Thank you.
Thank you for the opportunity to be here today. CFIB is a not-for-profit, non-partisan organization representing more than 108,000 small and medium-sized businesses across Canada that collectively employ more than one and a quarter million Canadians and account for $75 billion in GDP.
Our members represent all sectors of the economy and are found in every region of the country.
With me here today, as you mentioned, is Louis-Martin Parent, who will assist me with the question and answer period of this presentation.
First, almost all businesses in Canada are small or medium-sized. They employ 64% of Canadians and they produce half of Canada's GDP. As a result, in this Year of the Entrepreneur, addressing issues of importance to them can have a widespread impact on job creation and the economy.
Now, you should have a slide deck in front of you that I'm going to be walking you through over the next few minutes, so if you could pull that out, that would be great.
As you may be aware, CFIB surveys its members regularly on a wide variety of issues that help us formulate policy positions on their behalf. In 2009 we did a survey on federal procurement and released a report based on that data earlier this year entitled, Big Opportunities, Bigger Challenges--and you all should have received a copy of that report as well.
Over the next few minutes I want to share some highlights from that report. First, who are these small federal government suppliers? As you can see on slide 2, they are a good mix of businesses that sell goods and services, or both, and the vast majority have been selling to the federal government for more than five years.
As you can see on slide 3, three-quarters of them sell to government as sole contractors, while one in five works as a subcontractor, mostly in the construction industry. Only 5% are selling to the federal government as part of a joint bid or partnership with another company.
What was really interesting to us were the reasons that small businesses did not sell to the federal government. Now, the most common reason was that the government simply does not buy the business's product or service, as you can see on slide 4. However, almost all the rest relates directly to the federal government procurement process itself. One in four stated that the government's tendering and bidding process was too complicated and that they had no means of knowing what the government wants. One in five stated there was just too much paperwork or found the inability to contact the actual user or purchaser as a key deterrent.
But it's not only those who do not bid on contracts that find the whole process confusing, but also those who have had experience in bidding and even winning federal contracts, as you can see on slide 5. Almost half of them rated the simplicity of forms, the clarity of the steps necessary to sell to the federal government, and access to contract opportunities as poor, meaning there is lots of room for improvement in these areas.
Overall, many of the frustrations of smaller firms engaging in federal procurement were based on the fact that the overall process is too complicated and too different from how they normally do business--for example, not being able to discuss the bid with the actual user or purchaser of the goods or services, using an electronic bidding process such as MERX, which may seem simple at first but becomes more complex, with lengthy forms that often require unnecessary and duplicative information. A good rule of thumb should be that if it takes longer to apply for a contract than it is to fulfill the contract, it's unlikely you're going to get many small businesses applying for it.
There also seems to be a real lack of awareness of small business realities. For example, a one- or two-week delay in a payment can seriously affect cashflow in a small business operation. They do not have specialists to help them secure, much less manage, a bid, and therefore they have to adapt their entire operations to fit into the government's expectations. We would suggest that the government start to look at their procurement processes and practices through maybe a small business lens, which has being suggested by the red tape reduction commission, as a means of starting to address some of these issues.
Now, to their credit, Public Works did recognize that there was a need to address some of these concerns after extensive lobbying from CFIB and other groups, and they created the Office of Small and Medium Enterprises about five years ago. CFIB supported the idea of an office like OSME, which was to provide assistance to small firms on the bidding on federal contracts and to be an internal advocate for the needs of small businesses within Public Works. But as you can see on slide 7, OSME is not that widely known within the small business community.
Now, this level of awareness compares to about two-thirds of our members who were aware of the procurement ombudsman, though very, very few of them ever used their services
Now, slide 8 is a chart that was not used in our report due to its low sample size. We only share it with you today for information purposes. And it should not be interpreted as being statistically valid; however, we thought it might be interesting.
Of the 32 respondents who said they did know OSME's role, results were mixed on the service provided. They did relatively well on providing timely responses to questions, but could improve on assistance on how to bid and understand procurement procedures. This survey was conducted prior to the launch of the buy and sell website that OSME had created as a one-stop source of practical information and advice on federal procurement.
This kind of tool would be well received as it does provide useful information and direction on what the process is all about, something that was severely lacking prior to the buy and sell website and to OSME. However, we believe that OSME may be suffering from being within Public Works and therefore not necessarily seen as independent by small businesses looking for information to navigate the system and help them solve procurement problems.
Also, OSME's role as internal advocate is an important part of their mandate, but it's not always clear how influential they are within government to bring change that will benefit Canadian small businesses.
Moving to the Canadian innovation commercialization program, we have less experience with this because we haven't had any members contact us about it. We're still learning ourselves about the usefulness of the program and are pleased that it's in a pilot phase so that the government can learn about what works and what doesn't before it dedicates more funds to it.
CICP has long advocated using federal procurement as a means of promoting innovation. So many small firms have great ideas and alternative approaches that could prove valuable to government, but they can often be stifled if they are unable to fulfill pre-established requirements or address prescriptive needs. If this program helps to break down some of those barriers, that would be progress.
From what we know about the program, we like that it seems to encourage interaction between the supplier and the end-user and that it seems to promote some flexibility within the actual procurement process. However, we worry about any program in which government picks winners and losers. We wonder how success will be measured, given the long lead time sometimes needed to get a product to market.