Government Operations Committee on June 8th, 2006

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

But they spent some time looking for the answer.

[Michael Fortier]

Can I respond? I think I know what the question was.

[The Chair, Liberal, Diane Marleau]

I think that's fine. You'll have lots of time to respond.

Madame Thibault.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Madam Chair.

Mr. Fortier, thank you for being here with us. Thanks as well to Mr. Marshall and all the senior officials who are with him.

As you undoubtedly know, we are quite pleased to be able to ask you questions. Since this isn't a question period, I'm sure we all hope to get some answers.

My first question, to which you referred in your address, concerns the fact that, for a number of years now, Public Works has been trying to find ways to innovate and achieve savings. Over the next hour and a half, my colleague and I will be able to ask you questions, mainly about supply, real property management and risk management in information technology, among other things. Here we're talking about better potential innovations for your department.

The previous government said it wanted to save a few billion dollars by grouping government purchases together. As you've already said, the idea for you is to optimize purchases in order to achieve your objective, lower prices.

First, I'd like to know whether your objective is the same.

Second, I'd like to know whether you're motivated by a sense of fairness towards the regions. By that, I don't mean you should buy in Manitoba if that means paying three times the price. However, I'd like you to tell me whether, when your department tries to get the best possible price, it will keep in mind the cross-Canada reality, that is to say that businesses are established right across the country. As you know, this is a very important issue for the survival of certain regions. If this is indeed an objective of your department, how will it manage it?

Lastly, I'd like to know approximately how purchases are allocated by province, in Quebec, and by subregion, if you're willing.

[Michael Fortier]

I'll answer your questions in the order in which you've asked them, if you see no objection to that.

I believe in savings. One program began under the aegis of the last government, but I don't think this is a partisan issue. When the State spends this much money annually, anyone in my place would try to find ways of saving money.

We spend colossal amounts, and that's entirely normal, because we support all the departments.

However, I want to reassure you: We are committed to making substantial savings. I refer you to Mr. Flaherty's budget, which clearly states that our department expects supply savings of nearly $2.5 billion over five years. Those savings are already set out in Mr. Flaherty's budget. I believe we must make these efforts on behalf of taxpayers.

Your second question, which concerns regionalization, is a good question. It refers to the principle of balance between getting the best possible price and a quasi-industrial policy to permit or encourage the growth of small and medium enterprises across the country.

As a result of the creation of the Office of Small and Medium Enterprises, if we as a department do our work right, there will be, in the coming years, more smaller businesses in the regions entering into contracts with the Government of Canada.

Small and medium enterprises currently contribute 43 per cent of Canada's gross domestic product. I don't have the exact figures. It's a bit complicated because Public Works and Government Services Canada is not entirely responsible for all government acquisitions. However, I would say that, as government suppliers, small and medium enterprises probably don't win more than 30 per cent of the value of government contracts. There's already a major gap between what actually exists in the economy and government supply.

I hope that, over the next few years, we'll be able to tip the balance in favour of small and medium enterprises. I believe that, since they are located in large part in Canada's regions, the SMEs will indirectly increase the share of the regions.

We're proceeding with regional calls for tenders for the purchase of certain goods. Ms. Thibault, the senior officials present here will forward much more accurate information to you, today or later, on each of those regional calls for tenders.

As for your last question, which concerned the breakdown of purchases by region, I don't have any information, but I remember previously having it.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Minister, I consider this issue very important. Like some of my colleagues, I've previously played the role of municipal councillor in my community. When we accounted to the public every month for our purchases and actions, citizens saw that 80 per cent, for example, of the goods we had purchased were local. People said those purchases created jobs at home, and so on. You shouldn't buy at just any price, but this is a highly motivating factor.

We've received the document on the next stages at our offices. If you sent it with a strategic purpose in mind, I congratulate you. We received it at 7:30, and we were here at 8 o'clock. That's extraordinary.

Do you have a concern related to your green program. Are you keeping that concern in mind to ensure that suppliers—that supply goods or services to Canadians—also have green policies in order to produce goods as green as possible? Do you require that respect for a sustainable environment be taken into account, both when buying a good from a private sector supplier and when you acquire the product internally, on the hill or elsewhere, for example when you install a green roof? Do you set that requirement for suppliers?

[Michael Fortier]

Yes, a policy has applied to all supply contracts since April 1 of this year. Instructions have been given to our professionals.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Minister, how are you going to measure progress? What performance measure have you established to ensure, without sending the police everywhere, that these people comply with the criteria you've set?

[Michael Fortier]

I'll let Mr. Bennett answer that question.

[Ian Bennett]

Yes, exactement.

Madam Chair, what we have tried to do as a department is to look at greening opportunities in all our areas, including real property, which is obviously the operation of our buildings, but also specifically with respect to the acquisition function. As the minister was saying, we include that in all of our major commodity strategies.

The performance measures that we would include are quite specific. For example, in the area of office paper, we have very stringent performance measures that they must comply with, in terms of the highest environmental standards. Similarly, we have very standard specifications for printers—which are a major procurement, and which have a very significant ecological and greening impact, as you can all imagine. So we track with—

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Are they available? I assume we can ask you for them if we want to know them?

[Ian Bennett]

That's correct.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Do I have any time left?

[The Chair, Liberal, Diane Marleau]

Unfortunately, that's all.

Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Madam Chair.

Welcome, Minister, and everyone.

A few weeks ago I met with my local chamber of commerce and other business organizations in the city of Burlington, the riding that I represent. I talked about the office's small and medium enterprises. I don't think they were terribly convinced that it's going to work for them.

So my questions are twofold on that particular office, which I think is a great opportunity. What's the department doing in terms of marketing and making sure that small business understands what the opportunities are?

My second question in the same area is in terms of performance evaluation. How are you going to evaluate whether the office has been effective? What criteria are you using for that?

[Michael Fortier]

Thank you for the question.

I'm not surprised people are skeptical about this effort. I understand that the small and medium business community and the industry have been lobbying Ottawa for several years. It's not a partisan thing; they've been around here, and they've noted something that anybody, really, could have observed: if you're trying to do business with the Government of Canada and you're provided with an 80-page RFP with links to various websites that have other criteria for the supply of desks, and if you're a small company with six or seven people in the head office who are doing all sorts of other functions, you don't have time to go through all this, while the bigger guys can have staff totally devoted and dedicated to understanding how to do business with us--so there's an imbalance in terms of the competitive environment.

The first part of what we need to do was the easiest. It was to announce this. That was the easy part: you announce this and say we're going to do this. The really tough part, where the rubber meets the road, is exactly what you said: how are you going to measure this and how are you going to bring these people to the table?

I think we're going to bring small and medium business people to the table by doing a number of things. Among those things, we need to simplify the rules. Rather than face 80-page RFPs, they have to face 12-page RFPs. Rather than facing 25-page RFPs, they should be facing 8-page RFPs.

Right now in Mr. Marshall's department, a review is going on of what has been built of standard clauses over decades. A clause becomes a standard clause because there was a case, and somebody said you have to put this clause in or the Supreme Court will reverse this in some other case. Finally, you end up with a million of these standard clauses. The fact of the matter is, when small business owners go into our system and read the RFPs, they're confused and discouraged after the first four pages, so they just chuck the thing and don't move on, and that's sad. It's sad because we lose.

As I said earlier, normally the more people we have at the table--and I think this was your comment--the better the prices we'll have.

More importantly, small and medium business enterprises in this country have always been very creative and very innovative, but we're closing ourselves off from this wonderful basket of innovation and creativity. We can't allow this to continue; hence, the Office of Small and Medium Business Enterprises is out there to help these folks do business with us. While that's happening, Mr. Marshall's department is looking at all these RFPs, taking out the mumbo-jumbo that doesn't need to be there anymore, and facilitating the MERX system.

In a small shop in Truro or in your riding in Burlington, when somebody who is, let's say, a supplier of microphones or some sort of a technology goes on the system, they click on technology and can immediately see what's on offer. They double-click on the stuff that interests them and within a reasonable time--not four hours, but perhaps half an hour--they know what's on offer and what the conditions of offer are, and that's really critical.

[Mike Wallace, Conservative, Burlington, ON]

Do I have more time?

[The Chair, Liberal, Diane Marleau]

Yes.

[Mike Wallace, Conservative, Burlington, ON]

I used to sell to the Government of Canada and the provincial government. I was on commission and I always loved February, because lots got bought, as long as it was delivered by the first of the month. As a citizen, I didn't think it was necessarily the appropriate way to do business, but as a commissioned sales rep, I didn't mind; you've got to take advantage of what's there.

It's been a few years since I've done that.

[A voice]

Did you inhale?

[Mike Wallace, Conservative, Burlington, ON]

Sorry, that's a Liberal thing.

Has there been any change to that procurement process? What's the vision for Public Works on that? Is there a way we can avoid the we've-got-it-so-we-need-to-spend-it approach?

[Michael Fortier]

I'm not aware of that actually happening on a large scale. What we're trying to do now with this new system Mr. Marshall is implementing is that we have 34 large standing offers that'll be implemented over the next six to nine months. We want to make sure.... For example, when we're buying cars, we realize that if you buy cars in a certain quarter of the year, you'll have more options for free than if you buy them in a different quarter. As the lots are full of cars and the inventories go up, they'll obviously be interested in selling cars. Folks at Public Works are taking a hard look at it from that end.

In terms of people piling up at the end of February to get stuff in by early March, I'll let you answer, David. Maybe it's only in Burlington.

[David Marshall]

Thank you, Minister.

I think Madame Chair is probably familiar with this phenomenon, having been involved with Public Works.

What happens is that departments are very conscious of not overspending their appropriation, so they try to be cautious and allow some headroom. Then, as they get toward the end of the year, they find they have some extra money, and they tend to buy goods that can be purchased, such as computers, cars, and so on.

[Mike Wallace, Conservative, Burlington, ON]

I was selling cabinets.

[David Marshall]

Cabinets, furniture, yes....

At that point it's very hard to negotiate a good price, because you want delivery very quickly. This does not give good value to the government.

So we did two things, as Minister Fortier pointed out. We are putting in a procurement system called the Government of Canada marketplace. It allows people to buy throughout the year, but it also allows us to track procurement behaviour. If we look over two years or three years and discover you're buying an average of 5,000 computers a year, let's not pile it up at the year-end. Let's guarantee you're going to buy a certain number and get you a good price; then you can draw down through the year. We are smoothing out that bulge. I think it will be very valuable.