OEE In A Nutshell

I spent much of Sunday digesting the draft economic empowerment legislation put forward by the UBP on Friday.

The bill proposes to establish an Office of Economic Empowerment (OEE) within the Ministry of Finance, which would seek to enable meaningful participation of all Bermudians in the economy by

• Promoting economic opportunity.
• Promoting a broader base of ownership and management participation.
• Promoting investment programmes.
• Promoting access to finance.

The OEE would

1. Designate certain small businesses as “approved”.
2. Establish a seminar programme on tendering for Government contracts that businesses seeking approved status would have to attend.
3. Ensure at least 20% of the Government’s annual procurement needs were sourced from approved small businesses, up to a maximum of $750,000 per business per year.
4. Coordinate with financial institutions to facilitate financing for approved small businesses that have obtained Government contracts.
5. Require all other businesses tendering for more than $5 million of Government contracts per year to participate in a Government-sponsored mentoring programme for small businesses.

Bermuda does not yet have economic equality between the races. But helping small businesses to thrive should do much to distribute wealth more evenly. The UBP are to be commended for proposing legislation that aims to entrench equality of opportunity, rather than a more populist affirmative action programme which would do little to make any gains self-sustaining. That said, I have several concerns with it:

• There seems to be a large degree of overlap with the Bermuda Small Business Development Corporation (BSBDC), an institution established in 1980 as a joint venture between the Island’s banks and the Government. The BSBDC already runs a number of seminars: why not get them to do the tendering seminar too? Moreover, the BSBDC already facilitates financing for small businesses. How would the involvement of the OEE help?
• Compelling larger companies to mentor small businesses if they wish to bid for Government contracts will add to their cost of doing business. Is there not a danger that they would simply pass this cost on to the Government in the price of their bids? And what would an acceptable mentoring programme involve?
• Is the 20% target reasonable? How much Government procurement is currently sourced from small businesses?

Hopefully the UBP will provide more clarity on these issues in the days to come.

Comments

[Tiger Bay on 13.12.04 at 09:24]

There's no brilliance here. However, it shows a well thought out plan. We don't see that out of the PLP.

[shipstones on 13.12.04 at 10:09]

How many businesses at $750,000 a pop does 20% represent?

[jake on 13.12.04 at 11:12]

This is the UBP at its best. It has always been the party of the business community and this kind of thinking appears to blend meritocratic assessment with small business status. If the program can be publically monitored in terms of race as well, it would allow a true assessment on wider economic access. The PLP should adopt this measure and then give the UBP full credit for its role. What we need is progress, and if that comes from bi-partisan collaboration - then fine.

Well done UBP.

[shipstones on 13.12.04 at 14:48]

Jake I take my hat off to you again!

[jake on 13.12.04 at 14:59]

If this love fest continues I may have to:

(1) Reduce my medication; and,

(2) Insult someone.

;-)

[ace on 13.12.04 at 15:07]

lol..lovefest.

Jake, reactivate your hotmail account man, did you miss my post in the Human Rights, Human Wrongs thread?

I have a mighty thirst going.

[Fraz on 13.12.04 at 21:21]

Shipstones:
In 2003 the Government of Bermuda lists about $220 million in Goods & Services and Capital Expenditures. Although not too unreasonable to assume they procure everything annually (except perhaps the capex), let's assume that they only actively procure 50% of that each year. So, that takes us down to $110 million.

They want to give 20% of this to small businesses, i.e. $22 million. Now factoring in the cap of $750k per business, there is room for no fewer than 29 businesses. Assuming they procure the entire sum each year, that would give you almost 60 small business suppliers to the government.

Of course, what we don't know is how capable these firms are of supplying $750k of product at a reasonable price... In not using large businesses (who presumably receive volume discounts) it is not too unreasonable to assume that the government's costs of acquiring it's supplies each year is actually going to go up, perhaps making room for a couple of other businesses.

Phil, this could be your opportunity to get PC hardware at a lower price and supply the government... ;-)

[big bad wolf on 13.12.04 at 22:02]

Yeah which Bar are we going to toast this empowerment thing?..thank God its Xmas and drinking season is starting to get into full swing.....Lets see what the new year brings....Crystal ball Will the PLP support the empowerment Bill......mists are clearing answer on the way............YES...IF THE UBP SUPPORTS INDEPENDENCE! hmmm fate is tricky..think I'll concentrate on my presents for now.

[shipstones on 13.12.04 at 22:52]

The BHC could use 29 companies.
$750,000 for painter, $750,000 for gardener and that's only Ewarts house!

[Bermykid on 26.12.04 at 00:01]

As a 44 year old white man who has lived in the same predominantly black Southampton East community all my life. Recently I decided to renovate my house in stages and decided for the lack of a better definition to a:- Keep my money in the community, and b:- To attempt my own version of black empowerment. My first project was to change my windows, I hired a business who had been doing construction for the better part of 40 years and was known to myself. It took them five weeks to install 7 windows, on the job for a couple of days and away for a couple of more and no work cup match week, when they finally finished they didn't take the trash but what they did take was a collection of garden tools and a few other general tools. Step two in my renovations were new front room and kitchen, once again I hired a black company from within the community to do my work, having not learned my lesson the first time, the gentleman came to the house looked over the plans and said he would do the work, would be able to start in two weeks as he was just wrapping up another job. Two weeks went to three, then four and finally five weeks with no word, finally got in contact with the suddenly hard to find contractor and he assured me that he would be able to start the following monday, needless to say he never showed, no explanation, no excuse, not even a bold-faced lie. Having had enough of that charade I went out of the community and approached a white owned and run construction company, well lo and behold he was on time for his initial appointment, he supplied his estimate on time, and indeed started the project on the day he said. For this work to start a certain amount of excavating had to be done, again I hired a black owned and black run company to do my excavating, I mean what harm can come out of digging a simple hole. They finished the job and less than 10 minutes later I received a phone call from then to verify my mailing address so that the bill could be sent, all of this occrring on a friday morning. The following Monday morning I received a call from the company asking if I had received the bill yet I informed them no and was shockingly asked when I would be checking my mailbox, I informed them I didn't know, I'm not the type of person to run all wide-eyed to my P.O. Box to retrieve a bill. I received a call that afternoon that in case the bill wasn't there here is the total and when would I be coming to pay it. I then received 2 phone calls a day for the next three days asking me when I was going to pay my bill. That thursday I got home a little early while the construction workers were still there and they informed me that the excavation company had hit the satelite dish. At the time it was disconnected as to the ongoing construction and I reconnected it and sure enough it was not working. I called the excavation company to file a formal complaint and to my amazement the woman who answered the phone the same one who was harrassing me for my money found the whole thing hilarious and had the nerve to tell me that it was a funny story. It was the old get the guy to pay the bill quick before he discovers we hit the dish. Then and there I decided to take them to court, of course the simple solution would have been to subtract the amount of the dish repairs from the bill and I'll just pay the difference, however it is my opinion that by doing so I would be facillitating dishonesty on the part of the machine operator who neglected not to mention it, and also the continued unprofessionalism of the sercretary. However I'm going the court route to basically teach themn a lesson, that lesson being that the judge will tell me that I owe them close to $900, but, you can be rest assured that I will ask for and receive court costs, and it doesn't take to many phone calls to a lawyer and the obligatory pre-court date meeting will eat up that $900 pretty quick.

It seems that the Berkely project and myself have something in common, black empowerment didn't work. It didn't work largely because the blacks I chose to empower and the blacks the governemt attemted to empower were basically all talk no action, wanting something for nothing and worked harder at fleecing and dishonesty then putting in a fulls day's work. The premier may do it again because he has the public purse at his disposal. I don't have that luxury.

[shipstones on 26.12.04 at 14:57]

BErmykid,
Are you saying white contractors would not have ripped you off.
Are you saying white contractors would have turned up on time?
I assure you they do!
I had a black plumber, electrician and they both did a great job overall. They pissed me off a couple of times but I didn't put that down to their colour. The white company that I purchased the hardware from ripped me off big time and said "That's our price!" in other words pay up. I don't think that was because I was white do you?
My roof is painted by a black guy. He comes and tells me when it needs painting and gets on with it and finishes it quickly and does a good job for a reasonable price.
The bottom line is good work doesn't go by the colour of your skin Bermy.

[Bermykid on 26.12.04 at 19:53]

Fair enough, I don't have a problem with that, you are speaking from your experience and I'm speaking from mine. I would have a problem if my roof painter showed up and TOLD ME when my roof needed doing, that sounds like the classic junkie/crackhead/alcoholic roof painter who passes himself off as an expert roof painter and does it with a certain amount of panache and eloquence and you are convinced that if the roof isn't started tommorrow the Health Department is on the way. If this guy is showing up every two years to do your roof something tells me that he is either doing a lot of work that doesn't need doing or he never did it right to begin with.

[shipstones on 27.12.04 at 16:16]

Bermy,
OK the painter didn't TELL ME WHAT TO DO, he suggested it and it actually lasted 3 years. We ourselves said its time we did it. He came round in April and planned to do it in August and turned up on time. He also said the walls are OK but may need doing next year. Just friendly advice.

[Bermykid on 27.12.04 at 23:57]

Yes three years seems to be the average for getting the roof done. I last did mine summer of 2002. Don't know how much you know about Bermudian architecture but my home is what is called a Marshall design, a one storey and thats a fairly easy roof to do, not to steep with two big flats, a little wire brush, a little power wash, the obligatory clorox bleach and she is ready to do.

The

[jake on 28.12.04 at 10:28]

If your claim is for less than $10,000 it must be filed in Magistrates Court. In Magistrates Court there is no jurisdiction to award costs.

Ergo, your little plan to teach the excavator will end up losing you money if you spend anything on lawyers in the hopes of claiming funds back on a $900 claim. No court costs can be awarded.

Just a thought from one of the blacks you seem to think are all the same.

P.S. Try looking to get a credible company without regard to race and black empowerment should flow naturally over time. We are not all shucking and jiving for your money. Some of us (actually) enjoy producing work of beauty even if it is for someone who divides up his view of the construction world into black companies and white ones.

[loki on 28.12.04 at 11:39]

"In Magistrates Court there is no jurisdiction to award costs.

Ergo, your little plan to teach the excavator will end up losing you money if you spend anything on lawyers in the hopes of claiming funds back on a $900 claim. No court costs can be awarded."

This is 100% wrong - there is jurisdiction and, indeed, the Magistrates' Court schedule of allowable costs was recently increased significantly, meaning that there are quite a few cases that I previously would have advised clients not to pursue that are now worth pursuing.

[Bermykid on 28.12.04 at 22:31]

>This is 100% wrong - there is jurisdiction and, indeed, the Magistrates' Court schedule of allowable costs was recently increased significantly, meaning that there are quite a few cases that I previously would have advised clients not to pursue that are now worth pursuing<

Moving right along.

[The Limey on 15.03.05 at 19:15]

David Dodwell did in fact clarify the UBP's position on the questions I raised in this post. I intended to post his response but unfortunately got sidetracked in the Christmas maelstrom, and by the time the New Year rolled around I'd forgotten.

Here's what he said:

We don't assume that we have all the answers, and I personally would welcome any input from anyone. It's only with dialogue that we'll have fruitful debate.

1. I don't believe that there would be a large overlap with the BSBDC - rather, an extension of its responsibilities and oversight by the OEE.
Essentially, the OEE under the Finance Ministry would manage and oversee the administrative side of this plan/concept/legislation to promote the empowerment of all Bermudians and their effective participation in our economy. It would be responsible, together with other divisions of the Finance Ministry, for the implementation of the technical aspects of the process. It would also have direct accountability to Parliament through the Ministry and Minister - giving focus to our call for the highest levels of transparency. You are right, the BSBDC already does have responsibility for assisting small businesses - we see that increasing if this Bill were implemented. We also see the financing side of assisting small business with Government contracts being considerably ramped up - through greater levels of cooperation with local banks and the development/brokering of venture capital funds. I think that the focus and importance ascribed to this Bill would be assisted by the involvement of the OEE.

2. I don't see larger businesses being compelled in the strong arm and legislative sense - rather, a willingness for the good of their particular business broadly and for Bermuda generally to do the right thing, by helping a small business to emerge and grow. I see it more as an investment of time and energy, rather than money (although I understand that the two go together!). I see my role as communicating and working with already established businesses in Bermuda to seek their assistance, and to encourage them to get involved in a program which produces positive results for individuals, entrepreneurs and small businesses. Just imagine the impact of a business person contacting someone in the same business as him or her and offering help/support/advice - what a powerful way of sending a message of inclusion!!! As to what would be an acceptable mentoring program, I would like to see this developed with all the stakeholders as the process unfolds.
I look for input from the community in this area particularly.

3. Unfortunately, we don't know how much of Government's procurement is currently sourced from small business. I would really like to find out! I would imagine it would take a special assignment by someone in the Finance Ministry to produce such information - it certainly is achievable without too much effort, I would think. It would be immensely valuable to everyone in the community to know where their tax dollars are going and to whom - what a terrific opportunity for transparency and for the ability to create new avenues for small business to pursue on top of it! A win win for everyone in my view! Our selection of 20% was as a result of research in other locations and lot of thought on our part as to what would be reasonable in the first instance. It is certainly is open for discussion, although I personally do not see a lower number. My goal is to make a significant impact in the area of economic empowerment, and what better way than through the awarding of part of Government's goods and services to those have not had the opportunity in the past - they deserve it!

[dr. phil on 15.03.05 at 22:39]

"I intended to post his response but unfortunately got sidetracked in the Christmas maelstrom, and by the time the New Year rolled around I'd forgotten."

dr phil says maybe UBP got sidetracked with budget too. dr phil thinks limey and UBP have something in common.

dr phil says limey owes UBP an apology.

limey not above mistakes either. dr phil says sometimes people forget.

dr phil wonders if limey big enough to admit his mistake.

[The Limey on 15.03.05 at 23:04]

dr phil

Limey didn't receive four emails within three weeks asking why he hadn't posted Dodwell's response.

But yes, I should have posted this earlier.

Likewise, *someone* in the UBP could have replied to me in the last three weeks, Budget debate or not. After all, there's 14 of them and only 1 of me.

[dr phil on 15.03.05 at 23:18]

dr phil says not everyone reads limeyinbermuda.com so ubp didn't know you forgot.

dr phil agrees only 14 of them. but dr phil observes many ministries, ministers and civil servants to respond to. dr phil says budget is a very busy time.

dr phil thinks limey showing double standard.

dr phil wonders why when limey busy it is ok but when ubp busy it is not?