Evidence of meeting #14 for Government Operations and Estimates in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was osme.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Tom Hayes  President and Chief Executive Officer, GrowthWorks Atlantic, Canada's Venture Capital and Private Equity Association
Herman Yeh  President, Canadian Information Technology Providers Association
Jason Gillham  Director of Operations, 2G Robotics Inc.

4:25 p.m.

Director of Operations, 2G Robotics Inc.

Jason Gillham

We've doubled our staff over the past six months, but is it directly causal to the CICP program? It's always hard to say. There's going to be a component to that program, but there's also going to be a component to everything else that has been leading up to what we've done.

4:25 p.m.

Conservative

Peter Braid Conservative Kitchener—Waterloo, ON

How many employees do you have now?

4:25 p.m.

Director of Operations, 2G Robotics Inc.

Jason Gillham

We're up to about six.

4:25 p.m.

Conservative

Peter Braid Conservative Kitchener—Waterloo, ON

Great, thank you.

Mr. Yeh, I have a question for you, sir. With some previous witnesses there's been some debate about where OSME should be housed, in PWGSC or maybe some other department. Do you have any thoughts or perspectives on that?

4:25 p.m.

President, Canadian Information Technology Providers Association

Herman Yeh

I think Treasury Board should come forward with a better policy to focus on SME procurement.

As far as recruitment goes, it should stay in PWGSC, because it's procurement policy.

Of course if you're talking about industrial regional benefits, then it's Industry Canada. I disagree with this, but it's not the same minister on the procurement side.

4:25 p.m.

Conservative

Peter Braid Conservative Kitchener—Waterloo, ON

Finally, Mr. Hayes, as I'm the member of Parliament for Kitchener--Waterloo, I would strongly encourage you to support Mr. Gillham's sector.

4:25 p.m.

President and Chief Executive Officer, GrowthWorks Atlantic, Canada's Venture Capital and Private Equity Association

Tom Hayes

Thank you.

4:25 p.m.

NDP

The Chair NDP Pat Martin

Thank you very much, Peter. That was a good use of your time. You might have got some investment in the local business.

4:25 p.m.

Conservative

Peter Braid Conservative Kitchener—Waterloo, ON

It certainly was.

4:25 p.m.

NDP

The Chair NDP Pat Martin

That's the end of the first round of questioning.

I wanted to ask for some clarification on one point in the testimony from Mr. Yeh.

We heard testimony from previous witnesses earlier in this study who pointed out the United States office of small and medium-size enterprises, or the sister organization that assists SMEs, is almost a public interest override. Projects are not bundled into mega-contracts unless it can be demonstrated it's absolutely necessary. So the default is smaller bite-size contracts instead of massive overwhelming contracts.

Could I ask you to talk about what you called the risk transfer that's possible, going from the risk of it being in-house to the risk of being in one mega-contractor doing all that IT work for us?

4:25 p.m.

President, Canadian Information Technology Providers Association

4:25 p.m.

NDP

The Chair NDP Pat Martin

Could you expand a little bit on that?

4:25 p.m.

President, Canadian Information Technology Providers Association

Herman Yeh

Let me give some examples of IT projects.

When you want to build a large data centre, there's a large capital involvement. Building a tier-four data centre costs, per se, $150 million, plus you have to fill it up with servers, communications gear, and so on. From a bureaucratic senior management point of view, it's great. They say a big project may be easier for them to farm out to one company to let them handle the whole thing, from building it to managing it, the whole infrastructure. By doing that there is a risk transfer because they do not want to keep it in-house and break it down into a smaller bite size.

You need lots of talented people to do it, and I believe the government with the 8,000 IT staff they have--with the SSCs they will have 8,000 people--and all those other people who are already managing data centres and their networks. Starting to subcontract might not be the best job, but we are not sure. SSC never said they would do it that way, but there's a tendency at the senior level. When they are talking about it at the large project level they have a tendency, as we've seen year after year. A few years ago it was the government marketplace project. A number of projects are really not doing so well, but they did give the contract to a single contractor.

On the other hand, we've seen it's very effective when they bring it down to a smaller size, a bite size, and the smaller SME contractor can contour much better. They're the subject experts. Often the large company will go to the SME and ask if they want to be their subcontractor and then they make money in between.

4:30 p.m.

NDP

The Chair NDP Pat Martin

That's very interesting. Thank you, Mr. Yeh. I wanted you to expand on that somewhat.

The next round of questioning will begin with the NDP, Mathieu Ravignat, for five minutes--or are you sharing your time with Denis?

4:30 p.m.

NDP

Mathieu Ravignat NDP Pontiac, QC

I'll share my time with Denis.

4:30 p.m.

NDP

The Chair NDP Pat Martin

Very good.

Five minutes, however you want to cut it up.

4:30 p.m.

NDP

Mathieu Ravignat NDP Pontiac, QC

Thanks to the witnesses for being here.

Could you tell me whether you are a member of the Canadian Federation of Independent Business?

4:30 p.m.

President, Canadian Information Technology Providers Association

Herman Yeh

No, we are not.

4:30 p.m.

NDP

Mathieu Ravignat NDP Pontiac, QC

That's fine.

4:30 p.m.

President and Chief Executive Officer, GrowthWorks Atlantic, Canada's Venture Capital and Private Equity Association

Tom Hayes

No, I'm not.

4:30 p.m.

Director of Operations, 2G Robotics Inc.

Jason Gillham

I'm not, no.

4:30 p.m.

NDP

Mathieu Ravignat NDP Pontiac, QC

I asked you that simply to put my question in context.

The Canadian Federation of Independent Business has conducted a survey of its members on public markets. It received approximately 626 responses, which is quite a lot. They realized that only 5.9% of that number knew the role the Office of Small and Medium Enterprises plays in federal government procurement. I was wondering whether that surprised you. If not, why not?

4:30 p.m.

President, Canadian Information Technology Providers Association

Herman Yeh

If I answer for that part, it's not a surprise to me, because this was as I described before. And when you go for a new customer, it's the hardest one to get. They might not be interested in the Canadian federal government business either, if they consider it hard to do. And as they say in the report, they report back to the one who responded and say, “Hey, how come it is so hard to do business with them?” And we might disagree, because we are doing business with the government and there is a certain way to go in and to buy and sell. As Jason was saying, it takes lots of patience to keep going through that.

4:30 p.m.

President and Chief Executive Officer, GrowthWorks Atlantic, Canada's Venture Capital and Private Equity Association

Tom Hayes

The only comment I would make is that you would really have to take a look at the structure of the membership of the CFIB. I don't know enough about it, but I'm not sure that many of their member companies would be companies that would necessarily sell to government. There are lots of Canadian manufacturers associations and other industry associations that would have members that would be applicable to this type of a program. I'm simply not sure whether the membership structure of the CFIB is applicable in this instance.

4:30 p.m.

Director of Operations, 2G Robotics Inc.

Jason Gillham

I don't have too much to add, but my knowledge of getting to the programs has been through Communitech, as I discussed earlier. Being a small company, you don't have all the time and knowledge to gain an understanding of everything that's out there on your own.