Government Operations Committee on April 30th, 2009

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

Thank you very much, Mr. Chairman.

My question is addressed to Ms. saint pierre.

It would seem that it is difficult for SMEs to deal with the federal government, often because of a lack of personnel or information. Is there something your department, Public Works and Government Services Canada, could do to assist these SMEs? In terms of calls for tenders, is there a structure in place to help them get through the process?

[Liliane saint pierre]

Thank you.

The answer to that question is yes. There is, in fact, a structure in place. There are a number of avenues open to small and medium enterprises. Of course, we always want to do more. We talked about the role and mandate of the Office of Small and Medium Enterprises, where staff are dedicated exclusively to assisting SMEs. That assistance and these points of contact are not only part of the procurement process. On the contrary, it is available right from the outset either in person, through the websites or at information sessions. The amount of contact with SMEs has grown considerably. In the last year, there were more than 18,000 separate interactions with SMEs, either individuals or several people together.

I also want to stress that, within our processes, we are making increasing use of letters of interest. We publish our statements of work in advance; we let SMEs know about our future requirements. This gives not only small and medium enterprises, but all businesses or individual suppliers an opportunity to ask questions. Because there are points of contact; they have direct access. They can get in touch with us verbally or in writing. Our goal is to be accessible to all businesses; however, at the same time, some of our initiatives are specifically aimed at SMEs.

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

As I understand it, letters of intent are used primarily for services or goods that the government will be requiring in six months, a year or two years later. SMEs receiving these letters can then adjust their production or purchase certain equipment in order to be in a position to bid. Unless they do that subsequently. Is there is a time lag between the two?

[Liliane saint pierre]

Letters of interest indicate that the government is expecting to have certain requirements and that there are opportunities there. It allows businesses to decide, with respect to the specific product or service, that it might be a good idea to position themselves. In fact, if it is a very important product that a business can only partially provide, it may want to position itself with suppliers who are able to supply the complete product.

Let me give you an example. Recently, we issued a large long-term contract for the production of military clothing. The request was disseminated through the MERX system, but there are obviously not 200 companies in Canada that specialize in that line of business. In any case, it attracts their interest and gives businesses only able to provide some of the components an opportunity to get together with other companies to make a joint bid.

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

That is very interesting. I believe the basic principle that Public Works operates on is openness, as you have just demonstrated with respect to the services and products the government wants to purchase. Transparency and equity are also part of the equation.

After the process is completed, if a business feels that it has not been treated fairly in the tender process, can it go to court or ask the Canadian International Trade Tribunal to review it? Could you give us some statistics about the number of challenges in the 2007-08 fiscal year?

[Liliane saint pierre]

A business has a number of options when it believes there has been a glitch in the process. If the purchase is subject to the Free Trade Agreement — such as NAFTA and particularly the Agreement on Internal Trade here in Canada; those are the two that are best known — businesses can appeal or file an application with the Canadian Tribunal.

In recent years, the number of such cases has really been minimal. At the same time, we would obviously like for all processes to be perfect.

We carry out some 60,000 transactions each year, including 40,000 contracts. The others are amendments or simply other techniques. Of those 40,000 contracts, I unfortunately am not able to tell you exactly how many are subject to free trade agreements, but the vast majority of them are.

When we appeared the last time, we provided you with some statistics, including one that I would like to reiterate. In 2007-08—it may have been the calendar year—80 companies filed a complaint with the Canadian Tribunal. Fifty-nine complaints were not even considered at the outset. At the end of the process, eight were considered and four were deemed to be valid.

In statistical terms, that is a very low percentage. Even so, our goal is to have an open, fair and transparent process. The ultimate goal would be for there to be no complaints whatsoever.

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

As you just said, the goals are commendable: transparency, equity and openness. In this whole process, do you have any structure in place to help businesses and provide them with the necessary support? You talked about trade, and so on. If businesses want to ask questions, is there a mechanism whereby they can do so?

[Liliane saint pierre]

Yes, there is. I would like to ask Ms. Miller to provide additional details with respect to those activities. I must say that, in terms of structures, the Department of Public Works has an important role to play, but our colleagues in other organizations—and last year, you had a presentation from senior officials at the Canadian Tribunal—also have a structure in place to keep people informed, should problems arise. Because there are a number of players and various doors people can knock on, there are a number of people available to provide support, when needed.

Ms. Miller.

[Shereen Miller]

It is important to remember, first of all, that we have a toll-free line that people can call to get answers that do not deal specifically with competitions. This is a way of helping people to navigate in the system and understand how to properly manage the process. After that, they can be briefed by procurement officers who have led the process, in order to find out why the result was what it was. As a general rule, successful bidders are not the ones that complain. Those that are unsuccessful are able to request a briefing.

On supplier debriefing, we at OSME, in cooperation with the Office of the Procurement Ombudsman, have recently posted on the website a reminder to all suppliers and procurement officers about the policy on supplier debrief. When a supplier seeks to have a supplier debriefing they can have one, and they are entitled to receive as much information as possible, given trade restrictions. But even if you can't give the specifics of certain elements, you can always give the gist. They need to know they are entitled to that.

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

Thank you.

[The Chair, Liberal, Derek Lee]

The last opening round goes to Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Mr. Chair.

Thank you, witnesses, and good morning.

I'm interesting in starting, Madam saint pierre, with some of your statistics. I'm interested and even kind of heartened to see you report that the $4.8 billion worth of goods purchased from SMEs constitutes roughly 49% of the total value of business transacted.

You note that in 2005-06 it was at 43%. I've noted in our research that in 2006 the Minister for Public Works at the time, Senator Fortier, made a public announcement that from then on at least 40% of government procurement would be from SMEs, but you were already purchasing 43%. It strikes me as a little like taking credit for the sun coming up if you announce that you're going to strive to achieve what you're already doing.

I'm wondering what concrete steps Minister Fortier took to try to achieve what he was already achieving or what kinds of memos or directives took place. It seems like setting the bar kind of low to promise to achieve less than you're already achieving. Is there an inconsistency here or what?

[Shereen Miller]

If I could answer that, Minister Fortier actually was relying on statistics related to the overall buy. To be very specific, the 49% is actually purchases by Public Works, as a common service provider, when you factor out foreign companies. It's the relative amount for total contract value related to--

[Pat Martin, NDP, Winnipeg Centre, MB]

All Canadian companies.

[Shereen Miller]

--companies located in Canada. Right. So that is an important distinction.

[Pat Martin, NDP, Winnipeg Centre, MB]

It's a hugely important distinction.

[Shereen Miller]

It's a little like comparing apples to oranges. When he made that announcement, actually, I think the overall was less than 37% at the time, so it was actually going to be a stretch to bring it up above 40%, but we have.

In a sense, on the 43%, 46%, and 49%, the reason we select that representation of the statistics is that it factors out a lot of other complicating factors when you factor in foreign companies, so over those three years, we were trying to compare like companies located in Canada. That's what the difference is. So he wasn't being cute.

[Pat Martin, NDP, Winnipeg Centre, MB]

He wasn't being cute? Well, he may have been, but....

I'm also interested in this very helpful information that you brought in, Mr. Connell, regarding the state of the nation, as it were, for SMEs generally. You point out that the inability to find venture capital is a huge concern amongst the SMEs that you're in touch with. I note that the labour-sponsored investment funds were created with that hope in mind, and they've kind of tanked in a catastrophic way in most places around the country. I'm still sitting on...the only time I've ever waded into investing was out of some loyalty to labour funds and I got slaughtered like everybody else, so we're not too likely to do that.

The other thing I note is that the federal small business rate is at 11% for taxes. I think that's staggeringly high. It's no wonder small businesses are having such a terrible time if their federal government is dinging them for 11%.

I would point out to Mr. Anders that in the socialist paradise of Manitoba, with the NDP government there.... Do members know what the small business rate for taxes is there?

[A voice]

Tell me.

[Pat Martin, NDP, Winnipeg Centre, MB]

Zero.

[A voice]

Oh my.

[Pat Martin, NDP, Winnipeg Centre, MB]

When we took over from the Conservatives, it was at a crippling 11%, but year after year...there are now no taxes on small businesses in the socialist paradise of Manitoba.

Now that we're all socialists, you might want to take note of that, Mr. Anders.

[Voices]

Oh, oh!

[Pat Martin, NDP, Winnipeg Centre, MB]

The “buy Canadian” and “buy American” thing is really getting to us. It's interesting, then, that you do break out and keep track of the amount of goods purchased from Canadian firms versus goods purchased from foreign firms. In the U.S., let's face it, they've gone protectionist, period. Their “buy American” policy, as much as they deny it, is alive and well and being acted on.

I'm interested in the crossover. Does allocating more procurement opportunities to SMEs have the consequence of buying Canadian? Are more SMEs likely to be Canadian in that context?

[Liliane saint pierre]

I can start. One of the fundamentals of the way we conduct procurement, one basis that we have to refer to, is the trade agreements. Canada is a signatory to a few trade agreements, one of which is NAFTA and the other one is AIT.

When you had an opportunity to have a presentation from the Small Business Administration in the States, they mentioned to you that within NAFTA these deals are set aside for small business. This brings the question of why we don't have a set-aside for small business, when I look at the percentage of small business in Canada. The answer comes with the AIT, the Agreement on Internal Trade, that we signed immediately after NAFTA.

We started with NAFTA in 1994, and then in 1995 we signed between the provinces and the government. Within the AIT there is no provision for a set-aside for small business. Actually, there is a provision to say that suppliers have the right to compete, so that is one of the challenges we have when we are asked why there is no set-aside for small business as such.