Government Operations Committee on April 23rd, 2009

[Linda Oliver]

We can bring representatives from small business, but the issue we were discussing today is not a small business issue. The issue is that some companies, some staff augmentation firms, have approached you and said to you that they will be shut out, and that therefore small businesses are shut out. In order for you to understand exactly what's happening in this industry, you needed to hear what the ecosystem is and how businesses work together. Is this really a small business issue? In my view, it is not. It's not a small business issue, because small businesses are indeed contracting with government.

If you look at the amount of money the government spends in professional services, you'll see that the majority of contracts are to staff augmentation firms; they are not to consulting firms. In this area we're pleased that the Government of Canada is looking at consolidation, at ways of using technology to be more effective, and at using that investment to be innovative.

That's the reason we thought it would be more beneficial for you to hear what these companies are, how they can operate, and how it impacts small business. Indeed, the two gentlemen have explained that they use small business to a great extent in their contracts.

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

Thank you, Madam.

[Louis Savoie]

Madam, allow me to add a comment to what Ms. Oliver has just mentioned. I am the President of the Public Sector Business Committee—whose French name I cannot recall right now. The way this committee operates is completely transparent. When we have the opportunity to work with the federal government, all of our members are invited. We have a distribution list and relay everything that we do and discuss to our members. All members are invited to attend the meetings of the subcommittees to discuss shared services, the business communication network of the government, or any other subject, before ITAC tables its submission to the government.

Members of our association attend the meetings because they have an interest in the proceedings. If they do not participate, it is because they do not have any interest. I can assure you that all of our members are aware of our activities and are invited to all of our meetings. Our process is totally transparent. I have been involved with ITAC, as has my colleague Hicham. If there are representatives from major corporations who are with us today, it is because they can afford to invest their time and resources to support the association, whereas a small or medium business has fewer resources to do so.

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

I understand very well, sir, and I thank you for that reminder.

Specifically regarding CGI and Bell Canada, you say that you call on SMEs in the regions, and that small and medium businesses will not lose their share of the market if you obtain contracts from the government. On the other hand, you also state that you have a certain number of employees in the National Capital Region.

If you obtain large contracts, worth somewhere in the order of $1 billion per year for the next 20 years, for a total of $20 billion, you must hire additional employees. Yet, your employees are already very busy. I believe that CGI employs 1,000 people in the National Capital Region. If you are awarded a large contract, you will need to hire additional staff. Where will they come from exactly, will they come from small and medium businesses in the surrounding area?

[Hicham Adra]

Merci, Madame. If I may, I will answer in English.

We're proud of our success. I still believe that we are a company that still acts like a small company in many ways, being entrepreneurial. Entrepreneurship is one of our core values. We are still growing. We compete on an international scale. Some of our competitors are ten times our size, so on an international scale we're still that company that's working hard.

You asked me a good question in terms of the region and how we grow. We would obviously deliver the business in Canada, so it could be in the region or in other parts of Canada. Today, we are obviously a major provider to Government of Canada services. To my colleague Louis' earlier analogy, I may be already selling my client four or five cars. I may end up really selling my client two or three cars, if they spend less. I may gain or lose in terms of spending, because many of these departments today are already my clients directly. If they become a client of Public Works, and Public Works then subcontracts some of that work to me or whatever, I may be getting less business or more business. The question, really, is whether it's still the right thing to do from a taxpayer perspective or from a government perspective.

To your question about how we manage resources, yes, we do leverage those centres of excellence. Those centres are built to deliver a service, so they're not necessarily always utilized to the maximum. We do act as a provider to many clients. Somebody may be 60% busy. We use 40% of that person's time to manage another client and so on, because that person could be working for multiple clients. That's how our clients get value and efficiency out of us.

We do work with small companies and large companies. That's how we grow and build. Again, we still believe there's room to grow those companies. However, if we do not do work and do projects as a country, those companies would not develop skills and capabilities that they can leverage. I don't think anyone would say that if you're going to go build a building, you would hire me personally with my own hammer to come and build a building. You would hire a general contractor, potentially, who would work with firms large and small, and that person would act as the integrator and would provide a service.

[The Chair, Liberal, Derek Lee]

Thank you.

Mr. Gourde, you have eight minutes.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you very much, Mr. Chair.

Thank you, witnesses, for being here today. My question is addressed to all of the witnesses. You may take your turn in answering it.

Just how well does the Information Technology Association of Canada understand the current approach used by the Government of Canada in terms of shared information technology services and the government's enterprise network services? In your opinion, what role can the association play to help the government to push this initiative forward?

[Louis Savoie]

Good afternoon, sir. Thank you for your question.

The projects being discussed today have been in the planning for the last three years. Our association facilitates effective exchanges between industry and the government of Canada. We attempt to get a unified perspective from the industry, which is not always the case, but everyone has the right to be heard. We endeavour to make this unified perspective known to stakeholders from PWGSC, so as to foster the exchange of information and the identification of problems, potential solutions, and so on and so forth. In the weeks and months ahead, we will be pleased to continue collaborating with the various departments in order to advance these projects.

Ultimately, we believe that it is possible to improve the effectiveness of government operations, and that the chosen or discussed track is the right one, and that it will not have a significant impact. You are well aware that baby-boomers are preparing for retirement. Our association estimates an impending shortfall of 90,000 skilled IT workers in the near future. I have a hard time believing that there will be a lack of jobs or business opportunities for anyone in the industry.

We are anticipating this problem and believe that it is urgent to improve how things are done now in order to prevent a shortfall of technology and systems workers in the years ahead. Our association worked with government and is ready and willing to make sure there is ongoing cooperation to meet needs, and find solutions to problems that are being experience by SMEs, or others.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

To your mind, does the government consult industry effectively under these IT procurement initiatives?

[Linda Oliver]

Merci, monsieur.

Yes, we are very active with the federal government in terms of day-to-day consultations. We offer our views, either solicited or unsolicited, on all of the projects the government has, and indeed we have a program where we have been advocating for the last few years for a national ICT strategy.

We find that the government is now poised...I guess because all the members of government these days are somewhat younger and they know more about technology. They seem to be more interested and more focused on leveraging ICT in Canada as an enabler in terms of leadership and competition for competitiveness for Canada.

We are very involved in the consultation process. We take advantage every time the department has any type of offering, where they offer the private sector to consult. We've also worked on many of the projects for professional services for temporary help, by helping government to design the model.

We find that the people we work with in Public Works and Government Services are very open to dealing with the private sector. They have us in, they hear what we say; we don't always get what we want, but they're very fair and they listen to us. So we're happy about that, and we're hopeful that this will continue.

We do have key messages for the government in terms of an ICT strategy. Part of it is procurement, but also it's government as a model user and government being more efficient and using technology, particularly at a time when there is a downturn in the economy. This is the time to invest in ICT infrastructure in government so that when we come out of the recession, we are going to be more competitive. Other jurisdictions in the world are doing that.

This is the kind of advice we give when we're asked to consult.

[Louis Savoie]

To follow up on Linda's comments, I would say that the government has improved how it consults industry in the case of projects it wants to see move ahead. That is obvious. There has been a lot of improvement on that front, as well as increased transparency. We invited several experienced government managers to come and speak to our members and people from the industry about what they do and think, and what direction they will be going in. We are trying to set up that communication. It is a two-way street. I am increasingly satisfied in that respect.

I can tell you, nonetheless, that the industry hopes to see things improve. As I mentioned earlier, this project has been discussed for three years, but at some point, a decision has to be made to either go ahead, or to suspend it indefinitely .

Our company responded to three separate calls for expressions of interest, and calls for proposals. This takes up our resources, and things do not move forward. That is the real problem. It goes without saying that we want consultation. But be it regarding the Government Enterprise Network Services or any other project, we want to see the procurement process reach its conclusion, or the decision to not go ahead be taken. Either way, we want decisions to be taken more quickly.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Do you believe that procurement instruments like the Task-Based Informatics Professional Services are meeting the needs of SMEs that provide information technology services?

[Louis Savoie]

Yes, absolutely. I do not have the statistics on hand, but during a past meeting of this very committee, I did hear that the volume of business between SMEs and the government continues to increase.

Of the procurement tools that have been implemented, I am aware of the TBITS, the Task-Based Informatics Professional Services, the Informatics Professional Services Prices Index, and another tool focused on solutions recently implemented. These tools simplify departmental procurement procedures and enable SMEs, as well as all other companies working in this field to answer the calls for proposals. In short, I believe that these tools help meet the needs of government and allow SMEs to help further government projects.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you.

[The Chair, Liberal, Derek Lee]

Mr. Martin, for eight minutes.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Mr. Chair. Thank you, witnesses.

If I could perhaps begin with the notion that Martha Hall Findlay introduced, which I think sets the tone for us quite well, she pointed out that we want the best value for taxpayers, etc., to accomplish the objective we have in mind. But government is not like the private sector; we may well have secondary objectives that we seek to achieve as well. So it's not quite as plain and simple as a client in the private sector. One of those objectives is to grow the IT sector, or whatever industry sector we're dealing with.

I note that CGI started out as a very small enterprise and is now something we're all very proud of, with 25,000 employees. But we want 10 more of those enterprises, and if we don't start feeding some of the work to the SMEs in that sector, they're never going to grow to become the international stories you are.

There is the Wal-Mart effect. When Wal-Mart comes into a community, all of the mom and pop shops close. That's not to our advantage, as monopolies lead to inefficiencies—not money savings. That's really the premise of why we're meeting here today, and you are our first witnesses, so you are getting the brunt of that tone.

But let me ask a question first of CGI. You have 25,000 employees in Canada and across the world. How many of them are actually in Canada?

[Hicham Adra]

Thank you for your question.

I do share your hope and objective of building more champions in Canada that could compete across the world.

I will directly answer your question about the number of employees. We have 16,000 employees in Canada, and in Ontario alone we have about 5,000 employees. The average salary is $80,000, so these are significant jobs. You will see there's a good multiplier from the kind of work we do. StatsCan says the multiplier is .84 from ICT jobs, which is higher than other industries.

To your question about building companies, it's something I'm personally passionate about. I started with a small firm and we grew, but we did not grow because our clients did staff augmentation; we grew by doing projects. If I were a small company today in front of you, a true small company, I would ask you to do projects. Do not do staff augmentation. It does not build value; there is no IP, etc. That's how to do it, by doing projects.

[Pat Martin, NDP, Winnipeg Centre, MB]

You made that point quite capably.

I'm looking at an article from the Ottawa Citizen in 2006 by Kathryn May—whose research you can always trust, because it's always accurate, and who is here with us today, in fact—which says that small businesses now have about 30% of the government procurement work. Mr. Fortier, the former Minister of Public Works promised the SME sector that it would be awarded 40% of government contracts.

The big companies already have 70% and the initiative of this government is to make that into 60%. I don't think anybody is contemplating shutting out the major players. They're simply trying to point a little bit more towards the little guys, so they can grow their businesses, hopefully into the big ones.

I have very little time and I'm just going to jump to another point. One of the points you made, Mr. Adra, is that a single network reduces access points, etc. But we've been seeing in the private sector that size doesn't guarantee security in any way.

What was that company that had the Winners stores?

[Hicham Adra]

TJX.

[Pat Martin, NDP, Winnipeg Centre, MB]

Yes, TJX. That was a catastrophe. CIBC also suffered catastrophic breaches, which take place, no matter the size the network, I would just point out.

[Hicham Adra]

If I may comment on your question about the percentage shares, I don't know how those numbers are measured, whether they are measured in terms of direct business obtained by those companies or whether they also include revenues derived from the other firms. But I have to tell you—

[Pat Martin, NDP, Winnipeg Centre, MB]

Right. That was a promise Michael Fortier made to the SME sector when this government was first created.

[Hicham Adra]

I can speak about our industry, though. We are a large employer of IT people in this country, but are second largest behind you as the Government of Canada. You employ many more people than we do. Again, if you do projects, that work will get out there, and small and big companies can do it. If that work does not happen and we don't invest and we don't...[Technical difficulty--Editor]...we will lose our position in the world, and then small and large companies will suffer.

[Pat Martin, NDP, Winnipeg Centre, MB]

It reminds me of the point I was going to open with. Not all of us are convinced that contracting this work out is the best thing.

Yesterday we were reminded of the ridiculous spending in the private sector for the gun registry--$1.2 billion to create a database that I can buy at Future Shop for $169 off the shelf.

That was the private sector in a catastrophic waste of money that we could have done with our own talented in-house people for one one-hundredth of the cost.

I am no big fan of contracting out, period, but we are past that argument now. We are talking about how we are going to contract it out, not if.

How am I doing for time?

[The Chair, Liberal, Derek Lee]

You're doing great. Do you happen to have the telephone number of Future Shop?

You have a couple of minutes left.