Evidence of meeting #112 for Government Operations and Estimates in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was business.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Louis-Martin Parent  Director, President's Office, Canadian Federation of Independent Business
Pierre-Yves Boivin  Vice-President, Strategy and Economic Affairs, Fédération des chambres de commerce du Québec
Iain Christie  Executive Vice-President, Aerospace Industries Association of Canada
Yvon Boudreau  Consultant, Fédération des chambres de commerce du Québec
Jim Quick  President and Chief Executive Officer, Aerospace Industries Association of Canada

12:20 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Thank you, Mr. Peterson.

We go to Mr. McCauley for seven minutes, please.

December 5th, 2017 / 12:20 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Thank you, Mr. Chair.

Gentlemen, thanks for joining us.

Mr. Parent, thanks for taking time out to beam in.

I want to follow up on Mr. Christie's comment about OSME. It is a phenomenal resource. We used it in Edmonton just last week for a town hall on how to sell to the government. A lot of the feedback we received that day directed toward OSME was concerning, as Mr. Parent mentioned—and it came up a lot—the difficulty of dealing with business, the complexity. I love the quote here: “Dealing with federal tenders is too painful to bother.”

That, of course, comes up in the procurement ombudsman's annual report. I think 25 of the top 32 issues were all concerning red tape.

I want to wrap it around to a couple of government initiatives. One is a private member's bill, Bill C-344, which is about community benefits. It provides the minister with the authority to require an assessment of community benefits as part of an RFP process. To me, this adds a huge level of red tape and also a large amount of uncertainty because it does not define what a community benefit is, but does allow the minister to demand that a small business provide an assessment.

I wonder if I can get feedback from CFIB and from you, gentlemen, about this possible bill coming down.

12:20 p.m.

Consultant, Fédération des chambres de commerce du Québec

Yvon Boudreau

That's a great question.

Not to dwell on the irony, but I will say that it underscores what a complex undertaking it is for a government to streamline or simplify a process. Streamlining has its limits. As you said, when you add a requirement such as assessing the economic spinoff to a community, more information is necessary to warrant applying those requirements. We believe simplification has a clear limit.

The existing processes can undoubtedly be streamlined, but what matters most is an effort to take the mystery out of the request for proposal and federal procurement process for businesses. Many SMEs see it as too complicated, even before they've really taken a look at it. Efforts to educate and inform them are necessary.

12:25 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

That's the concern I have—that we're adding complexity.

Mr. Parent, do you have anything on the issue?

12:25 p.m.

Director, President's Office, Canadian Federation of Independent Business

Louis-Martin Parent

With regard to the first reading of the bill, you could make an argument that if you're a successful bidder, then you will naturally have positive community impacts just by nature of getting more money and paying your employees or whatever. But yes, the red tape nature of what this could be or, I think, is a bit concerning. I would have to see what the kind of check or proof would be—or whatever the requirement would be—before actually coming down positively or negatively on it. I understand the reason for it, but it gives me pause, I will admit.

12:25 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Okay.

It leads to another question we've been asking for a couple of years in the committee here. There's been mention in several mandate letters about our fair wages policy, and two years ago, former Minister Foote with PSPC stated in committee that the intent was to make the fair wages policy apply to every single government purchase: photocopy paper, paper clips, etc.

How can small and medium-sized businesses possibly compete? Is this going to exclude them from a lot of the bidding process because they have to follow the added red tape, but also the added wage burden of a fair wages policy that affects every single penny of government purchases?

12:25 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Do you want to direct that?

12:25 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

I'll start with Mr. Parent. Mr. Christie's giving me a funny look, so we'll go there next.

12:25 p.m.

Director, President's Office, Canadian Federation of Independent Business

Louis-Martin Parent

When you see these new initiatives, you always understand the reason why they're being proposed. In this case, it's because, of course, fair wages are important. You want to pay people equally and fairly and everything. Again, this is one of those things. When small business owners have to bid on contracts, but also have to take into account all these extra things that they have to put into the bids that always adds an extra level of complexity and difficulty. Maybe they need a fair wages policy. Maybe they have one already. Maybe it's not portrayed correctly or what have you. Again, it's one of those things that would have to be implemented with a small business lens in mind. That, I think, is probably the key point.

12:25 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Perfect.

Does anyone else want to comment?

12:25 p.m.

President and Chief Executive Officer, Aerospace Industries Association of Canada

Jim Quick

In aerospace, that's not really a big issue for us, because of the nature of the work and the salaries, that sort of thing.

I'll go back to your earlier question, just to take a different look at it. One thing we try to encourage our members to do is to articulate, when they are responding to these things, what the government has identified as being important for Canada. When we were developing value propositions over the last three years, one of the things we said to the government was that it should be using value propositions to say, “Here is the plan we want for Canada”, and then make the bidders respond to that. If you want to have things like diversity and inclusion, we think you should do that. Then it becomes part of the process.

It's not so much a burden as it is, “Show us what your plan is.”

12:25 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

To me, it's the clarity required up front, as opposed to the vagueness that's proposed in the bill.

12:25 p.m.

President and Chief Executive Officer, Aerospace Industries Association of Canada

Jim Quick

You could argue some of that. I'm just taking a different view on it that I think....

We are very encouraged by what we see in value propositions, because the government says, “Here is what we think our plan should be for this procurement. How are you going to respond to those things?”

We view it as a positive thing, actually.

12:25 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Mr. Weir, you have seven minutes, please.

12:25 p.m.

NDP

Erin Weir NDP Regina—Lewvan, SK

Thanks very much.

Our fearless analysts have called our attention to a recent OECD study, which found that Canada has quite a high rate of small business participation in federal government procurement—something like 40% of the value of federal government contracts goes to small businesses.

Do you consider that the current system is working fairly well and maybe just could be a little better, or would you present those statistics in a different way?

12:25 p.m.

Executive Vice-President, Aerospace Industries Association of Canada

Iain Christie

We should remember, as Jim said, that the companies we represent engage with the federal government on very particular kinds of procurement, and they tend to be high-dollar-value, high-complexity procurements. There are some concerns, like the ones Louis expressed, that a lot of our members don't have. That doesn't mean they are not important.

I don't think the system is broken. We tried to portray it fairly well in our remarks. I think it has actually gotten a lot better in the last few years. Most of the trends we see are positive, but I don't think we should believe that we have gotten all the way as far as we should.

I certainly give Canada's system a passing grade, but I also think that work continues to need to be done.

12:30 p.m.

Vice-President, Strategy and Economic Affairs, Fédération des chambres de commerce du Québec

Pierre-Yves Boivin

The data from the recent University of Ottawa study also show that certain types of SMEs are more likely to want to bid on government contracts. These are businesses looking to grow themselves, engage in exporting, and pursue innovation. That said, I would echo the gentleman's comments. It's important to bear in mind that not all businesses are necessarily interested in doing business with the government, depending on their sector.

The aggregated data reveal that less than 10% of SMEs participate in government procurement, but it is more important for some than for others. What we need to do is figure out how to make those contracts more accessible and appealing to these SMEs.

12:30 p.m.

Consultant, Fédération des chambres de commerce du Québec

Yvon Boudreau

I would add, if I may, that it is possible to indirectly facilitate the participation of SMEs in government procurement. That would involve making it easier for big businesses that have landed major contracts to establish ties with SMEs. That’s something the government has done in the past and could do more often. Indirectly, it would increase the participation of SMEs in government procurement, even though they would not be awarded the federal procurement contract directly.

12:30 p.m.

NDP

Erin Weir NDP Regina—Lewvan, SK

I'll ask you about a specific aspect of the current system. I'm wondering if anyone has a comment on the industrial and technological benefits policy. This, of course, applies to defence procurement and to procurement that is subject to national security exceptions, but it does include a provision to provide at least some of the work to smaller enterprises.

12:30 p.m.

Executive Vice-President, Aerospace Industries Association of Canada

Iain Christie

With respect to government procurement, ITBs are squarely where we live. You could probably try to stop me from having an opinion, but you'd be unsuccessful.

Again, there's no question that we certainly have come a long way in the last few years. The very transactional nature of the IRB program was truly problematic, so we're doing better, and it's not just the ITBs but it's the whole rated and weighted value proposition, which means that companies need to have a plan.

They need to explain to the Government of Canada what their strategy is and how it relates to the government's industrial strategy, and if it's working right, they need to demonstrate that their strategy for how they want the sector to develop is aligned with the government's priorities. That's what should get them the highest marks. Then they should win the bid and they should execute the strategy, rather than taking the government's money and shaping the market to their own satisfaction, which is what was happening before.

ITBs are a part of that whole process. It is a complicated process. Even two years on it's still just getting itself rolled out because it takes so long to get these procurements through the system. We're not there yet but we are moving in the right direction.

12:30 p.m.

President and Chief Executive Officer, Aerospace Industries Association of Canada

Jim Quick

I'll just add a comment to Iain's. We are now seeing a change from the IRB program to the ITB program in terms of behaviour of large companies. For example, the last two ITB announcements were large companies investing in small companies in very significant ways, tens of millions of dollars, to help them develop technology and innovation that they can then help them take out to the market and export.

I think we're starting to see now some of the behaviour that we were looking for, through the transformation of the IRB program to ITBs.

12:30 p.m.

NDP

Erin Weir NDP Regina—Lewvan, SK

We've used this term “red tape” a bit, and I think it's often thrown around as a pejorative, but of course, there are legitimate requirements. Picking up on the question about a fair wages policy, there's nothing particularly administratively complicated about having to pay a certain wage rate. Some employers might prefer to pay lower wages, but I would challenge presenters to define what we really mean by “red tape” and what should be done about it.

12:30 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Do you want to direct your question to a particular individual?

12:30 p.m.

NDP

Erin Weir NDP Regina—Lewvan, SK

Mr. Christie seems ready to go, but I also don't want to exclude our panellist from Toronto, so perhaps we'll go there next.

12:30 p.m.

Executive Vice-President, Aerospace Industries Association of Canada

Iain Christie

I'll try to be short because I think the others should weigh in. Again, our members view this from a particular perspective.

They are companies that are used to dealing with very large entities that have very particular requirements in order to supply them. The government in that way is no different from the large OEMs, so what frustrates companies and what makes the government different from large suppliers is the transparency of those requirements, and the fact of whether or not they change post facto.

When our companies complain of red tape, it's that they don't know what they need to do to be successful, and new requirements seem to appear after they get involved in the process. Frankly, some of them seem to be arbitrary and coded to the whim of the procurement official, rather than running according to a process that is consistent.

I think that is one thing the government does not do as well as, for instance, the large OEMs, which have spent a lot of time generating various efficient supply chains. They are better at that than the government is.