It's much more often known as BIFMA, because that's a lot shorter.
I thank the committee for the opportunity to speak on behalf of the industry.
BIFMA's mission is to lead, advocate, inform, and develop standards for the North American office and institutional furniture industry. Our organization represents some 140 member manufacturers and service providers from around the world.
In 2006, the Canadian Furniture Task Group, a sub-organization of BIFMA, was formed to represent the industry in Canada. Our task group contains 111 individual members representing 75 companies in the manufacturer, distributor, and service provider element of our industry. Of these 75 companies, 50 would fall into the small and medium-sized enterprise category as defined by Industry Canada.
BIFMA has many concerns regarding the recent procurement for the free-standing furniture request for standing offer that was concluded in the month of January and in early February. It starts with a perception from our industry that the Public Works philosophy has moved from a historically inclusive procurement process to a more exclusive process. This particular RFSO resulted in a reduction in contract awards in this category from 36 manufacturers to only five manufacturers. The end result is that competition has in fact been reduced within this category, with a real chance that the crown may see increased costs as opposed to decreased costs. In fact, in three of the four product categories that exist in this procurement, only two bidders were qualified and received standing offers.
Historically in the RFSO process, Public Works provided opportunities for bidders to clarify bids and submit additional information as required, but during this RFSO process, very few bidders received communication of any kind from Public Works and, again, received little, if any, opportunity to provide clarifications for their bid submissions. The end result was that some bidders were disqualified for simple typographical errors in their bid submissions and others for issues that easily could have been clarified had the opportunity been provided by Public Works.
The vast majority of the unsuccessful companies in this category fall under the SME classification, and each of these companies would have expended tens of thousands of dollars to test their products for compliancy and prepare and submit their bid. The end result? Some of these businesses, certainly those that rely very heavily on government procurement opportunities in light of the current economic scenario, could see their businesses at risk.
In addition to manufacturers who bid on the RFSO, our industry contains a very large number of distributor entities, dealerships, 95% of which would fall in the SME category, and they too suffer from the loss of the opportunity to pursue government business.
The successful small and medium entities in this category face real risks in managing their contracts related to annual volumes and the typical surge in government year-end buying. Unfortunately, in office furniture, procurement is not spread evenly throughout the course of the year. In some categories, 60% to 70% of procurement occurs in the 90-day window of the fourth quarter.
If you're a small business and you suddenly have to deal with a massive uptick in your business activity, you might find yourself having to exclude every other customer that you have from business while you service the federal government. The risk then falls on you. Should you in the future lose that federal government contract, you would face the opportunity or the challenge of having to win back all the customers you've turned away.
As an industry, we also believe that service levels to crown clients will be at risk, as the small number of successful bidders trying to deal with the surge in year-end volume will experience extended lead times, making it very difficult to meet the delivery obligation that the goods must be received by the end of the fiscal year.
This procurement process failed despite the best efforts of our industry to collaborate with the crown through the Government Office Furniture Advisory Committee, also known as GOFAC. GOFAC was formed in 2007 as an advisory committee, bringing together Public Works, government user departments, and industry representatives due to a true commitment to collaboration focused on achieving positive results for all parties.
Since its formation in 2007, and as a result of significant changes in Public Works membership, GOFAC has again become perceived by the industry as an adversarial environment where industry and user input is selectively responded to. GOFAC advised Public Works of several potential pitfalls in the current procurement process, which were ignored to the detriment of the crown. This resulted in several bid requirements that were misaligned with the standard and common industry practices in the office furniture environment. Several mandatory requirements of the bid were not reviewed with GOFAC, preventing the kind of collaboration that would have improved the bid document and the procurement process. Just so you're aware, there are eight industry members on GOFAC, four of whom would fit in the SME category.
The resultant procurement process for the free-standing furniture RFSO was the most complex, costly, and challenging bid document our industry has ever seen. The bid contained several onerous mandatory requirements that added significant cost and opportunity for error. This included the need for an editable price list and complex product technical forms and documentation. There was also massive confusion and ambiguity about how the industry was to respond to several of the mandatory bid requirements, and the delay in receiving clear answers from Public Works created extensive costs due to rework and increased the opportunity for error.
The final significant amendment was published on November 18, a mere seven days prior to the original bid closing. A one-week extension did little to alleviate the time-related issues with the bid. The original bid timeline of 47 calendar days was insufficient to allow bidders to properly formulate their submissions. Only on the release of the RFSO was the final mandatory basket of goods and technical requirements provided to our industry. Only then could manufacturers determine if the efforts and costs expended to pretest the products were sufficient. If not, you had to develop a test plan, manufacture product, ship it to a test lab, and complete your testing. In the event that your product had any test failures, you would have to redesign, re-engineer a product, and repeat the entire process again.
At the same time, the number of manufacturers who had to go to the test labs for product testing left the bidders incapable of completing the mandatory product testing in time, because the test laboratories were not able to keep up with the capacity required.
The original timeline for this RFSO, as discussed in our GOFAC meetings, was intended for a July bid release with a fall closing. This would have provided four to five months, which would have been adequate had this schedule been met. Significant delays in the release saw the response time compressed so much that the industry struggled to adequately respond.
Our industry remains committed to working collaboratively with the crown to achieve procurement reform that is positive for all parties involved. We believe Public Works is not as committed to this process as we are and regularly blames the industry for issues in the procurement process. Comments have frequently been made regarding the poor quality of the bid responses, without regard to the concerns frequently raised about the complexity of a bid that does not seem to align with the standard industry approach to business.
Public Works has apparently confirmed the shortcomings in the free-standing process by extending the active bid for systems furniture by an additional four months to provide an adequate timeframe for the industry to provide quality responses. Had this procurement provided a similar timeline, many of the issues and challenges could have been overcome by the bidders.
The industry has made several suggestions to Public Works on how to simplify the bid process and reduce the costs associated with same. Given the move to what we describe as closed contract dates versus the previously open contract dates--where standing offers could be awarded at any time--many companies will expend tens, and in some categories, hundreds of thousands of dollars unsuccessfully bidding on government opportunities. Simple decisions could be made to delay some of the most costly requirements to apply only to successful bidders. Other decisions could be made to reduce the total cost of the bidding process, making it much easier for SMEs to pursue business opportunities and allowing all industry members to pass savings on to the crown.
Thank you.