Government Operations Committee on Oct. 31st, 2017

[Erin Weir, NDP, Regina—Lewvan, SK]

Is it your sense that ESDC will essentially come up with a policy and your department will just apply it?

[Arianne Reza]

ESDC is doing consultations nationally. I think they're looking at different stakeholder groups and discussing the various pieces. Once we have an understanding of what the contents of the policy will look like, we will be looking at reconciling it with our current contractual obligations.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay. Is there a sense of when you would receive that input from ESDC? Or is the ball in their court and you're waiting to hear from them?

[Arianne Reza]

We are working closely with them, but for a sense of the timing, I don't have access to know. Perhaps we can come back with a response on that in terms of timing.

[Erin Weir, NDP, Regina—Lewvan, SK]

Yes, perhaps you could come back with a written response on the timing. That would be greatly appreciated.

I did also want to ask about the use of domestic materials in government procurement. I've asked previously about the new Champlain Bridge, and your department indicated that less than 20% of the steel would be manufactured in Canada. I'm wondering if you can provide any update on that project as well as other federal projects such as the Alexandra Bridge and the Esquimalt graving dock.

[Arianne Reza]

I'm not able today to provide detailed updates on those projects you've mentioned and those acquisitions.

I would just say that in terms of domestic content policy, procurement has two areas. One is the defence area and one is procurement that is non-defence, which is governed by Treasury Board policies and guidelines, as the defence side is as well, but trade obligations restrict our use of how we use domestic content policy. Government procurement that is underneath the umbrella of trade agreements doesn't have the capacity to leverage in all cases domestic content policies, as is done in other areas.

[Erin Weir, NDP, Regina—Lewvan, SK]

Yes, fair enough.

It seems as though the government has been relatively liberal in its use of national security exceptions, in that things such as winter clothing for refugees have been purchased under those provisions. It does seem that if the government wanted to, it could get around some of the obligations under trade agreements.

[Arianne Reza]

My understanding of the way the trade agreements work is that there are exceptions that all countries who are signatories of the trade agreement agree to, and they're very narrowly defined.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay. Our committee did another study on the national security exceptions. It seems they were being used fairly broadly in some cases, but I won't try to reiterate that meeting.

I do want to ask as well about the government's contract with IBM for the Phoenix payroll system. Will that contract be made public?

[Arianne Reza]

I think that the various pieces of the IBM contract that are not defined by contractual confidentiality with IBM have already been shared in terms of the cost, the amendments, and the bidding process. I believe that there has been a fairly robust set of documentation already provided.

[Erin Weir, NDP, Regina—Lewvan, SK]

It seems the government is continuing to pay more money to IBM to try to fix the Phoenix system. Does that reflect a problem with the original contract?

[Arianne Reza]

Mr. Chair, I am sorry. I came prepared to talk about the landscape of federal procurement from the PSPC lens, and I don't have details on specific strategies for individual contracts.

[The Chair, Conservative, Tom Lukiwski]

Perhaps, if I understand Mr. Weir's question correctly, you would be able to provide to the committee some answers in a written response?

[Erin Weir, NDP, Regina—Lewvan, SK]

Yes, that would certainly be quite satisfactory.

I also have a question for Mr. Ieraci. Your office provided a report recently where you talked about some problems with government standing offers, and specifically the notion that suppliers need to meet a large number of requirements for those standing offers, but then are not actually guaranteed any business.

I assume that the need to have inventory on hand to meet standing offers would be a particular challenge for smaller enterprises. I'm wondering if you could elaborate on that point and also speak to any improvements that could be made to the government's standing offer format.

[Lorenzo Ieraci]

Thank you for the question.

Yes, as I mentioned in my message in the annual report, one of the things I heard about last year was from suppliers who were raising questions and concerns about standing offers. If you take a look at prior annual reports from my office, you'll see that standing offers are an area that generates a lot of questions and some concerns on the part of Canadian suppliers.

One of the reasons why I think that's the case is that, for many suppliers, the concept of a standing offer differs from what they experience in the private sector. In the private sector, there do not seem to be as many types of agreements between private sector companies where one company essentially agrees to undertake some activities on an as-and-when-needed basis for no guaranteed source of business. Standing offers appear to be something that is somewhat unique to the public service.

In our office, one of the things we do through our outreach-and-educate pillar, which I mentioned, is to ensure that suppliers understand that when it comes to standing offers there are certain expectations and obligations that are placed on them and certain expectations and obligations that are placed on federal organizations, but that there is not necessarily a guarantee of business. Because of that, when it comes to planning out their business strategies in terms of submitting proposals, they need to take those factors into consideration so they can ensure they have a proposal that will work for them from a business perspective.

[The Chair, Conservative, Tom Lukiwski]

We'll have to cut it off there for now.

Mr. Ayoub, seven minutes, please.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you, Mr. Chair.

As Ms. Owens said, it is very difficult to provide a summary in 10 minutes. This is all the more so when you have only seven minutes to ask questions aimed at deepening a subject.

Still, I would like to talk about what can be done to make it possible for small and medium businesses can do business with the government and to ensure that they are quality suppliers who qualify and who remain suppliers thereafter.

How many small and medium businesses do business with the government once and cease to be suppliers afterwards, either because it became too complicated and caused problems for them, or because they weren't qualified?

Do you consider situations like this?

Do you have statistics for that?

Then, do you implement a game plan or corrective action, so that the government doesn't always deal with the same companies that look good and, for a variety of reasons, have found the right way to do business with it?

Have analyses been done on this?

Is corrective action taken to encourage companies that have done very little business with the government to do so again?

I don't know who would like to answer.

Ms. Reza or Mr. Gray, would you like to?

[Arianne Reza]

Do you want to take it from your perspective?

[Desmond Gray]

Given the terminology, I'll answer in English.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

You can answer in English. That's okay for me.

[Desmond Gray]

There are a couple of things.

Your question is a very good question. The answer is yes. We do analyze the actual volume of suppliers to see how many suppliers repeat in our business and how many new suppliers come in. Of course, we're very interested in ensuring a diversity of suppliers and new suppliers, because part of the notion of value is to ensure we broaden and expand our supplier base. That's what indicates better competition and better value for Canadians.

For example, one of the things we do in the Office of Small and Medium Enterprises is to lead engagements with the supplier community all across Canada. We do between 1,100 and 1,200 events with supplier communities, one-on-ones, to explain to them how to access. We do seminars and give them the information they need, and we encourage them, which I think is an important point. We encourage them to understand the opportunity.

This means going to the Buyandsell website. We show them how to get access to tenders. We show them the tools that can make it easy for them, such as an automatic email notification for any tender that's in their area of business. You don't have to sit there looking for it; it comes to you. These services have to be responsive to suppliers, and we have to reflect also the diversity of Canadians across Canada, not just in the large urban centres, but in the smaller communities.

The outreach activities we have done go right across Canada, including in remote communities. I'm looking at some of the numbers. For example, we also target specific socio-economic groups to ensure the benefits are applied broadly. For example, we do specific events for green and clean technology, indigenous communities, women's businesses, multicultural communities, minority official languages groups, and youth. We set specific targets to go out, find those communities, and communicate to them.

We have a very strong strategy, and we're trying to make sure that we measure the effect, as we look at the suppliers who are now coming in, to see if we're getting a refresh on that supplier. Also, is it expanding? Are we getting new businesses coming in?

The answer is yes: we do this.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

I've already heard from representatives of small and medium businesses that things went relatively well when they did business with the government, but it was another story when it came to closing the contract and getting paid.

What do you have to say about this?

How could the payment cycle be accelerated so as not to penalize small businesses that need this cash flow on a regular basis?

[Kathleen Owens]

Recently, we recently made a change to the financial management policy that ensures the government can pay its invoices in 30 days or less. The previous requirement in the policy was to wait 30 days, but now departments can pay in advance.

[Arianne Reza]

Based on that recent change in April, I think it's reflective of what we've heard: there's a lag time in terms of paying. Since we know the bulk of our contracts are with SMEs.... I spoke earlier to the comment made in terms of the value. I should say that 80% of contracts under a million dollars are with SMEs, so getting them paid quickly is really key. With this key pivotal change, we're working internally to look at readjusting the timelines, now that the 30 days have been accelerated, and to see how we can accelerate our processes and invoice payments to make payment faster.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you.

Mr. Casey, do you want the minute and a half?