Government Operations Committee on Oct. 20th, 2011

[Jeff Lynt]

I don't have any specific experience with them.

[The Vice-Chair, Liberal, John McCallum]

Ms. McCallion?

[Cathy McCallion]

I am in the same boat. It's outside our realm. I haven't had any direct experience with IRAP.

Basically, my opinion is to put the money behind OSME. I would like to see an increased voice there.

[The Vice-Chair, Liberal, John McCallum]

Thank you.

Professor Hanel.

[Petr Hanel]

I would like to share an observation with regard to the projects, more specifically the reduction of tax credits based on salary alone. In my view, this is dangerous. I believe it works very well in some sectors, for instance in the sectors of information technology and communication. However, in the case of biotechnology and other technologies which require the purchase of sometimes extremely expensive equipment, this is a risky approach. I cannot speak to IRAP, but I know that some eminent economists, including Mr. Lipsey, gave this program a very positive review in terms of the way it is implemented and its results.

Further, I believe that government projects should not be designed as lifelines to help small- and medium-sized businesses to operate. We should do what is done in other countries, which is to foster the growth of SMEs. Indeed, we are competing against countries which are helping to grow their small- and medium-sized companies so they become bigger and more powerful.

[The Vice-Chair, Liberal, John McCallum]

Thank you very much.

We will now go to Andrew Saxton.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you, Mr. Chair.

Thank you, witnesses, for coming here today.

I have several questions. My first one is for Cathy McCallion.

Cathy, you mentioned earlier in your remarks that contracts are bundled for the sole purpose of excluding SMEs. Do you think there might be other reasons why contracts are bundled?

[Cathy McCallion]

I think there's that misconception that it's easier to deal with one organization than with several.

I think that is a misconception. There are many examples of projects that have gone astray because they've been sourced to one large entity and they get out of control very quickly. Does that answer your question?

[Andrew Saxton, Conservative, North Vancouver, BC]

Do you think it could be a question of economies of scale or cost savings as well?

[Cathy McCallion]

From a cost perspective, I can say that SMEs do a fantastic job of keeping costs extremely low. We're hands-on with our clients in the sense that we have good, solid, direct relationships with our clients and the people who work with us.

I have never worked for a large entity, I'll be honest with you, but the impression I get from my clients when I discuss it with them is that there is a disconnect between the people who run these organizations and the people they interact with.

I work in the resourcing industry. Our consultants and the relationships we have with them are very important to us, because they are ultimately doing the work that the client wants performed. They are getting the tasks done--

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you. That's fine.

Mr. Rivenell, I have a question for you.

You mentioned CICP in your opening remarks. Can you explain the tangible effects that working with CICP has had on your business?

[John Rivenell]

Yes, absolutely. The fact that we have an initial test department set up and that there is funding in place for that test department gives me a little more freedom and security financially, so I have hired more people over the summer than I would have done otherwise. That's the first thing; I can step back a little from the panic of the spreadsheet, as it were.

The second thing is that we're working with a very good test department. We have already reached the point where they have given us some effective feedback concerning ways in which they would like to see the system changed. That's the whole point about the test department. Not only do we have a reference account at the end of it, but we get to work in a real-life situation and get positive, tangible feedback.

So our product is improved, I have a little more flexibility in hiring new heads to contribute to development, and we will have a reference account at the end of it.

[Andrew Saxton, Conservative, North Vancouver, BC]

So you found that the process was helpful and they were receptive to your needs?

[John Rivenell]

Oh, absolutely. In fact, I just came from a meeting here and I'm off next week to do a first install. We work very closely with the client.

[Andrew Saxton, Conservative, North Vancouver, BC]

Would you use CICP again?

[John Rivenell]

Absolutely, there's no question about it. It's very good.

Maybe I shouldn't raise this other point, but if you remember, I said earlier that it's very difficult for me to sell to the federal government for anything more than $25,000. This contract is more than $25,000.

[Andrew Saxton, Conservative, North Vancouver, BC]

That's very good. Thank you for that.

We just saw yesterday the culmination of the naval procurement process, which I think just about everybody has complimented, saying how transparent it was, that it was non-political and at arm's length. Is this a process you think we could use for other procurement processes?

[Dr. Sue Abu-Hakima]

I'm sorry, but I don't know enough about the naval procurement process.

[Andrew Saxton, Conservative, North Vancouver, BC]

Perhaps John...?

[John Rivenell]

It's a very big thing. Personally I have concerns about some of the socio-economic benefits that are put into some of these projects. My past experience with CF-18 procurement made me wonder. It is a good idea if it is exercised correctly, but you have to be very cautious that it isn't abused—in other words, if you have a socio-economic benefit, the price goes up and you don't get any benefit.

But openness is good.

I don't really have a lot of experience in big contracts of this sort. My typical contracts are in the range of $5,000 to $400,000.

[Andrew Saxton, Conservative, North Vancouver, BC]

Thank you very much.

Thank you, Mr. Chair.

[The Vice-Chair, Liberal, John McCallum]

Thank you.

Our last intervenor is John Carmichael.

[John Carmichael, Conservative, Don Valley West, ON]

Thank you, Mr. Chair.

Thank you to the witnesses.

I have one question I'd like to ask, but we don't have an afternoon to get into it. The specifics on procurement are very clear, from all of your comments, and I'm trying to assess the barriers to entry as we talk about this. I think the whole procurement process is something that needs probably a really good look in order to understand how it works and how better to streamline it.

Let's talk about innovation. I'm hearing that innovation is a problem; I'm on other committees. One of the challenges we face is as a nation is how we establish this nation as a centre of innovation, which I'd love to see. If we truly believe in leadership, what do we do? I'm looking at four entrepreneurs who I believe are all extremely innovative. Could you talk to me very briefly about the innovative process in your companies?

Let's keep it short if we can, because I know the time is tight.

[Dr. Sue Abu-Hakima]

I'll keep it short.

From my opening remarks, you know that my first company filed 18 patents. This one now has 12 patents. We're known as an extremely innovative company that's really on the leading edge. That's our history. We have a tremendous team with experience from places like Bell-Northern Research, Mitel, and so on.

I think it comes from leadership and a philosophy of innovation within the enterprise itself. I think that from the youngest sales person or marketing person or front-line staff to the most senior people, if your leadership is innovative, your team will be innovative. You look at social networking and methods to look at marketing yourself much more effectively. The kind of response we get at shows in the United States is the stuff that large companies get.

That would be my answer to you. You just have to train people to think in a certain way.

[John Carmichael, Conservative, Don Valley West, ON]

Thank you.

Mr. Rivenell.