Government has moved in against inefficiency and lack of accountability on the part of tenderpreneurs with a set of new stricter amendments to the tender process which have elbowed out many small medium enterprises from competing for tenders.
A host of SMEs cried foul this week after the Roads Authority indicated that for tenders to do with bitumen roads, a company ought to surrender to it a total amount of N$30 000 as bid security for a total of 120 days.
This is cash in a company or individual’s commercial bank account that has to be withheld by the bank in favour of RA just in case the company does not deliver on the tender.
Any bid not accompanied by an enforceable and substantially compliant bid security will from henceforth be rejected, The Villager has been informed.
Most SMEs said this amount was too much and seeks to exclude a majority of them from participating in the economy in favour of bigger established corporate entities.
One visibly discontented entrepreneur and chief executive officer of J.U Investment CC, Antonius Karuuro said the money being demanded was overwhelmingly huge.
“For the steel and concrete tenders, you need about N$52 000 as bid security. It must be there for about a 120 days. What it is for, I do not know. And then you have again bitumen, road maintenance, potholes and all those things, you need another N$30 000.”
“Most of the projects, you need to start with your own money because you need to give a bank statement of three years and that’s where some of the SMEs came in and the guys said look, I am experienced, I have been working for a company in this industry, I have quit and formed my own company, I have the equipment but I don’t have the three-year bank statement. What do we do now? They said no you need to go and make a plan,” he lamented.
The demand for the submission of a report on the financial standing of the bidder dating back to the last three years torched a serious storm with a majority of business people who joined in protest at the NIPAM building where they met with Roads Authority.
“The problem I have is that I am new and I have just established a company, so where will I get that statement from. They just said, this is a new baby, it has no nappies, meaning we just have to deal with it,” said one disgruntled anonymous entrepreneur.
Another irked business person who spoke with The Villager said, “I think this is for big businesses or something. It’s not for us small and medium enterprises.”
Tenders to do with litter control in four identified sections of Windhoek will be accompanied by a requisite bid security of N$10 000 from the bidder bringing all to a total of N$40 000 cash upfront to be held by a bank as security on behalf of RA.
The same amount goes for tenders to do with grass cutting in four identified areas of the city.
Another tenderpreneur disclosed to The Villager that it is now required that no workers will be driven around in trucks when carrying out projects, implying that they buy/provide suitable transportation vehicles.
A number of business people that awaited to go through an induction of how to apply and execute tenders at NIPAM said government has to reconsider its conditions.
“I am not satisfied really at this point because the tender document itself has clauses that are not applicable. The time frame which they gave us is also not viable to fill in all the requirements.”
“The requirement that is eating us up is that we need to pay security bids for tenders which act as guarantee and put aside for 120 days. We are SMEs. We use what (money) we have to make more. So if we have to put money aside for something that is not guaranteed, then how do we work. Of course you get back your money but then that’s after four months. How are we going to do this, we are SMEs,” said one Lawrence Ganuseb who works in civil construction.
Another anonymous business person irked by the new development said, “It’s a serious barrier for SMEs. If you are opening up the market and you want to tackle the lower end of the market, how will they be part of the business?
“So they must be some relaxation of all these requirements otherwise you will not be able to bring them in the mainstream,” he said.
However, some are satisfied with the new rules.
“People would get tenders, and they will not have money to do the tenders, or they would run away and not complete them and their performance guarantees would not be issued.”
“So in the event that you are awarded the bid, then that money is kept by the entity, so after you get the letter of award, you’re supposed to get a performance guarantee,” said Lincolm Moses from Ditshetlo Investments.
Once you issue the entity with the performance guarantee then they will give back your security bid in full, he said.
“The thing is, what the entities are doing, they are bidding, to know that in the event that you’re awarded this project, you are capable of doing it. The procurement Act requires people to be accountable. In the event that you don’t give that performance guarantee then you lose your money to the entity."
“They have awarded you the project but you are not capable of giving them a performance guarantee so it’s a waste of their time. I am happy with it because the procurement act gives an opportunity to companies that have been in the business all these years to be able to stand and say I am capable, I am accountable and I deliver,” said the entrepreneur.
RA chief executive officer Conrad Lutombi said he would not be in a position to talk as he was still on leave, saying "It's a tough one. First of all i am on leave. Can you do me a favour and just put your questions and send them to Hileni so that we can prepare a proper response" when contacted by The Villager for a comment.