Government Operations Committee on Feb. 26th, 2009

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

I am sorry to interrupt you, Mr. McGrath.

My question is very specific. SNC-Lavalin has contracts for 344 federal buildings. Why did we not award those contracts to 344 small and medium enterprises? Finally, SNC-Lavalin is doing PWGSC's job. SNC-Lavalin is playing the role of an intermediary between Public Works and Government Services and the small enterprises that have contracts. Why were these contracts not awarded to 344 small businesses rather than to one single entity called SNC-Lavalin, which is exploiting the small and medium enterprises? The question is clear.

[Tim McGrath]

In fact, Mr. Chair, SNC-Lavalin is doing the job of Public Works and Government Services. That was the whole intent of the way the contract was set up. Where we retain accountability for delivery of property and facilities management services, SNC-Lavalin is responsible for bringing forward a much more effective and efficient way of delivering services--

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

I am sorry to interrupt you yet again, Mr. McGrath—

[Tim McGrath]

--and in addition to that, when the original contracts were put in place, we achieved a $20 million savings when we did it originally with BLJC, Brookfield Lepage Johnson Control, back in 1995, and then on the reprocurement of the contract we saved an additional $25 million.

So we've been able to achieve a better level of service in a more cost-effective way and still have the same number of small and medium enterprises involved in that business and deliver a better service to our occupants, and hence to the Canadian taxpayer.

[Jean-Yves Roy, Bloc, Haute-Gaspésie—La Mitis—Matane—Matapédia, QC]

You say that Public Works and Government Services saved $20 million. That remains to be proven. What you are telling us is that the trend at Public Works and Government Services is indeed to combine contracts so that only a single large firm will be able to bid on them, unlike small and medium enterprises, all because you feel that otherwise, it would be too expensive. That is what you are saying.

[Tim McGrath]

Mr. Chair, the approach--and it's not only with Public Works and Government Services, it's with other levels of government and with private industry, as well--is to go out and find people who coordinate a program of work. In turn, they do the contracting. So it's a more effective way to get the money out in a more efficient fashion to the small and medium enterprises.

Again, the nature of the industry, the real property industry, is based on the location of the buildings. Those coordinating the programs go into the local communities to find services to be provided. It's not a cleaning company from Toronto providing cleaning services here in Ottawa. It's Ottawa-based companies providing cleaning services. In Montreal and Quebec City, or wherever the government is located, the people providing those services are local people. It's just a matter of the way the whole industry has moved, and we're taking advantage of that.

When I talk about the $20 million in savings, that's per annum. That's not a total accumulated amount. That's on an annual basis.

[The Chair, Liberal, Derek Lee]

Thank you very much.

I'm going to the government now for five minutes. Madame Bourgeois still has four minutes of her time, but I'm going to ask her to just--

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

Is that my first four minutes?

[The Chair, Liberal, Derek Lee]

No, no. We have only heard from one government member since we started, and I'd like the government to have an opportunity. So in five minutes I'll come right back to you, and you'll have your four minutes.

This is the decision of your chair.

So we'll have Mr. Warkentin for five minutes. Then we'll come back to Madame Bourgeois and you can have your four minutes.

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

Are you trying to muzzle me, Mr. Chairman?

[The Chair, Liberal, Derek Lee]

No, you have four minutes. It's just that I'm recognizing Mr. Warkentin next.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

Mr. Lynt, I just want to pose a couple of questions. I thank you for coming back. I know that you and your organization have been before committees before to bring testimony on similar issues. Obviously, you know the challenge from your side and also the challenge the government faces.

The Auditor General has, on a number of occasions, lectured government about their practice of building specialized computer infrastructure for specified reasons, sometimes with unsuccessful results that have caused all kinds of problems. In some cases, they have actually had to replace it with an out-of-the-box option that would have been available in a cheaper format from the get-go. This is a challenge that I think Public Works experiences. This is a problem across government.

I think we're all looking for solutions. I'm curious to know your opinion, in terms of this particular reality, in terms of how small- and medium-sized companies might better be involved to address this particular reality. Because we are continuously being told--and it's been demonstrated through mismanagement of contracts in the past--that government should be working towards an off-the-shelf type of program. Obviously, I know that has implications for small and medium-sized companies, and specifically for members of your own group.

Do you have suggestions or thoughts as to how we might reconcile these two particular, in some people's opinion, divergent realities and how we might be able to bring them together to better facilitate the needs of your group?

[Jeff Lynt]

First of all, yes, absolutely, we are very concerned about the policies coming out of PWGSC that suggest that they need to privatize to large companies. That has a huge effect on us.

[Chris Warkentin, Conservative, Peace River, AB]

But I guess what I'm going to address is that there are reasons for those policies.

[Jeff Lynt]

Yes.

[Chris Warkentin, Conservative, Peace River, AB]

The Auditor General has highlighted specific reasons as to why those policies.... Those policies have been coming for years as a result of disasters, quite frankly--we've witnessed them--in terms of overspending on computer programs and different things.

What, from your position, can you give us as a way to address the concerns of the different departments so that your organization, your members, might have better access to government contracts? Because that's the crux of the issue, in many cases, I think.

[Jeff Lynt]

What we believe the Auditor General said was that they need to break contracts down into bite-sized, chewable chunks. Smaller, manageable contracts are in the best interest of the Canadian taxpayer. These large contracts do not allow for any off-ramps; they do not allow the government to change position or change course if things are going wrong. So more money gets thrown at it. As an example, when the federal government wanted to implement something very important to the government, and very unpopular with Canadians, the GST, it turned to small business. Small business implemented it right. If you want to hear an example of one that went really wrong, it's the gun registry. That was done by large companies.

So we believe that we provide innovative solutions. In fact, I heard numbers indicating that some 49% of government contracts go to SMEs. In the IT space, it's our belief that it's 70%, and that's because we provide good solutions at good prices. That's why we're winning them.

[Chris Warkentin, Conservative, Peace River, AB]

Maybe I need to come around this a different way.

There seems to be the issue of customization. Every department creates its own silo. Every office within that department creates its own silo. In particular, the silo is created because of the limited capacity of one program to speak to another, in terms of just the computer systems.

How do we get over that hurdle? How do we get over that hurdle and allow smaller and medium-size high-tech firms to come in and in some cases establish these programs but still have the capacity? I'm looking for solutions here. How might they be able to speak to one another so we can address this systemic problem within government, which the Auditor General and all of the outside specialists have berated government for?

[Jeff Lynt]

I don't think there's a simple answer to your question.

We believe it should be the mandate of PWGSC. Their mandate should be to control it, not to be a middleman, not to put it in the hands of somebody else to bring in these “standardization practices”, as they refer to them, from one company. We believe that innovative ideas come from small business, and those innovative ideas can help drive and work through those standardization things that need to happen.

We think that there needs to be a shared services office created within PWGSC to focus exactly on what you're talking about. How do we identify and get the departments communicating, so that we can eliminate duplication in processes and equipment, and get equipment communicating? There are lots of opportunities to share bandwidth. There are lots of opportunities to get people on the same page. They need to look at that and focus on it, and not try to send it out to a large company and force everything down their throat, because, quite frankly, most departments don't want that.

[Chris Warkentin, Conservative, Peace River, AB]

What are you as a—

[The Chair, Liberal, Derek Lee]

I'm sorry, but your time is up. The line of questioning was very interesting, but I'm under great pressure here to move on.

We still owe Madame Bourgeois four minutes.

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

Thank you, Mr. Chairman.

My question is for the representatives of CABiNET. I simply want to verify one thing. Perhaps this goes back to my colleague's question.

We received two documents today. In the first one, the research service suggests excellent questions for us, as usual. As for the second document, it deals with a Competition Bureau investigation. If I understand correctly, this has nothing to do with the issue before us today. The second document mentions that seven CABiNET businesses have supposedly been accused of collusion by the Competition Bureau. This has nothing to do with you.

[Jean Thivierge]

You are absolutely right, this has nothing to do with today's discussions.

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

Then why did you distribute this?

Secondly...

[Jeff Lynt]

If I could interrupt here, I just want to clarify that all seven of those companies are not involved with CABiNET. You said that seven companies were members of CABiNET, and they're not. I just wanted to clarify that.