Government Operations Committee on Oct. 25th, 2011

[Mathieu Ravignat, NDP, Pontiac, QC]

The vast majority of businesses have been dealing with the government for over five years. One question was raised at the last meeting. On the topic of challenges, the fact was mentioned that the name of some SMEs was not recognized, nor did they get the opportunity of offering services to the government.

According to the CABiNET:

Government officials, when researching solutions, will often go to the recognized brand names rather than seek support from smaller Canadian suppliers—even from those that specialize in the very areas where the expertise may be sought. Bureaucrats are not forced to seek out innovative solutions that could be provided by SMEs. They find it easier to revert back to the old and known entities such as the large companies.

Do you share that perception?

[Corinne Pohlmann]

Yes, we would, absolutely. It's my understanding that even the procurement ombudsman has reported that there are 12% fewer federal suppliers than there were four years ago. Most of those are probably smaller companies, I would suggest to you.

As contracts got bigger, that pushed out smaller firms. It's a problem when RFPs that you have to fulfill get thicker, when you feel like you're duplicating information, when you can't ask the end-user a technical question, and when the person who is intervening can't answer your question.

When you come with an alternative approach that is a little bit different than what the government is asking for, you're told that you're no longer eligible because you're not in this criteria. Those are all things that have been happening in the real world that make small businesses say it's not worth it.

[The Chair, NDP, Pat Martin]

You have 30 seconds, if you have a brief question.

[Mathieu Ravignat, NDP, Pontiac, QC]

It's difficult to know whether the same names, the same big businesses come back all the time. Do you think the government should prepare a report on that? Do your members have access to that type of information? As for the companies that are overused—do you think there should be more transparency?

[Corinne Pohlmann]

Yes, one of the areas of data that we'd like to see more of is exactly that. How many are repeat users, what percentage are repeat users, and what percentage are new companies that have never been used before? As you know, companies sometimes change names, or they are divisions of other companies, so when you look at the current list, it's often difficult to determine whether it's actually a new company or it's just a division of a company that has already done business with government.

I think that's the sort of data we're talking about. We'd like to see it a little bit more fleshed out to understand what we are dealing with. It seems to be a real drop, and why is that happening?

Yes, definitely, we'd like to see more transparency and understanding of who the government is dealing with. So we would agree with that.

[The Chair, NDP, Pat Martin]

Thank you, Ms. Pohlmann.

That concludes your time.

We now go to Ms. Kelly Block.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

I too thank you for being here today.

Last week was small business week, so we had an opportunity to recognize the hard work and dedication of small businesses and entrepreneurs, and how much they invest in and contribute to our economy. I want to make sure that my question is received in the spirit in which it's intended in terms of supporting small business.

I want to get to the recommendation you made in your presentation regarding reviewing mega-contracts to determine if they're necessary. I know this addresses the whole issue of bundling. It is my understanding, though, that sometimes large contracts are awarded and that small to medium-sized businesses may still yet be subcontracted by those larger contracts.

Why does it matter if a small to medium-sized business is the successful bidder at the front end or they're subcontracted by one of the large companies that win the contract?

You mentioned that there is an office in the United States that takes a look at whether or not these mega-contracts can be separated. What are the criteria they would use to do that?

Those are my two questions.

[Corinne Pohlmann]

On the first question, certainly there is evidence that subcontracting happens. It is primarily in the construction industry, however. The amount of goods and services the federal government purchases in a year are $15 billion. I think some of that should be accessible in a fair and equal way to small and medium-sized companies as well. They shouldn't only be subsumed to big subcontractors and larger companies.

Part of that is, as we are talking about today, to encourage growth of entrepreneurship. We believe, of course, that the federal government, through its procurement program, cannot only push innovation, but it can also push entrepreneurship. The only way you can do that is if you make sure those contracts are accessible to companies that want to bid.

I don't want to say it's happening all the time, but there are instances where these bundling contracts are coming out, and we're not really sure why they've decided to sort of bundle them together as they have. We have seen anecdotally over and over again that it doesn't necessarily mean the government is going to save money in the end. I think that's the answer to your first question.

I'm not 100% sure what criteria the U.S. use, but we can look into it and get back to you. My understanding is that they basically take a look at the type of product, commodity, or service available, and whether it can be delivered by smaller companies as well. So they look at what's out there in the market and whether it is something that can only really be delivered by maybe two or three large companies. Defence contracts are the ultimate example. Generally those have to be big. There are only so many companies that can actually bid on them.

A few years ago there was bundling of office furniture contracts. There was bundling of office products. These are things that don't necessarily have to be bundled. There are lots of companies across Canada that are capable of delivering those types of services. I think that's what we're talking about. It's about looking at what the market can deliver. If there are smaller companies out there that can deliver it, then it makes more sense to perhaps try to break it up a little bit.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Ms. Scarborough, do you have an answer for either of those questions?

[Michelle Scarborough]

I think the bottom line is that you've got to understand the whole process by which procurement happens. As far as bundling goes, I agree that in certain cases where there is a large contract you could set up a system. I don't know how you would do it, but you could set up a system whereby a large company works with several small- or medium-sized enterprises to collectively bid on the contract. You could set up a system that effectively does that, and that may be part of the solution.

In addition, if there are efficiencies in the government process by which companies can bid and be successful, at least in the bidding process, then that may affect the desired outcome of those companies having the ability to have the government as a customer.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Okay.

[The Chair, NDP, Pat Martin]

You have 30 seconds, Kelly.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

No, that's it.

[The Chair, NDP, Pat Martin]

Okay, thank you very much.

For the Liberals, John McCallum, it's your turn again.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you. I have one remaining question.

Are you aware of how this agency, the U.S. Small Business Administration, functions, or anything about it?

[Corinne Pohlmann]

They're basically the oversight body of the federal government in the United States to make sure that policies concerning small business are being applied across the federal government. There are things like a regulatory accountability act that takes effect among various government departments in the United States to look at the impacts on small business.

They administer those types of things. Plus, they do a lot of research on small business in the United States.

[John McCallum, Liberal, Markham—Unionville, ON]

Given, as I described, your lukewarm view on OSME, I'm wondering whether there are any lessons for how OSME could be improved, either from what they do in the U.S. or other countries....

[Corinne Pohlmann]

Absolutely. We have been advocating for this idea of perhaps having OSME be the body to look at the bundling project, for example, making sure the contracts aren't too big and advising departments that they need to cut them back.

We are trying to use that as an example of how we can perhaps improve on making procurement more accessible for small firms in Canada.

[John McCallum, Liberal, Markham—Unionville, ON]

Do you mean how you can use your knowledge of what they do in other countries?

[Corinne Pohlmann]

Well, specifically in the United States. I have less knowledge of other countries.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay. So if we're interested in how OSME should be improved, we should look partly to the U.S. experiences.

[Corinne Pohlmann]

In that particular area, yes.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay.

[Corinne Pohlmann]

There are other parts of the United States I would suggest perhaps not looking into.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay, thank you very much.

That's it.