Government Operations Committee on June 17th, 2008

[Jeff Lynt]

Well, my company is at risk of closure, so potentially all the employees, myself included, would be looking for new employment. I would hope that somehow I could find a way around that. But no doubt a certain number of my employees would be affected. It's pretty much as simple as that. We may potentially be bought up by a large company, but no doubt the families would be downsized.

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

If I may, what would be the possibilities...?

Madam Chair.

[The Chair, Liberal, Diane Marleau]

Yes, sir?

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

I would hope that the parliamentary secretary to the minister would be kind enough to listen to our witnesses. I don't mind if he doesn't want to listen to me, but I think it's important for him to listen to the answers.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Thank you, Marcel...[Inaudible--Editor]

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

I appreciate that, James.

Mr. Lynt, what would be the possibilities for these employees let go by your firm to find employment within these two, three, or four larger companies that would have all of the contracts across Canada?

[Jeff Lynt]

I can't answer that directly. I know that ultimately my employees would not be the only ones affected. There would be a tremendous number of companies that would be affected, all potentially hitting the street. So there is no doubt, as I said in the previous response, that if they did find work, their families would be downsized, incomes would be reduced, and there's obviously no guarantee that they would find work in the same sector. In fact, I have many people who are involved in running my business who are not even related to IT. I have support staff, and we're not even mentioning the other individuals who support my company just in general services that I purchase through other local companies.

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

Thank you.

Mr. O'Neil, I listened to your presentation with much interest. I have a very simple question to ask you. Although this bundling process has not necessarily been put into place as we speak, this committee heard the testimony of a company owner, a gentleman by the name of Donald Powell, who owns a company identified as TPG Technology Consulting Limited.

I don't know if you're aware of Mr. Powell's testimony in front of this committee on June 10, but Mr. Powell was relating a situation about a bid in which he had been told unofficially that he would be the lowest bidder, so he could expect to have this contract. He alleges and argues that within the department there were—let me call them—funny games played, and somehow, miraculously, following a suite of coincidences, an employee was removed from the department and another employee decided there was going to be a reconsideration. The points worked out for the assessment of the bids somehow would have been modified, and as a result his company did not get the contract, but rather it went to CGI.

Are you under the impression that even though this bundling process has not started, the department, under the direction of the present government, has already started putting into place these much larger contracts?

[Mike O'Neil]

Yes, basically. We've gone through a request for information process driven by PWGSC, which closed in mid-February. The activity that kick-started us was on June 6, when we received an update on MERX stating that the government would be proceeding with this RFP in the fall and that it was a very high-level assessment of what they might be changing for the RFP, based on feedback from the industry. The one thing was that they would award points to prospective bidders for having a strategic plan to engage SMEs as subcontractors.

As we have said in our speeches, we win 65% to 70% of the competitive bids in the federal government today by bidding against the same large integrators that are going to be the only ones capable of bidding on this contract. This is a billion-dollar opportunity annually, in four pillars. The first one is on the street in the fall, if it's allowed to proceed, and that's network services.

We have engaged the support of several other organizations in the last couple of days, in particular the Canadian Advanced Technology Alliance, CATA, the Canadian Federation of Independent Business, as well as the software product association, the Canadian Information Technology Providers Association, or CITPA.

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

Thank you. I'm running out of time. I'll have to come back later on, but am I right to understand from your comments that this doesn't pass the smell test?

[The Chair, Liberal, Diane Marleau]

Mr. Proulx, you have run out of time.

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

Thank you. I'll be back.

[The Chair, Liberal, Diane Marleau]

Ms. Bourgeois.

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

Thank you, Madam Chair.

Good day, gentlemen, and thank you for joining us. I have to confess that I am a little puzzled by the situation that you have described to us this morning.

First of all, how did you learn that you were being shut out of the contract bidding process?

[Mike O'Neil]

The first we learned of it was when we were made aware of the request for information documents that were put onto the electronic bidding system last December, and it's basically a draft RFP, a request for proposal, where they're soliciting feedback from the industry. It was fairly evident in that draft RFP that only large integrators would be able to bid for this opportunity because of the nature of the projects that would be used as project references.

As far as consultation with the SME sector is concerned, I have it on good authority that CATA was never consulted. CFIB was never consulted, and obviously we were never consulted through an industry consultation process to determine what may be the best way to deliver these prospective shared services.

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

That's why I find your statement this morning rather odd. On November 9, 2006, Minister Michael Fortier appeared before this committee and told us that six new regional offices for SMEs had been opened. Apparently, there are even offices here in the Outaouais.

Have you done business with these regional offices or has someone from these offices been in touch with you?

[Mike O'Neil]

As chair of CABiNET, we have ongoing consultations with Public Works procurement. In particular, over the last two years, we've been involved in consultations on two new supply chain task-based contracts—with task-based meaning obtaining professional services resources—which have just been delayed. The first one was just released in April; it's called the task-based informatics professional services contract, TBIPS. The second is still to be awarded, and it's for solutions-based informatics professional services. That industry consultation took one and a half to two years.

As far as shared services are concerned, they would not be available at a regional office level, I would think. We were never approached as to how shared services were supposed to happen. The first indication that it was happening was when we attended a breakfast sponsored by the Ottawa Centre for Research and Innovation in March, where Mr. Poole was the guest speaker. He outlined in his speech exactly how things were going to be delivered. That's when we became concerned.

Jeff, do you have anything else to add?

[Jeff Lynt]

I just wanted to add that we also attended a presentation that was put on by Marshall Moffat at the Canadian Management Centre. We were bewildered to learn that in fact the gentleman would be retiring in six months. Really, he was then a bit of a lame duck from our perspective. We've never really been consulted by him on any matter related to SMEs.

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

I'm sorry, but we do not have a lot of time, so I would appreciate it if you could keep your answers brief.

If I understand correctly, you were not consulted or informed that a restructuring was under way. You heard about this from Mr. Poole. Correct?

[Mike O'Neil]

Yes, we were aware of the shared services and issues. We were not aware that they were going to do contract bundling of all professional services and software products under one contract to be awarded to one winner.

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

How do people win a bid? You mentioned a points system. Large businesses can win extra points if they do business with small companies like yours. Is this the normal way of doing business in this environment?

[Mike O'Neil]

In cases where you have a huge requirement.... Again, we're not opposed to shared services in the context of consolidating networks and data centres; what we are opposed to is the professional services and the software products being provided to support those shared services all being bundled into one contract, with the winner taking all. The only people who can bid on that in this environment are two to three large integrators that have a presence here in Ottawa, and obviously they are international companies.

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

I have another question. What fascinates me is that PWGSC seems to want to award IT contracts for a period of 15 to 20 years, at a time when the IT environment is changing every three to five years. Don't you find that rather odd?

[Mike O'Neil]

Somewhat, yes. I mean, according to the reasons they have given us, it's not because of cost savings, as far as we're concerned; it's not because they're supporting SMEs, as far as we're concerned; and it's not consistent with the rules of good governance.

It's probably because they have a concept that bigger is better and they'll get things done with one contract or with one “partner” over the next 20 years. We've seen how large IT contracts have proceeded in the federal government. Historically, they've failed. They've been unmanageable, they've had cost overruns, and they've delivered very little on what they were originally required to do for the federal government and their clients.

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

Getting back to this famous Mr. Poole whose name has already been mentioned by various witnesses who have appeared, I'd like to know how long Mr. Poole has been doing business with SMEs like yours. How long have you been doing business with him? Is he new to the department? It seems that before he arrived on the scene, things were working well but now, that's not the case.