Government Operations Committee on Oct. 19th, 2006

[Jeremy Ingle]

The statistics show that in the last year the total dollar volume of the temporary outstanding offer was in the region of $220 million. If we took out those categories that have gone on to the standing offer and in fact are not really part of the temporary help standing offer, or shouldn't be, we think the total volume would shrink by roughly $85 million. So it would come down to approximately $150 million.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Thank you.

[Jeremy Ingle]

I could actually help you a little bit there. Had those figures been looked at as they should have been looked at in the first place--that $80 million was not really part of our supply at all--I don't think we'd even be part of this discussion. We wouldn't be here today, because we'd be such a small sector that it would not have provoked an outside consultant to look at it and say we have to beat this industry over the head.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Thank you.

The premise behind what Public Works has been trying to do, so they say, is to make sure that prices go down, whereas you're saying that if you're going to reduce competition in your types of services, the tendency would be for prices to go up. Can you briefly give me a little more detail on this?

[Meredith Egan]

Based on the model the department was proposing to use over a three-year standing offer and cutting the number of suppliers down to potentially as low as seven, initially there would have been significant reduction in pricing because there would have been the psychology of fear in the bidding process. But in the way things work, over that three-year term you would have seen the loss of all these other supply companies that could no longer tender to the federal government. The Conference Board of Canada's pre-consultation documentation indicated what a significant part of the economy the federal government is in terms of the temporary help industry, and without access to that client, most of these companies would go out of business.

The long-term effect would be that those seven companies would then have retaliatory pricing because they had been forced down in this competition of fear, this bidding in fear. Three years later, the retaliatory pricing would come in and you would see a significant increase in prices.

[Jeremy Ingle]

I'd like to add to that.

During that time, what would have happened? The prices would come down because the bidders would bid prices lower. The wages might have come down or they might not. It depends on how low a wage people would accept. But what would have happened is, because the price had come down, there would a non-supply situation because you could not get a person supplied at the rate quoted. They wouldn't work for the pay rate, because the industry margins are so small. What would happen is what has been happening, actually, funny enough, in the provinces for years: that in order to get a clerk, they'd have to order up a secretary. That would undermine the whole process of purchasing. You don't put in a system that will only work if it has to be cheated.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

I have a very quick question.

[The Chair, Liberal, Diane Marleau]

You'll have another turn, Mr. Proulx.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Fine. We'll come back.

[The Chair, Liberal, Diane Marleau]

Monsieur Nadeau.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you very much, Madam Chair.

Good morning, ladies and gentlemen.

This plan to change procurement methods at Public Works and Government Services Canada came to our attention in June and, from what I've heard, caused a lot of disappointment among the various suppliers concerned. I wanted to verify the government's intentions myself. The document states that the goal is to reduce the $20 billion procurement budget by $2.5 billion; that's one of the reasons given to explain this measure. They want to cut the time needed to conduct a transaction between the government and its suppliers by 50%; they want to reduce administration costs by 10%; they're talking about implementing an independent electronic system for goods and services procurement. One understands from the documents that those are the goals, but what we're also told is that the objective is to increase the chances that small and medium-size businesses will secure a share of the contracts awarded by the federal government, to stimulate the local economy and to give businesses equal opportunities. So it seems to me there are a number of contradictions between the objectives written and expressed.

Mr. Fredette, you're from this region; you do business in both the Outaouais region and in Ottawa. We know that only six percent of federal procurement expenditures are made in the Outaouais, compared to 94% on the Ottawa side. From the standpoint of small and medium-size businesses, what do you understand from the goals expressed, that is to say to stimulate your business, versus the potential effects of the planned measures?

[Alain Fredette]

You're talking about the reverse auction system?

[Richard Nadeau, Bloc, Gatineau, QC]

Among other things, yes.

[Alain Fredette]

With the reverse auction system, we would virtually have had to terminate our relations with the federal government because it would have been impossible to operate that way.

I said earlier that it can take up to three months to train our technicians so that they have thorough knowledge of the products. A photocopier is a complex device. It is a device that scans, faxes, copies and prints. So we need specially trained technicians, who have connectability knowledge. So obtaining a six-month contract — that's what was proposed — that we could have lost at any time would not have been worth the investment. We wouldn't have taken the risk, first of all.

Second, our employees wouldn't have been interested either. How could I have told my employees that I didn't know whether I could still be doing business with the federal government in six months? In those conditions, how could I retain good employees? Definitely not by concealing the truth from them. So have we taken an interest in employee quality? I'm not sure. Currently, we're investing in our labour force by offering training, but am I going to make the investment in order to win a six-month contract? I'm not sure of that either. Are we going to continue offering training on our products or tell our clients that once the photocopier is delivered, the technician will have to do the best he can? That's probably what we would have had to do, eliminate training. That was unthinkable for us.

[Richard Nadeau, Bloc, Gatineau, QC]

So if I understand you correctly, there's a difference between the government's expressed goal of helping small and medium-size businesses and the anticipated impact of these measures on your business.

As regards consultation with a view to proceeding with these changes, Mr. Ingle, I read your document, in which you mentioned that you have had good relations with the government in the past. However, you write that, suddenly, you felt you were being treated as opponents of the new procedure. You were asked for suggestions — not to say demanded — on June 20, and you were given a limited period of time to respond.

In fact, the documents that I have here don't even represent five percent — I stopped printing them because it was a waste of paper — of the documentation on the call for tenders for temporary help services. From an environmental point of view, this is a phenomenal waste — we can come back to that — but think what it represents from an administrative standpoint.

How were you consulted by the government before you learned what the new way of operating would be?

[Meredith Egan]

There were no consultations with our industry.

[Jeremy Ingle]

We wrote and requested a meeting on February 20. We didn't get a reply.

We were asked by departmental officials to submit some information, which we did. We were called to a meeting on June 20, I think it was, where we set out the proposals we had. We were cut short by a gentleman called Mr. David Rota, who said, “Well, that's what your information is, but let me tell you what we're going to do.” He then announced exactly what they were going to propose. He didn't give us the document in detail, but he told us in outline form. They were going to give us a new RFP.

We then asked if we could have some consultation. We were told yes, but we'd have to do it in a hurry. Three days later we were called in. They listened to us for about an hour and a half, and that was the end of that. Five days later, the proposed RFSO was on the street. Anything we'd given to them that day.... There was no notice, no change, nothing. It was a fait accompli.

[Richard Nadeau, Bloc, Gatineau, QC]

We read in the media that the government retained the services of a company called A.T. Kearney and that that corporation was at the origin of this new procedure.

Mr. Ingle, Mr. Egan and perhaps Mr. Fredette and others, were you able to consult the document outlining the new measures that would have to be taken in order to retain your services?

[Meredith Egan]

We were not able to. We actually asked to see that documentation at that June 22 meeting and were told that for competitive reasons it wasn't available. We then went through the access to information process and are still awaiting the documentation.

I believe it's a 30-day turnaround time on a request, and then the department has an option for up to a 120-day extension. But we still haven't seen that particular one. We made a number of ATI requests throughout the course of the summer, but we have not seen that particular request. So we have not seen the documentation yet with respect to A.T. Kearney's proposal, other than the produced RFP.

[The Chair, Liberal, Diane Marleau]

Merci, monsieur Nadeau.

Mr. Kramp.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

Thank you, Madam Chair.

Welcome to all of our guests. Thank you very kindly for coming here today.

To me, this is a great opportunity to build the partnership that is so necessary to work with government and to work with industry. I am pleased that we have a diverse group of interests here, everything from personnel to staffing to capital asset acquisitions. That gives us a bit more of a broad perspective on where we need to go with this. You are, though, by no means unanimous in your assessment of the situation, and we recognize that reality.

Might I say off the bat that I am encouraged? We're not sitting at “Hell, damn it, where do we go from here?” We're really sitting at a level of understanding, at least, and I notice a level of willingness that has been expressed by many of the participants here that the government is willing to listen. To me, no one learns unless they listen. Governments have made mistakes in the past. Governments have often made wonderful decisions, just as we have in business and in life.

I notice there is willingness to listen, and you have expressed an acknowledgement that there is definitely a willingness to consult. As we have seen from the reversal of the reverse option, we have also a demonstrated willingness to act.

Maybe we're not where we need to go totally with this entire perspective, but I'm really encouraged that this government in particular, without any reflection on any other governments, is at least recognizing that we have a problem. Can we make a better road map down the road for our future for all of us, both for the industries and for the government? At least we're not at loggerheads, but there are still some difficulties. I noticed, in particular, that the government has asked for suggestions in the consultation process, and I am very, very thankful.

I see in the presentation from the Furniture Task Group here today that they came forward with a suggestion and a concern regarding the mandatory standing offers. I didn't like this, but the government, obviously, through their departments can digest and evaluate, can see if this makes sense from both sides.

My question is to Mr. Ingle. You have voiced a number of concerns. I know the government is totally relying...well, not totally relying, but relying to a great deal on many of the services that your organization uses. So we are looking for a “win-win” out of this as well.

The government is mandated to secure savings. I think we all recognize that. The bottom line is there will be savings. There is no such thing as a painless road to progress, but we're certainly not looking at and I don't think the industry is looking at tossing the baby out with the bathwater, per se.

I'm looking for ways to address your concerns, and I wonder if you could possibly give some suggestions to this committee as to actions and/or deliberations that the government could entertain to address some of your concerns as well.

[Jeremy Ingle]

The first thing we think should be addressed is the fact that any suggestions that have been made so far institute a system that is not conducive to the supply of services, and particularly the supply of the services of people, because people are very complex, as you well know. We have a system in place that works exceptionally well. Unfortunately, because of some oversights in the way it's actually been managed, there have been some difficulties with it, because the system has been inflated by companies getting onto our standing offer and supplying not genuine temporary help services. So it's inflated our whole business and makes it look totally wrong. That's the first thing. We should remove that part of it, get back to what our industry does, which is supply basic temporary help.

We should keep the flexibility of being able to move the prices in accordance with the marketplace, because the federal government, believe it or not, has to compete in the marketplace, and the marketplace for good people in Canada is diminishing, whether anybody likes it or not. We've got a really bad problem in western Canada, and that's not going to go away here either. So anybody who's actually worked in government realizes how difficult it is to get these people. We've got to supply them. So we should use the existing system; we should limit the way the prices are allowed to fluctuate.

We have a very quick system of being able to get people. There's talk about reducing the time of service, the service time, the procurement time. Our procurement times are probably the shortest of any commodity or any service that anybody ever buys. We get two hours' notice.

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

I understand where you're going. Are you suggesting, though, that the status quo is fine?

[Jeremy Ingle]

No, I'm not suggesting the status quo is fine. I think what we've got basically should be fixed up, and I think there are a number of different ways. I won't bore you with the complexities of doing it, but I think we should sit down and say okay, we've got a system that we developed, and basically it's excellent--how can we make it better for the government, who is our client?

[Daryl Kramp, Conservative, Prince Edward—Hastings, ON]

I hear you, and I thank you for that, but could I make a suggestion? Obviously this will go to a consultative process with the government, your recommendation about dealing directly with the government. But what I might also suggest is that the recommendations you might consider to be valuable, that could add value-added to both yourself and to the government on this, you could possibly present to this committee. I think that might be a good suggestion going forward.