Small business subcontracting expands the economy

Every multimillion-dollar government contract is an opportunity to grow Jamaican businesses. So, when we award one that is nine figures, without requiring the winning vendor to bring small businesses into the work, the country makes a deliberate choice to concentrate taxpayer dollars instead of using them to expand the economy.

Let’s take the recent $790-million JamaicaEye awards as a case in point. According to a Gleaner report last week, Sitewatch Electronic Security Limited received a $439.4-million contract to supply and install 300 CCTV cameras and supporting infrastructure in Portmore. Separately, Konnexx Services Limited was awarded $351.1 million for islandwide maintenance and related services. Both contracts were awarded through restricted bidding.

It is to be expected that much of the public discussion will focus on surveillance, privacy, and value for money. Fair enough.

However, that can’t be where the story ends for Jamaica. Not when the country is simultaneously trying to recover from a devastating hurricane, generate stronger economic growth, manage the effects of high prices, and contend with a creeping uptick in unemployment. These are precisely the conditions under which government should be asking how every dollar it spends can do more than purchase a good or service.

A $790-million procurement is also $790 million worth of economic leverage. It is an opportunity to create work, build capacity, strengthen smaller Jamaican firms, and circulate public money more widely through the economy. We simply cannot afford to spend on this scale without asking who else gets to participate in the economic activity those taxpayer dollars create.

In fact, difficult economic conditions should make this question more urgent, not less. When growth is slow, and businesses and households are under pressure, government spending becomes one of the most powerful tools available to deliberately widen economic opportunity. It is, therefore, grossly inadequate to ask only whether Jamaica needed the cameras or whether the contracts represented value for money. We have to stretch our minds and policies to ensure that we extract as much economic value as possible from spending nearly a billion dollars of public money.

Building small-business capacity

To be clear, Jamaica does have a small-business procurement mechanism. The Public Procurement (Set Asides) Order, 2019 reserves 20 per cent of the Government’s total annual procurement budget for micro, small, and medium-sized enterprises.

What we don’t appear to have is a systematic contract-level requirement compelling prime vendors to include qualified MSMEs in major awards wherever the scope permits.

Setting aside smaller contracts for MSMEs is absolutely not the same as requiring smaller firms to participate in the nine-figure contracts that build experience, technical capacity, and serious businesses.

I want to be precise because it is easy to mishear this as an accusation that something was skipped. This also isn’t a security debate. Indeed, tendering the argument that “this is national security infrastructure, and you can’t divide a surveillance contract to accommodate small vendors” is lazy and inaccurate. The US proves this every year.

America awards highly sensitive work in defence, homeland security, and classified systems to small businesses that meet both the applicable small-business requirements and the necessary security, cybersecurity, and facility standards. Security and small-business participation aren’t opposites even in the most sensitive arenas. In fact, the US deliberately built a vetted supplier base so it wouldn’t have to trade one for the other.

Another objection to small-business participation may be that local SMEs don’t have the technical capacity. However, this is precisely the kind of capacity gap that US mentor-protégé, subcontracting and joint-venture structures are designed to close while expanding a vetted list of security service providers. The visionary principle is simple: limited capacity describes a present state, not a forever state.

In the US government programmes in which I worked, where a small-business participation goal was established, the prime vendor was required to engage smaller firms on defined scopes such as cabling, civil works, site preparation, equipment installation, and even routine maintenance while retaining responsibility for the technically demanding core.

Restricted competition still requires questions

The contract award notices confirm that both JamaicaEye contracts were awarded through restricted bidding. Restricted bidding involves competition but within a limited field. That makes it even more important to understand how that field was selected and whether the process created any space for smaller Jamaican firms.

The public award notices identify the contractors, contract values, procurement method, and award criteria. They do not state how many companies were invited, how many submitted bids, whether any were SMEs, or whether the successful vendors made commitments to engage smaller firms. The “level of competition” field is also blank on both notices.

These omissions do not mean that the process was improper. They simply leave taxpayers unable to assess how much competition occurred or whether small-business participation was considered.

Restricted bidding may be entirely justified for sensitive security infrastructure, but restricting the pool of prime bidders does not prevent the Government from examining each scope for suitable subcontracting opportunities. Nor does it prevent qualified smaller firms from being vetted in advance so that they can participate in future security procurements.

The question remains: Where in either $790-million award was local business capacity deliberately built?

The California case

California has measured what happens when government deliberately directs more of its procurement spending through small businesses, and the results are worthy of review.

A 2024 state study found that for every US$100 spent through certified small businesses, US$68 remained within California. When the same US$100 was spent through larger businesses, only US$48 remained in the state. That means that spending through larger businesses retained approximately 29 per cent less money in California than spending through certified small firms. That difference is massive when multiplied across billions of dollars in government procurement.

The wider economic impact was equally significant. Across the programme, small-business contracting generated an estimated US$5.9 billion in new economic activity and approximately 35,800 net new jobs annually.

California was not simply giving small businesses a slice of the cake. It strategically used procurement policy to make each public dollar work harder inside its own economy.

The multiplier is a model that can’t be transferred directly to Jamaica, but the underlying finding remains important: more of the money spent through smaller businesses stayed in the local economy.

When more of a government dollar stays local, it becomes wages, supplier purchases, household spending, and tax revenue. The economy benefits the more times that money changes hands locally.

It behoves us to ask the right questions so that the next $790-million contract can address:

What new local capacity will this expenditure build?

How much of its value will circulate through Jamaican businesses?

If small businesses are excluded, why?

One love,

Yaneek Page is the programme lead for Market Entry USA and a certified trainer in entrepreneurship.