Thank you, Mr. Chair.
Honourable members of the committee, it's a privilege to be here today to discuss the engagement of small and medium enterprises within federal procurement on behalf of the Information Technology Association of Canada, also known as ITAC.
ITAC is the national voice of Canada's ICT industry, an industry that includes over 37,000 companies, most of which are SMEs. This sector generates over 1.5 million jobs and contributes more than $76 billion to the economy.
Beyond the economic contributions, the ICT industry creates and provides the goods and services that contribute to a more productive, competitive and innovative economy and society.
Over two-thirds of ITAC members are SMEs. It is in this spirit that we welcome the opportunity to support your review.
In recent years ITAC has been partnering with the Government of Canada in various fora to work on modernizing their IT procurement processes and contracting terms and conditions to enable the government to successfully leverage information technologies to execute on their digital transformation agenda, which is ultimately to improve the delivery of public services to citizens in a more cost-effective manner.
ITAC has engaged in this manner in the hopes of mitigating the risk of unsuccessful IT projects and wasted taxpayer money and to remove barriers for SMEs and diversity-led businesses in Canada's ICT sector to do more business with the government.
ITAC supports the socio-economic goals of the government with respect to SMEs; indigenous, minority, and women-led organizations; and the leveraging of procurement across a geographically diverse group of companies. There is a need to help grow and scale up our SMEs, and federal procurement is a vehicle that can be leveraged to support this growth.
As the government seeks to improve procurement frameworks, it must also realize its role as the largest customer of ICT in Canada. In doing so, the government can build a platform that fuels digitization and innovation, supports single-window mandates, and successfully delivers simple and secure citizen- and business-centric services.
There is no one-size-fits-all procurement methodology. Many different models exist, but at the end of the day, the common goal needs to refocus on open, fair, and transparent procurements that result in the best product at an acceptable cost. What is sometimes lost in the discussion is how being highly prescriptive about what the government seeks while attempting to drive down costs can have a longer-term negative downstream impact on the supply chain, which lessens the potential for positive socio-economic impacts and stifles access to innovation.
Better tracking data is needed to understand where government procurement currently sits. What is the current proportion of procurements awarded to SMEs and to indigenous, minority, and women-led organizations? What is the value of those contracts, and are these detailed by sector and subsector? Were the procurements the SMEs engaged in simple or commodity-based, or were they complex procurements? It would be nearly impossible to set new requirements, policies, or quotas without first understanding where things are at.
ITAC has also been calling on the government to better engage the ICT community earlier in the procurement process, at the outset of procurement discussions, not further down the line when the decisions on what to procure and what IT to procure have already been taken. We would do this so the industry might provide and share industry knowledge and expertise, which is expanding at an ever-increasing rate as new technologies and solutions are being frequently developed and deployed.
Last fall, we hosted a conference for federal government executives and managers so they might better understand the principles of agile procurement.
ITAC supports agile procurement processes in the government, ones that focus on business outcomes and solutions, rather than the procurement of a specific technology, where industry may not understand what the ultimate goals or usage will be.
A new focus on the goals and outcomes of projects, rather than current overly- prescribed technical specifications, would allow industry to provide intelligence that leads to innovative solutions, rather than the baseline supply of an IT product.
We have called on government to enter into partnerships with industry and to negotiate contracts rather than to continue to leverage take-it-or-leave-it contracting. Contract negotiations are required at a minimum in complex situations. Unbalanced contracts result in poor outcomes for the government, the taxpayer, and the private sector, creating a lose-lose environment. ITAC members are seeking reasonable risk-sharing as a priority, rather than off-loading and transferring all risk to the private sector via unlimited liabilities, over-prescribed terms and conditions, and strict security requirements.
I also wanted to note that in many regards the attempts of the government to mitigate legal and security risks in contracting discourages many SMEs from submitting bids. Impediments range from requiring multiple corporate references to proven case studies to security requirements to the length of time federal procurement cycles take. Setting quotas for SMEs means diversity-led and indigenous firms will not have the socio-economic impacts they seek unless we address some of these current impediments to SME procurement.
These issues, teamed with the length of time it takes for more complex procurements—in certain circumstances, well over a year—limit how many SMEs can afford to dedicate resources to procurements that take this long. As a result of these issues, we have SME members who choose not to take part in any federal procurement due to the complexity and the investments required. This limits the Canadian government's capacity to acquire the best possible or most innovative solution and leverage its procurement to support its socio-economic goals.
Other jurisdictions, including the U.K. and the United States, have operationalized procurements that enable supply of commodity products and services under the vendor's standard contract with a wrapper of government terms and conditions. They have set platforms that allow the engagement of SMEs to explore innovations, business solutions, and applications.
ITAC believes there's a need for risk officers in government, a need to have someone evaluate how the inclusion of strict government terms and prescribed requirements are impacting the number of bidders on procurement.
How is the current procurement environment supporting industry growth, the expansion of the Canadian supply chain, the scaling up of SMEs, or industry partnerships and collaborative innovation? In short, setting a procurement environment that supports ecosystem partnerships, simplifies the procurement process, allows for the continuous refreshing of participants, seeks experimentation and pilots, and permits small, quick failures rather than longer-term significant failures will allow the government not only to access innovation but also to become a catalyst for innovation.
We believe some global best practices can easily be applied to the federal government. Government procurement is an avenue that can enable SMEs to grow, possibly moving from small to medium size and outgrowing the SME category altogether.
Fortunately, the government has been listening. We've begun a dialogue and we're discussing options to address many of these issues. The next step is action.
We'll be happy to take your questions.