontractors

Tight deadlines for preparation of bids

Increase in the deadlines for the submission of bids especially for complex contracts.

Lack of necessary knowledge of the PPL and bidding procedures of the state

Training and workshops should be organized for the SMEs on the bidding procedures for the State including the PPL 2020.

Lack of knowledge of bidding opportunities in the MDAs

Bidding opportunities should be published in the state/BUREAU websites and for states with eProcurement in the eProcurement portal.

Dissemination of all bidding opportunities to the relevant trade groups in the state, for example, the Nigeria Association of Small and Medium Enterprises or similar bodies.

High cost of bid preparation including cost of producing paper bids, obtaining the bidding documents and submission of bids to the MDAs

Allow free download of bidding documents from a freely available website

Waive the cost of obtaining bidding document or charge the barest minimum to cover the cost of the preparation of the bidding document

Allow electronic submission of password protected, read-only bids and quotation

High cost and difficulty in obtaining financial instruments; bid security, advance payment and performance guaranties,

Waive the requirement for the submission of financial instruments for contracts below a threshold specified in the Revised Applicable Threshold 2020.

Allow for submission of performance bond declaration in place of bank performance guarantee and advance payment declaration form instead of advance payment guarantee.

Allow for submission of Bid Securing Declaration instead of Bid Security.

Insufficient cash flow to implement awarded contracts

Increase advance payment up to 40% of contract amount

COMMON ERRORS OF SMES IN PUBLIC PROCUREMENT PROCEDURES AND HOW TO OVERCOME THEM

In addition to obstacles/barriers faced by SMEs in participating in public procurement contracts, SMEs also commit some errors when they participate in public procurement contracts. Some of these errors and how they can be overcome are listed in the table below:

Common Errors of SMEs

How to Overcome Errors

Failure to follow up on notices of bidding opportunities

Daily monitoring of notices on the Akwa Ibom State Bureau of Public Procurement website www.bpp.ak.gov.ng

Not properly studying the bidding documents requirements including the technical specifications

Special attention should be paid to studying the technical specifications and the requirement of the bidding documents as Training will be provided from time to time by the Akwa Ibom State Bureau of Public Procurement.

Failure to request for clarification of bidding documents /untimely submission of the request for clarification

SMEs should take advantage of the PPL 2020 which allows bidders to request for clarifications of the bidding document within the time stipulated in the issued bidding document

Late submission of Bids

The submission deadline stipulated in the biding document should be complied with

Failure to submit with the bids all requested documentary evidence supporting the requirements of the bidding documents

Ensure all required evidences to support bid submission are included in the bid as shall be emphasized during trainings.

TRAINING OF SMEs ON THIS GUIDELINE

The Public Procurement Agency (BUREAU) will provide training sessions to the SMEs on this guideline to enable them to participate and win contracts in the state. The focus of the training can be on the following:

Where to find bidding opportunities for contracts to be awarded by the Ministries, Departments and Agencies (MDAs)

The provisions of the State Public Procurement Law 2020.

Preparation of responsive bids. This will include among other topics:

How to request for clarifications on the bidding documents

Bid preparation and submission including ensuring that bids are responsive to the technical specifications, other requirements of the issued bidding document, and ensuring that all required evidences to support bid submission are included in the bids

Common mistakes in bid preparations

How to request for a de-brief

Complaint handling mechanism in the State Public Procurement Law 2020.

MONITORING OF SMEs PARTICIPATION

Each MDA will submit to the Bureau details of contracts awarded by the MDA on monthly basis. The details will be published on the Bureau’s website. The following information will be provided for each contract:

Description of the contract

The names of the bidders

The number of persons employed by the bidders

The winning bidder and state if the winning bidder, is an SME.

The Bureau will also provide training to the MDAs on the application of this guideline.

Ndifreke B. Akpan

Executive Secretary