Good morning, Mr. Chair and committee members. Thank you for inviting me to be with you today.
I am the assistant deputy minister for the acquisition program at Public Services and Procurement Canada. Accompanying me is Mr. Desmond Gray, the director general of the office of small and medium-sized enterprises.
I understand that your main interest is to gain an overview of the federal procurement process and to receive some general information related to the set-aside for aboriginal businesses and on small and medium-sized enterprises.
The procurement environment involves many players, the key ones being Treasury Board Secretariat, which, as we heard from Ms. Owens, establishes and monitors the regulatory and policy environment; my department, PSPC, which provides common procurement services and tools to client departments; likewise, Shared Services Canada provides common IT procurement services to client departments; individual federal departments and agencies, which buy goods and services under their own delegations; and, finally, the suppliers that compete for government procurement opportunities.
Mr. Chair, I will keep my remarks focused on the role and responsibilities of Public Services and Procurement Canada, or PSPC.
First and foremost, PSPC is the common service provider for the bulk of government purchasing. The department procures approximately $18 billion's worth of goods and services annually on behalf of client departments, equalling roughly between 77% and 80% of the government's annual procurement expenditures.
At PSPC, there are approximately 1,300 procurement specialists working either in the National Capital Region or in regional offices across Canada. For additional context, the total number of procurement specialists in all of government is about 3,100, meaning PSPC is the employer to about 40% of the government's procurement workforce.
PSPC's authority as a common service provider stems from the Department of Public Works and Government Services Act, which gives the Minister of Public Services and Procurement exclusive responsibility for the procurement of goods. To maximize efficiencies, the Minister has delegated to other departments the authority to acquire goods under $25,000.
PSPC does not have the same exclusive responsibility for procuring services. Instead, other departments can undertake their own procurement of services. Above a certain threshold, usually $2 million, departments have the option of using PSPC or going directly to Treasury Board for contracting authority. PSPC does, however, have exclusive responsibility for the procurement of certain types of services, including printing and translation.
The procurement process is guided by the principles of fairness, openness, transparency, competition, and integrity. Open competition is the default, both in regulation and in practice. PSPC has a well-established code of conduct for procurement that sets out the expectations for ethical conduct on the part of both the employees and the suppliers. PSPC employees receive training and reinforcement of desired and expected behaviours.
Mr. Chair, I thought it would be helpful to share some examples of what we buy on behalf of our clients. We buy everything from complex systems and consulting services to construction and military equipment. This includes aircraft, bridges, the services of health practitioners, bulk purchases of drugs and vaccines, satellites, and repairs and retrofits to government properties to reduce its carbon footprint as part of the greening of government operations.
Regardless of whether PSPC is buying a good or a service, considerable time is spent up front, analyzing how best to acquire it, how it will be used, and how it will be disposed of. This thoughtful approach is designed to help us achieve best value and reduce costs. It means having a thorough understanding of the market conditions and choosing the most efficient method of supply for what is being purchased.
PSPC uses several methods of supply. Some of the most common include standing offers, which are used when it is possible to define the requirement but expected quantities and timing are not known. For example, we have a standing offer for fuel, which allows client departments to purchase fuel as needed at predetermined pricing. Another method of supply is the supply arrangement, which is used to establish a pool of suppliers when there is a recurring need that has not yet been defined. Think of it as a pre-qualified list of suppliers we can call up when client departments determine what they need—for example, professional services for auditors, or tires for heavy equipment. A further method of supply is to enter into a contract with task authorizations, under which the work will be performed on an “as and when requested” basis.
Regardless of the method of supply, significant effort goes into developing the procurement strategy. This starts with the business commissioning phase, in which the client department defines the need. Next, PSPC and its client work together to select the appropriate procurement strategy. During this phase, extensive industry engagement may occur. We work with the client department to identify what socio-economic levers can be brought to bear. For example, the procurement strategy for aboriginal businesses, known as PSAB, is considered at this stage. The goal of PSAB is to maximize the participation of, and benefit to, indigenous peoples, businesses, and communities. Last year PSPC managed set-asides for indigenous business contracts worth around $112 million. We will also take into consideration the applicable trade agreements. If a procurement is valued at or above certain thresholds, the obligations of the agreement apply.
The solicitation is launched and posted on our buyandsell.gc.ca website, which makes publicly available PSPC's procurement opportunities, both active and closed.
We will typically receive questions from interested suppliers. PSPC responds in a transparent manner; the answers are developed, translated, and posted on the web to ensure a fair and competitive playing field for all potential bidders. The minimum length of time a solicitation needs to be posted to satisfy trade obligations is stipulated in the trade agreements and is often extended if suppliers ask for extra time.
The solicitation material contains the statement of work prepared by the client, the contractual clauses, guidelines on conflict of interest, and the evaluation criteria and basis of selection. Once the solicitation is closed, the client conducts the technical evaluation of the bids, and PSPC conducts the financial evaluation.
As a key part of the procurement process, PSPC manages the contract, monitors the execution of the contractor's obligations, and seeks to mitigate risks, such as a delay in the production or delivery of a good.
Depending on the complexity and the monetary value, PSPC will use an independent third party fairness monitor, whose role is to provide an unbiased and impartial opinion on the fairness of the process. If a bidder has concerns that the procurement process was not conducted fairly, there are mechanisms in place to resolve these disputes. The Office of the Procurement Ombudsman is one such mechanism. My colleague Lorenzo leraci will provide more details.
Mr. Chair, I would like to spend the last few moments of my remarks focusing on suppliers. As the committee is likely aware, Canada's supplier base is composed primarily of SMEs. As of today, there are approximately 7,900 suppliers with active PSPC contracts, 80% of which are small and medium-sized Canadian enterprises.
To help SMEs navigate the procurement process, PSPC administers the Office of Small and Medium Enterprises, OSME, whose objective is to increase SME access to federal procurement, reduce barriers, simplify the contracting process, and provide tools to suppliers interested in doing business with us.
Over and above the dedicated efforts of OSME, PSPC works closely with TBS, a host of departments, the national Supplier Advisory Committee, and individual suppliers to explore ways to improve and modernize our approaches to delivering procurement. This supports Minister Qualtrough's mandate to increase the diversity of bidders—including women, indigenous peoples, persons with disabilities, and visible minorities—and to take measures to increase the accessibility of the procurement system to such groups while working to increase the capacity of these groups to participate in the system.
PSPC officials look forward to having the opportunity to come back and present in more detail on PSAB and SMEs.
Thank you, Mr. Chair and committee members.