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.