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Evidence of meeting #44 for Government Operations and Estimates in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was suppliers.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Shahid Minto  Procurement Ombudsman, Office of the Procurement Ombudsman
Oriana Trombetti  Deputy Procurement Ombudsman, Office of the Procurement Ombudsman
Francine Brisebois  Principal Procurement Practices Review, Office of the Procurement Ombudsman

4:15 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

That's right. It's a good point.

4:15 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

Right? You're already negotiating with somebody who has inside information.

As a development of that, I'll come back to the earlier question of people giving up. Yes, they find it frustrating. You have somebody you want to go to, they say, and they don't have a chance. Why should they bother? It costs them money.

4:15 p.m.

Liberal

The Chair Liberal Yasmin Ratansi

You can have a very brief question, Mr. Martin.

4:15 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Thank you very much. Did you say I can have one?

4:15 p.m.

Liberal

The Chair Liberal Yasmin Ratansi

Actually, you can't. We got into this and your time is up.

4:15 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Perhaps I could just close with a comment, though. I think it's worth noting for the committee that it is a recommendation, both verbally and in writing, that we revisit this ACAN process, not only the application of it but the policy itself, as well as the application. It may be the root of our problems for the small suppliers who have been frustrated and coming to us.

4:15 p.m.

Liberal

The Chair Liberal Yasmin Ratansi

That's fair enough. Thank you.

We'll go to the next round of questions.

Madam Foote, for five minutes.

4:15 p.m.

Liberal

Judy Foote Liberal Random—Burin—St. George's, NL

Thank you, Madam Chair.

Thank you to our witnesses for appearing here today. We really appreciate having you here.

I want to speak to the mandatory standing offers to purchase common goods and services. I read through your presentation here and listened to you speak. You said that in your view “achieving operational efficiencies is important but It is also incumbent upon the government to ensure suppliers rights' to access government business”.

You also said, “One of the most significant observations relates to the usage data for monitoring and managing standing offers. Particularly troubling is that 30% of the usage data produced by government departments is unreliable because it could not be reconciled with any active standing offers”. From my perspective it's pretty damning to say that 30% of the usage data could not be reconciled with any active standing offers.

Then you go on to say, “Suppliers are required to submit regular reports on the contracts against their standing offers”. However, as you point out, “These reports are not being used by the government”.

There are two points there that I'd like to have you address.

You say, “This reporting requirement puts what appears to be an unnecessary burden on suppliers and results in extra costs”. You say, “The use of mandatory standing offers continues to attract a lot of concern from the supplier community” and you intend to continue the examination of this subject in future reviews.

The fact that you've made this observation.... From my perspective, these are two serious issues. I'd like to know what it is you intend to continue to examine and whether or not you actually have any teeth to deal with this issue.

4:15 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

Madam Chair, I'll make an opening comment and then ask my colleague here to answer in detail.

The supplier community has expressed a lot of frustration with standing offers. It's not difficult to understand. For furniture, let's say you go from ninety suppliers to eight or ten suppliers. The question you to have to ask is, what happens to the rest? The answer we always get is, well, they should do joint ventures and come in, but it's not that simple. Why would anybody want to share their profits with somebody else?

These small suppliers are all across Canada. They have particular niches. They can do things very well in small areas, but they can't do it in all of the areas. When you do a consolidation and you do some bundling and you do a big contract, then the big guys can do most of it. The little things that these guys were doing they can do themselves, perhaps not as well, but they can do it.

We are really concerned about the unintended effects of this policy on the market. What are you doing to the small suppliers and how do we ensure that they get a fair share of their market? That's one issue.

The second issue we are concerned about is that in many of the standing offers we looked at the number one supplier has the right of first refusal. First, you go to number one, then you go to two, and then you go to three. Suppliers are telling us that in order to be two, three, and four, they always have to invest money to maintain capacity so they can respond.

In many contracts, especially IT or professional services contracts, they have a loose affiliation with subcontractors. The business goes to number one and he never says no, so all these people go up. These guys are investing money in maintaining capacity, but they have no business, right? The next time you come back for another standing offer they are going to say you should have done business so many times in the last five years. You couldn't have done that business, right?

So inadvertently.... I'm not saying this is deliberate at all, believe me. I think there are unintended effects going on that we would really like the government to look at. This is part of the usage data issue that you bring up. We're saying to look at the usage data, look at the call-ups, and look at what is happening in the marketplace before you plan the next standing offer.

I'll ask my colleague to respond.

4:20 p.m.

Francine Brisebois Principal Procurement Practices Review, Office of the Procurement Ombudsman

I'd just like to add that it is very important to have the usage report, to have the history of the usage of the standing offer, as well as the forecast for future years, in order to actually assess whether the standing offer is an efficient method of supply and whether it is worthwhile to renew or extend the standing offer. So by not having accurate or reliable information, or by not using reports that suppliers are using, we're just questioning how well the department can make the decision in assessing the standing offer, this method of supply.

4:20 p.m.

Liberal

The Chair Liberal Yasmin Ratansi

Thank you.

Monsieur Nadeau, pour cinq minutes, s'il vous plaît.

4:20 p.m.

Bloc

Richard Nadeau Bloc Gatineau, QC

Thank you very much, Madam Chair.

Ladies, Mr. Minto, good afternoon to you.

I would like to ask you some questions about the $25,000 and $100,000 contracts. If I understand correctly, a contract of less than $25,000 does not necessarily have to be advertised publicly, and may be negotiated directly between the public servant responsible for a file and the suppliers. Is that an accurate picture of the situation?

4:20 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

I think there are exceptions provided to the fundamental principles of competition. For contracts under $25,000, that's one of the exceptions. You can invoke an exception, but I would just add that it's not automatic. You need to have a reason to go to this contractor and you need to have documentation to support why you went to this one and not somebody else.

4:20 p.m.

Bloc

Richard Nadeau Bloc Gatineau, QC

Very well. So that is the case also for construction contracts of less than $100,000?

4:20 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

That's for services.

4:20 p.m.

Bloc

Richard Nadeau Bloc Gatineau, QC

I am the member for the Gatineau riding, where a debate is ongoing concerning goods and services contracts in the region. We know that the City of Ottawa obtains about 98% of contracts and that the City of Gatineau gets about 2%. So we feel that there is unfairness in that regard. I am talking here about contracts awarded on the basis of merit.

However, in order for small and medium businesses in Gatineau to have a better awareness of opportunities, must they know who the public servants who review the files are, or is the normal process to simply make an offer in reply to a call for tenders from the federal government?

4:20 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

One of the things we're looking at for the next year is the whole regime around the rules for contracts under $25,000. One of the things we'd like to explore is how those possibilities are publicized, so that everybody has a chance to know they exist. Perhaps MERX can do something on that for contracts under $25,000. We haven't gotten to that work yet.

The honest answer to your question, sir, is that I really have not done enough work to give you a proper answer on that. Perhaps the people at Public Works would be in a much better position than I would be. We haven't done enough work to give you a full answer on this.

4:20 p.m.

Bloc

Richard Nadeau Bloc Gatineau, QC

I'm going to tell you about something. At a certain point, in a federal building on the Gatineau side, the Office of Small and Medium Enterprises was moved from the sixth floor to the ground floor to attempt to find a solution to this inequity. I think that more needs to be done than simply moving an office. I don't want to present a caricature the situation, or play on words.

I met with people from the Gatineau Chamber of Commerce and they want to know about the opportunities. On the one hand, there is the matter of obtaining the contracts. On the other hand, when a contract is not awarded to a company—and here I am still talking about small and medium businesses that make up the vast majority of businesses—how can the information process be improved? Businesses see that they don't obtain contracts but they don't know why and sometimes the situation is repeated in other cases.

What could you suggest in this regard, Mr. Minto, to see to it that our small and medium enterprises do not get discouraged before the vast apparatus that constitutes the federal government?

4:25 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

Madam Chair, we consider SMEs to be a very important constituent for us and one of our objectives is to find ways to assist them.

We are not lobbyists for SMEs. Let me just begin by saying that. Our job is not to get them business. Our job is to level the playing field. I think most SMEs don't want to be given handouts or business just like that, but they want a level playing field so they can compete. We are not apologists for the government, but we're not lobbyists for SMEs.

There are two things that I would say. One is to try the Office of Small and Medium Enterprises, OSME. Their job is to facilitate and to make it easier for SMEs to get business. That is their mandate. Their main mandate is to help small businesses get more business. That's not my mandate, because then I would become a lobbyist for them. I have to be in a neutral position.

The second thing is that if you look at our chapter on debriefings, that was the heart of what we were trying to say. Please tell people why they haven't got those contracts. Explain to them how they can do better next time.

The reason we were given was that “we'll get sued if we do that”. What we asked was why we didn't just create a safe zone, explain to people that you can talk within these rules, and that's the end of it.

4:25 p.m.

Liberal

The Chair Liberal Yasmin Ratansi

Thank you.

Mr. Warkentin, for five minutes.

December 1st, 2009 / 4:25 p.m.

Conservative

Chris Warkentin Conservative Peace River, AB

Thank you, Madam Chair.

Mr. Minto, I appreciate your coming to our committee today. We appreciate the work you do.

One of the things I have often been concerned about is the structure of RFPs, and I'm wondering if you could tell our committee if businesses of any size are concerned about this.

At one point, we heard from a group of people who were bringing forward what they thought was an innovative product. They felt it was leading edge. They felt it was something the government could utilize. However, when they went to seek the RFP that would have been the entrance for their particular product, they found that the RFP was so prescriptive that it didn't allow them to even bid.

Do you find that people complain about that? Do you find that is a concern of businesses?

4:25 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

We've had people come to talk to us about the complexity of the RFPs. We've had people say they didn't really understand the requirements. We've had people tell us that there are too many mandatories in it. We've had them asking why we need all these mandatory requirements just for the RFP and saying that maybe they could be rated requirements other than mandatories.

One of the projects we have on our books for next year is to look at the whole procurement strategy, and that procurement strategy includes the requirements for an RFP. We have people working on that now. I'll be in a much better position to give you some additional information when they finish the report.

4:25 p.m.

Conservative

Chris Warkentin Conservative Peace River, AB

I'd appreciate that. I'd be interested to hear if you find that there is as much concern as there was in this one company, especially as it relates to the high-tech sector. This person I am speaking of actually had what they felt was an innovative product. It was something that would have revolutionized the systems that governments use. What they found was that the RFP was very prescriptive for what they felt was an antiquated system. They felt they were being cut out from being a leader of innovation within the government.

I know you're not rules-based and that you are actually fairness-based. That may give you the latitude to consider this as you move forward. I would just be interested to hear about it as you proceed to look at that, and I know you will.

4:25 p.m.

Procurement Ombudsman, Office of the Procurement Ombudsman

Shahid Minto

We'll take note of your concerns and the issues you've raised. We'll put them into our planning hopper and see what we can do.

4:25 p.m.

Conservative

Chris Warkentin Conservative Peace River, AB

In terms of reviewing files, you spoke about the fact that a well-documented file is a file that's good for you, and I can understand that. In my own office, I know, I have certain staff members who are excellent at taking notes as they relate to case files, and I have those who are not so good at note-taking. However, at the end of the day, I keep them both around because they both are good at what they do and they get the job done.

In the case where you find there are not adequate notes or sufficient notes, are there other types of interviews or different mechanisms that you're able to undertake to evaluate whether an appropriate process has taken place, or do you depend on or will you continue to require departments to take better notes?