Government Operations Committee on Feb. 1st, 2018

[André Leduc]

Thank you for the question.

We talk about jurisdictions. If we look back, we're seeing some jurisdictions doing this the right way, and they haven't been doing it for 10 years. For Estonia, the catalyst was the fact they got hacked by a neighbouring country. They said, “We really need to change the way we're doing business in order to protect ourselves”, and they decided to go modern and digital across the board.

There are some apt lessons to be learned. It's an economy of 1.8 million people, not 37 million or 38 million people. They don't have a large bureaucracy to deal with, so it's an easier ship to turn, but they went down the right path.

The U.K. looked at the rule book. Our rule book is the SAC rule book, which covers the various types of clauses that should be included in a procurement. There are potentially 6,000 different clauses in the SAC manual. What the U.K. essentially did was throw out the manual. They said, “This isn't serving either party. This isn't serving government; it's not serving the private sector. Let's throw this out the window and move to an outcomes-based model, shorter procurement time frames, more piloting, more experimentation. Let's see what works and what doesn't, and then we can ramp up on what's working.”

There have been jurisdictions that have done it and are seeing successes. There are some lessons learned—nobody hits a home run out of the gate—but those are two countries that I would point to that have really transformed the way government is doing business with the industry. It's more of an ongoing relationship, as opposed to, “This is what we want. You guys can take it or leave it.”

[Majid Jowhari, Liberal, Richmond Hill, ON]

Would it make sense if we as the government initiated an initiative? Let's call it a pilot. We bring all the stakeholders together to do two things. First, we try some new technology that we are experimenting with, such as blockchain. Second, also during the process, we look at how we can change our policies. How can we make sure that our risk policies and our procurement policies are taken care of? How can we make sure that cybersecurity is taken care of? Could we use the concept that you're talking about as a pilot to be able to design or redesign all of these elements to move into a more agile and open procurement?

[André Leduc]

I think you're starting to see it. There have been a couple of blockchain pilots at the federal level that are either awarded or under way. You're starting to see the application of new technologies to federal frameworks.

From a purely procurement standpoint, how are we going about engaging those? When we talked about “open by default”, it was a challenge-based procurement. Tip-to-toe it was two and a half to three months, so we can hold that up as an example of a new practice in town that seems to be working.

It's a bit slow to ramp up in terms of adoption, because we have been doing things the other way for a hundred years. The change management side of it is significant.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Yes, it's huge.

[André Leduc]

However, we are seeing departments and PSPC working on contracting for pilots, contracting for experimentation, and starting to do it. We are seeing it.

[Majid Jowhari, Liberal, Richmond Hill, ON]

This is exactly where I wanted to go. Now we are seeing it with blockchain. We're getting the pilot. I'm not sure whether we are expanding the scope of that to make sure that we have the procedures on all of those things taken into account, because not all of the contract elements are going to be applicable to something like blockchain, such as 15 years.

Therefore, going back to what my colleague, Mr. Ayoub, started talking about, for some of the procurement that is commodity-based, yes, we can go to that prescriptive model. For some of the ones that are leading edge, probably we should go into the collaboration and to the pilot model and probably start with those and change some of our policies and procedures.

My last question is going to go to Mr. Akrouche.

The idea of a network of SMEs to create a super-enterprise was a very interesting concept. By way of transparency, I've managed a number of large enterprise business transformations where I had a lot of different suppliers coming in. One of the challenges, one of the big risks that I always had to mitigate, was how to manage when something goes wrong. Who are we going to hold accountable?

What do you see in that? That was my biggest challenge in my previous life.

[The Chair, Conservative, Tom Lukiwski]

There's about a minute left.

[Andy Akrouche]

Yes, that is definitely a challenge. The higher the number of stakeholders, the more complex are the relationships. That's true also in any prime-led relationship. You still have all these stakeholders working with the prime, and you have no visibility of them. At least in the other part, in the network model, all the partners are visible. You know what all the partners are actually doing, what they bring to the table, versus the prime-led model, where you really have no idea. You have no visibility. You have no line of sight to this stuff, so the risks are much higher than in that “one throat to choke”, if you want to put it that way. There's a lot of risk of associated with that, and I don't really recommend that in a complex procurement.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much. Unfortunately, we're out of time.

Mr. Masse, you can finish us off.

[Brian Masse, NDP, Windsor West, ON]

I appreciate it. I'll be very quick.

Mr. French, I believe you had something to add to the last question they had, and then I have one last question after that.

[Nevin French]

I think Ms. Mendès asked about how this can be introduced. I think governments could also look at allowing for flexibility from one department to another and not applying the cookie cutter, not saying “Thou must use solution x to whatever problems.” As André mentioned, I think it would be useful to create some kind of field of competition to test some trials and errors in small, controlled opportunities within different departments.

Government is government. It's a giant machine, so allowing some flexibility from one department to another could go a long way in introducing some of these new technologies.

[Brian Masse, NDP, Windsor West, ON]

I know there's lots of controversy with single-source procurement. Forgive my ignorance on this if it does happen, but is there a process whereby if you've been on a contract, perhaps in that contract there's some type of waypoint that may lead to another procurement, the point being that there's a benefit if you reach that benchmark?

I used to work on programs for persons with disabilities, youth at risk, and new Canadians finding employment, but I was always having to renew contracts. We had a 90% success rate in their finding employment or going back to the workplace or going back to school, but we were renewing the contract every six months. We did that for six years. A lot of energy was gone there. I understand that there needs to be accountability—and there was—but it was almost at a point where it was draining the resources and the capabilities of the investment.

Is there any type of a hybrid model that perhaps could extend it or give some earned benefit for experience, but with high expectations and measurables and accountability? For example, if you invested in this procurement and you got it, another window could be extended a lot more easily for renewal, versus running the entire process again, which can be quite draining.

[André Leduc]

I recently had a conversation with a bunch of members about having the right person or the right solution in place, and when the contract runs out, the government will go back and RFP it again. In certain circumstances there's an opportunity to roll over and add another two years. When we move to things like software as a service, do you want the contract to sunset and then go back out to tender with a new RFP if that software and everything is functioning properly? Can we not just roll that in, roll it over, and go for another two years using that solution? If everybody's satisfied with that, it's the best possible outcome. Why can't we do that rather than having to go back out for a full RFP again?

What ends up happening nine times out of 10—but it's probably closer to 99 times out of 100—is that if I have hired an IT consultant and he's doing a great job but I have to go back out to tender on an RFP, I'm wasting my time, the government's time, and the industry's time, because I will make sure that the only possible winner for this RFP process is this guy. I will make the experience requirements so drawn out and based on his experience that I'll make it prescriptive and only he can win, and when the rest of the industry looks at it, they wonder who could possibly satisfy these requirements.

There's a balance between rolling over.... Once I do a pilot, wouldn't it be great if we could just roll right into a contract? The pilot went great and we'd like to apply this over here, but we have to go back out for a full RFP again.

There is the opportunity to be able to do it. We do a $50,000 pilot, and if the pilot goes really well, we can open that up to a $100,000 contract. You can run on that. There's an opportunity to do it. There'll be resistance to it—legal, procurement, the rule books, the policies, the regulations—but we're starting to find out that not all those rules are written in stone.

[The Chair, Conservative, Tom Lukiwski]

You have a couple of minutes if you wish.

[Brian Masse, NDP, Windsor West, ON]

That was supposed to be my last question, and I apologize for that.

If the industry knew about that when bidding and the process moved in that direction, do you think they would feel there's favouritism or that there would be resistance?

Especially if it was, for example, one renewal or it was very much prescribed as part of the original bidding process and you met these things at such-and-such a benchmark, the process might kick in. If after that there was a fixed date that concluded in a definite sunset so others could feel there's more competition later on, would we have so much resistance in the industry? I don't know.

[André Leduc]

It's a balancing act. If you are transparent and up front about it, you'll say, “We are going to run this pilot at this amount of money with the option of doubling down and running an extended contract.” That's part of the procurement on the front end. If the pilot fails, then I go back out and start over again, but if the pilot runs well, why would I try to go back out and design an RFP when I know who I want to win and I want to continue working with this group?

It's a bit of a balancing act. If you're transparent and open about it on the front end, what are they going to challenge on the back end? You would pilot it for $25,000 with an option for $100,000. You're not immediately going out for that $100,000 investment, in case it goes wrong.

[Andy Akrouche]

I'd like to comment on this, if I may.

There's an existing mechanism within the procurement process. It's called the rolling wave. You can have a 30-year relationship with a firm, but that relationship continues based on the performance of the vendor. If the vendor is still doing well and everything is fine, you keep getting more years. There's a mechanism already in place to do this kind of stuff; it's just maybe not implemented universally.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Gentlemen, thank you so much for coming here; it's been excellent conversation and very informative. Should you have any additional information you think would be of benefit to our committee as we continue our study, please provide that information directly to our clerk. Any information you provide in addition to the testimony you've given today would be much appreciated. Thank you again.

Colleagues, we will suspend. Those of you who are not on the subcommittee on agenda are excused, and we will suspend for about three minutes.