The parties to the WTO Government Procurement Agreement (GPA) approved a compilation of best practices for promoting and facilitating the participation of small and medium-sized enterprises (SMEs) in government procurement. This compilation fulfilled a directive set by the parties a decade ago when they implemented the 2012 revision of the GPA. It was prepared under one of the work programs established by the parties in 2014 to address issues unresolved during the revision of the GPA. The publication of the best practices for SMEs represents an important contribution to both GPA parties and non-GPA members of the WTO seeking to enhance their SMEs’ participation in public procurement. It is also noteworthy as the first results of the committee's work programs to be made public. This post examines the best practices for SMEs engaged in procurement and the context for their development.
On October 9, the WTO procurement committee approved the Report of the Committee on Government Procurement on Best Practices for Promoting and Facilitating the Participation of SMEs in Government Procurement. The four categories of best practices identified in the Report are outlined below.
Enhanced transparency: Recognizing transparent, open, and fair measures as essential for SME-friendly government procurement, the Report listed practices that provide easy and quick access to procurement information and opportunities. They include:
-- Using special websites designed to help SMEs understand the procurement process.
-- Publishing government procurement laws, regulations, and policies on-line.
-- Promoting the use (free of charge) of electronic tools for the various stages of procurement.
Reduction of Administrative Burdens: Practices that are intended to reduce administrative burdens that constitute a major obstacle for participation in government procurement for all companies, in particular SMEs, include:
-- Using e-procurement systems to simplify and shorten procurement processes and provide access to all tender information, including tender notices, bid documents, and contract forms, as well as for supplier registrations.
-- Streamlining documentation requirements by allowing SMEs to self-declare compliance with qualification criteria and eliminating requirements for government-provided documentation.
-- Reducing the number of procurement portals SMEs must access for registration, payment, tender documentation, and submissions.
Providing procurement opportunities for SMEs: The Report pointed out that qualification and selection criteria, especially economic and financial requirements, can constitute a barrier to SME participation in government procurement if they are overly stringent. To address such barriers. To address such barriers, it identified a variety of practices, including:
-- Breaking larger contracts into lots to bolster competition and facilitate SME access to procurement contracts, provided it is not discriminatory or intended to lower the estimated value of the contract below the GPA threshold for covered procurement.
-- Raising awareness of opportunities for joint bidding and subcontracting for government tenders, for example, by using online resources to connect SMEs with prime contractors.
-- Providing for SME innovations by avoiding overly prescriptive specifications and allowing bidders to submit an alternative in their bids.
-- Requiring prompt payment by procuring entities and ensuring contract types and payment structures do not discourage SME participation in procurement.
-- Considering the financial capability of SMEs in developing tender requirements, such as bid bonds.
Enhancing the professionalization of procuring entities and dialogue with SMEs: The Report emphasizes that the promotion and facilitation of SME participation in procurement require professional procuring entities and dedicated engagement and education by government authorities. The practices that support this aim include:
-- Providing guidance for procuring entities on how to develop SME–friendly technical specifications and on SME's access to procurement opportunities.
-- Providing SMEs with a point of contact and conducting seminars on doing business with the government.
-- Creating a public-private advisory committee to discuss potential improvements in government procurement processes.
-- Consulting regularly with SME suppliers (including through surveys) on barriers and other procurement concerns.
In addition to identifying best practices, the SME work program required parties that maintain SME provisions in their GPA commitments (for example, the US exclusion of small business set-asides) to submit notifications fully describing their provisions. Another element of the work program was aimed at encouraging the elimination of discriminatory SMEs programs or at least extending them to the SMEs of all parties.
With the GPA committee’s publication of best practices for SMEs in public procurement, it is hoped that it will soon make public the results of its other work programs, in particular the work program to support the use of sustainable procurement practices. That work program calls for the committee to examine the objectives of sustainable procurement, its integration into national and subnational procurement policies, and how it can be practiced in accord with the ‘best value for money’ principle and international trade obligations. It also directed the committee to prepare a report on best practices relating to sustainable procurement. A catalogue on best practices for green public procurement, published jointly earlier this year by the European Union and the United States, could provide an important contribution to the GPA committee’s work.
Jean Heilman Grier
October 21, 2024