Government Operations Committee on April 28th, 2009

[Charles Duffett]

John, I'll turn that one over to you.

[John Reid]

As a matter of fact, I think we were the motivator for the creation of the small business bureau within PWGSC. The feedback is that their mandate and authority are rather weak, and they have not been able to communicate clearly government direction or opportunity.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

So, they are part of the problem.

Thank you very much.

[The Chair, Liberal, Derek Lee]

Merci.

Mr. Warkentin, please.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

I appreciate the witnesses coming in this morning. We appreciate your testimony before us.

We're trying to get a handle on probably a number of complicated issues in this whole discussion of procurement. One thing that I just want to get clarified—and I think I understood that from your presentation—is that the desire to call for set-asides is not in fact something that your organization represents. If I could just get some clarification as to what in fact you intended to ask for, as opposed to what was written there, maybe that would be helpful for committee members.

[Charles Duffett]

That's no problem.

The set-aside was something I put in, but I only found out later what it really meant. For us what it means is giving Canadian high technology companies--or SMEs in that space--the ability to sell their technology into the Canadian government.

[Chris Warkentin, Conservative, Peace River, AB]

So in terms of opportunities, you're a conduit to allow that to happen, as opposed to there being a legislated requirement that there be a space for these companies. I think what you're asking for is simply to have the ability to come in at a competitive level, or to allow companies to come in and actually compete. I think you would find agreement around this table to ensure that government doesn't close the doors to small companies because of their inability to bid on huge RFPs.

I just wanted to get that clarification, because I know CABiNET came before the committee as well, and there was some suggestion after they came that maybe we should have set-asides. But when I spoke to some of the principal stakeholders from CABiNET, they made it absolutely clear to me and to media representatives that they absolutely did not see set-asides as a positive thing for their groups or for the companies that are interested.

I'm not hearing it from you.

[Charles Duffett]

We do not see set-asides as positive either.

[Chris Warkentin, Conservative, Peace River, AB]

That's something we're hearing resoundingly from every organization that's coming before us.

On the flip side, I think what we are hearing is some concern in terms of what the future holds. Where a number of changes have taken place—and I guess everyone's learning by trial and error—unfortunately over the last number of months and possibly years, there's been a sense that smaller companies have had a difficult time accessing government contracts. Maybe what you can elaborate on is the biggest concern, which is not about what has taken place so far, but about what possibly might happen in the future.

[Charles Duffett]

I think there are two points. It is difficult for them—and I gave you that example of the company in Kanata. They have a unique product--

[Chris Warkentin, Conservative, Peace River, AB]

Maybe we can get some clarification. I don't know if you feel comfortable speaking on behalf of this company, because it is interesting for every member around this table to hear a story of a successful Canadian technology that isn't being implemented here in Canada.

Was there a concern that there had been no RFP ever calling for the particular product? Was it an issue that when they responded to RFPs, their technology was so much further advanced than what the RFPs were calling for? Do you know the details in terms of what their frustration was? Was it convincing government to be an early adopter of the new technology? What was the struggle?

[Charles Duffett]

I'm not intimately familiar with that side of it, but I'll tell you what I heard anecdotally, so that you can get that.

It was that this company produced this computer—and there is really no computer in the world that competes with it—and they brought it in. One of the departments said that they loved it and that it was exactly what they needed to reduce cost and reduce real estate space. They wanted to get one of these things in. They couldn't get one in on a trial, first, because doing so would have been perceived as favouring this company, and then you would have to allow everybody to bring in their equipment for a trial. The second point was that when they were asked to compete for it, there was no competition, so then they had to go back to other companies who could go out and try to piece this equipment together using other people's products to try to make something that looked similar. Making that happen would take well over a year.

[Chris Warkentin, Conservative, Peace River, AB]

So your take was that it simply was in response to the bureaucracy and the larger government having policies that required competition. And in this case, all of these policies and requirements bogged down the system, reducing the ability of a company that seemed to be on the leading edge of a new technology to.... There was just an inability for government to respond, possibly because of accountability rules, or any number of such requirements.

[Charles Duffett]

Absolutely. You've got it.

[Chris Warkentin, Conservative, Peace River, AB]

Well, it would be interesting for us as a committee possibly to look at that. Maybe we can get some details, if you could provide them to our chair. Maybe the company and we can do some investigating behind the scenes to see if we couldn't just come up with.... This may possibly be a good case analysis for our committee.

[Charles Duffett]

Excellent.

[Chris Warkentin, Conservative, Peace River, AB]

But I think what it highlights now is the frustration on the flip side, where smaller companies are providing services or other companies are providing technology that isn't as advanced. Obviously, I'm sure we'd hear from those folks if in fact there was an RFP that was streamlined, or that provided for this technology or the requirements this company could provide, and nobody else could even compete for it. So I'm sure we'd hear frustrated folks on the other side.

So these are the balancing manoeuvres that the Public Works folks, I'm sure, have to deal with every day. We have great respect for them and we feel for them, but I think you've highlighted a situation where all the rules in the world aren't protecting and ensuring that Canadians are getting the best technologies available.

[Charles Duffett]

I think the other point to add to that is to ask whether we are investing in Canadian companies. Are we making it easy to invest in those companies?

Thank you.

[The Chair, Liberal, Derek Lee]

Thank you.

Mr. Martin, for five minutes.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Mr. Chair.

Thank you, witnesses.

Mr. Reid, I noticed that in 2006 the Minister of Public Works, Michael Fortier, announced they were going to have vastly improved access for small and medium-sized businesses and that 40% of all government procurement would in fact be pointed towards, or made accessible to, SMEs. Have you noticed an appreciable difference in your ability to access procurement contracts since then? Does CATA feel the market is better for them in terms of accessing those contracts since that announcement?

[John Reid]

Obviously, there has been no improvement whatsoever, and the communications have actually further eroded confidence in the Canadian government as a market opportunity; hence, the story about more companies looking for their first sale outside of Canada.

So the intention was there, but what we hear—

[Pat Martin, NDP, Winnipeg Centre, MB]

The announcement was there, but I don't know if the intention was there.

[John Reid]

Well, hopefully the intention was there and it just hasn't panned out.

[Pat Martin, NDP, Winnipeg Centre, MB]

That's a big disappointment for everybody.

I'm not as clear as Chris on the problem with set-asides. I notice that in the United States they have a small business set-aside program that helps to ensure that small businesses are awarded a fair proportion of all government contracts. It works down there. Are you worried you'll be shut out of the big stuff if you're granted the small stuff? What possible reservation could you have about preferential treatment like that?

[John Reid]

Could I address that in maybe a little broader context?

What has happened in the U.S., if you look at the logic of this, is that you have very strong political leadership there on the value of technology to the economy. You have a cabinet of three people: you have a chief performance officer who sets targets and measurements; you have a chief information officer who looks at government modernization; and you have a chief technology officer who aims at modernizing the society, or creating the innovation nation, focusing on health care, public safety and security, and transformation. You have those three working together.