Oil companies must use robust bid evaluation to realise high levels of technology, skills transfer, employment

Aug 27, 2022 News

OIL SERIES PT. 3

By Kiana Wilburg

Kaieteur News – To ensure the capabilities of Guyanese are developed in a meaningful manner, the country’s Local Content Legislation takes key steps to influence the procurement philosophy of oil companies.

In this regard, Guyana’s Local Content Secretariat has issued guidelines which demand that oil companies use a robust bid evaluation process to realise high levels of technology and skills transfer along with employment.

The guidelines note that Section 13 (1) of the Act provides that a Contractor, Sub-Contractor or Licensees shall incorporate local content as part of the Contractor’s, Sub-Contractor’s, or Licensee’s bid evaluation criteria.

To assist in evaluating the local content commitments of each bidder, Contractors, Sub-Contractors or Licensees shall, at minimum, consider the following:

(a) Employment (number of Guyanese employed)– both current and proposed.

(b) Training, mentoring, knowledge, skills and technology transfer- and development of Guyanese nationals.

(c) Subcontracting to Guyanese companies and Guyanese nationals and use of local goods and services.

(d) In-country investment (capital or facilities).

(e) Technology and Skills Transfer Plan.

(f) Local Supplier Development.

To ensure objectivity in any competitive bidding process, the Secretariat notes that a Contractor, Sub-Contractor or Licensee shall assign a score or a weighting to the local content criteria in accordance with the following:

a) Where a Contractor, Sub-Contractor or Licensee evaluates local content as part of the technical evaluation criteria, the weighting of local content considerations shall be no less than ten (10) percent of the total score allocated to the technical criteria used for evaluation. For example, where the score for the technical criteria is 100, the local content score shall be no less than 10.
b) Where local content is evaluated as a separate criterion (outside of the technical criteria), the weighting allocated to local content consideration shall be no less than five (5) percent of the overall scoring used for the evaluation of bidders.

Pursuant to section 13(4) of the Act, oil companies are also required to ensure that the contract award shall be to the successful bidder resulting from the competitive bidding process.

Pursuant to section 13(5) of the Act, where two or more bids are adjudged to be equal, or two or more bids are within five percent of each other when financially (or commercially) evaluated but is otherwise adjudged to be equal, the bid containing the highest level of local content (the bidder with the highest local content score or weighting) shall be selected as the winning bidder.

BACKGROUND

The Government of Guyana has solidified its commitment to ensuring that the benefits derived from the foreign direct investments into Guyana’s petroleum sector, are captured and retained in-country, through the enactment of the Local Content Act.

That legislation prioritises Guyanese nationals and Guyanese companies in the procurement of goods and services for the enhancement of the value chain of the sector.

The Act also serves to enable local capacity development and provide for the investigation, supervision, co-ordination, monitoring and evaluation of, and participation in, local content in Guyana.

The Local Content Secretariat is mandated to ensure that the provisions of the Act are implemented and functions as the regulatory arm for the monitoring, evaluation, coordination and reporting of local content in the petroleum operations of Guyana.

In so far as the Act mandates every Contractor, Sub-Contractor, or Licensee to implement local content as an essential component of their petroleum operations, the Secretariat, through the issuance of industry guidelines, aims to provide detailed and specific guidance to Contractor, Sub-Contractors or Licensees with regards to their reporting obligations.

As such, these guidelines serve to provide clarity relative to the bid evaluation requirements of the Act.

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