Predicting tenders suitable for micro, small and medium-sized enterprises

The problem

Micro, small and medium-sized enterprises make up about 95% of businesses in Paraguay, yet historically received less than 9% of public contracting spend. Many smaller businesses struggled to find relevant opportunities, interpret tender requirements or work out which bids were worth pursuing. The result was a procurement market that was formally open, but still hard for smaller suppliers to access.

The solution

Paraguay’s procurement agency used machine-learning classification and clustering models to identify the characteristics of tenders suitable for smaller businesses. The model drew on more than 200,000 procurement lots from 2010 to 2022 and was integrated into the national procurement portal through a service layer, allowing upcoming opportunities to be automatically flagged.

The classification is also published in Paraguay’s open contracting data, enabling supplier-facing tools such as VIGIA to reuse the information.

The project was developed with support of OCP and its Lift accelerator programme, working with a team of representatives from Paraguay’s government, civil society, and the private sector to increase participation of MSMEs in the procurement market.

The impact

By the end of March 2024, one in three tenders were tagged with the new “suitable for MSMEs” label, and around one in four of these procedures were awarded to a micro, small or medium-sized enterprise.

Lessons learned

Increasing availability of detailed structured data, such as adding a SME/women-owned business tag, and making it open can increase opportunities for reuse. The project saw vendors and civil society as partners in that effort, leading in VIGIA to practical tools for the business community.

Paraguay’s new public procurement law and subsequent decree created a stronger framework for micro, small and medium-sized enterprise participation. The reforms included measures to reserve 20% of procurement for MSMEs in annual procurement plans, with a five-year grace period, as well as measures such as advance payments for MSME suppliers.