Mr. Chairman and ladies and gentlemen, thank you for the opportunity to appear in front of this committee. Improving government procurement is, in our company's opinion, a real priority for the health of Canada's economy and for the perception of Canada's government by its taxpayers.
I'll say just a few words to provide context about Vard Marine. We are an SME. We are about 110 people, 90 of whom are in Canada. We are headquartered in Vancouver, and my office is here in Ottawa. We design ships, and we do related marine consulting.
In Canada, we're responsible for the design of the Arctic offshore patrol ships and the new polar icebreaker. We have recently finished the design of a new Antarctic icebreaker for Chile. We design ferries for companies such as Seaspan Ferries, BC Ferries, and STQ in Quebec.
Also, we are completely global. At the moment, our projects include countries from Senegal and Turkmenistan to Taiwan and South Africa. We have experience of a very wide range of procurement systems in both the government and the private sectors.
Because my time is limited, I will summarize and paraphrase some of the remarks in the written material I have provided to the clerk. Thankfully, I'm helped in that by the submission from Mr. Gamble, to almost all of which we would just say, “Hear, hear!”
I do have a few other things that I'd like to emphasize.
Our company's general impression of Canadian government procurement is that it's extremely well intentioned. It sets out to apply sound principles of fairness, openness, and transparency. Unfortunately, the internal problems of the system mean that it often achieves quite poor outcomes and all too frequently manages no outcomes at all.
Changes to the processes in recent years have often been counterproductive, and that's particularly the case for small and medium-sized companies and innovative companies. The changes have driven up our costs of doing business, increased project timelines, and considerably increased project uncertainties.
The government's procurement expertise is spread very thin. This has been acknowledged by a number of government officials, and our own experience confirms it. I'll try to provide a few examples of some of these points.
The government is increasingly using requests for information, industry consultation sessions, and releases of draft requests for proposals to solicit input from industry. The intention is completely laudable. It's to try to ensure that a final request for proposals is as good as possible, but this, from our perspective as an SME, is free consulting. It takes time. It takes money. We cannot afford to send people across the country for consultation sessions. Also, it skews the outcome of the process towards larger companies that have lobbyists who can afford to do this. What we often see happening is that it makes the procurements more complex. Adding complexity does not help us, and we don't believe it adds help for the government.
In recognition of some problems, the government has been making increasing use of supply arrangements and standing offers. This is a way of simplifying things, potentially, but it's not always conducted terribly well.
A number of government departments are making increasing use of one mechanism, ProServices, which started off as an IT vehicle and is now being expanded to other things. From the engineer's perspective, it's interesting that in that mechanism all engineers are lumped into a single category of “engineer”, whereas you have another category for badges, insignia, and ceremonial accoutrements technologist. I'm not sure that their relative contributions to the Canadian economy are on the same level.
I do realize how important the insignia are.
What this means is that when departments use this vehicle, they create a whole new RFP process within it and quite often, in our experience, they get it wrong.
We were recently asked to bid on a requirement that had already gone out to tender twice and failed twice because the qualifications requirements that were being asked for just didn't exist in the Canadian industry. We could have done this, except that we were asked to provide somebody with a Canadian degree as our subject matter expert. We have many professional engineers and many people with other degrees, but none of the ones that were relevant were from Canadian universities. We don't understand why that was asked for.
I won't talk about low bid. Low bid has been covered off already, and very well.
What's even worse than low bid is low rate, and that often appears in these supply arrangements. If the government is really interested in finding the engineer who will charge the lowest hourly rate, then shame on the government: they are probably not the engineers you want. It's a far worse mechanism than low bid for a package of services.
Social engineering aspects, which we see in the large contracts—industrial regional benefits, industrial technical benefits, value propositions—are not easy for SMEs to handle. We can provide 100% Canadian content because we are 100%, but when we get into things like value propositions, this is difficult. The terminology is difficult. You have a few specialists who will give you consulting advice on this, for which you have to pay handsomely. They don't always have the same opinions on what's required, nor does the government. Further, there's another problem, which is that the time frames for these are often out of step with the procurements. Setting up a consortium R and D project with Canadian universities and other Canadian companies involves NSERC approvals and other mechanisms. We just can't get the time frames to match on these.
Before getting into a few recommendations, which we offer purely as our suggestions, I went through some of the earlier testimony to this committee looking at ideas such as set-asides. On small business set-asides, indigenous people set-asides, women's set-asides, we have experience with these in other countries. We caution you, if you are going to go down that road, to do it very carefully. What we see happening—and this is particularly the case in the U.S.—is that these privileged organizations now start to act as gatekeepers. They're not actually achieving trickle-down effects; they're merely increasing the cost of providing the services.
We are a matrix organization. My project manager in our single largest project at the moment is a woman. Recently one of my staff in Ottawa was named one of the outstanding female engineers in Ontario by Professional Engineers Ontario. I fail to see how it would help them if we failed to win government contracts, and instead were replaced by women-owned businesses.
We decided to make some recommendations for things that we think could be done better. We offer these up as part of a menu that you should consider, and certainly not going against what John Gamble was talking about earlier, which are all good recommendations as well. We don't see there being a one-size-fits-all solution for contracting; it's different depending on whether you're buying printer services or real estate or engineering, so all of these have to be looked at sensibly.
Here they are in no particular order. One thing is that, since I arrived in Canada, which was in 1981, your threshold for sole-sourcing has been $25,000. In fact it's gone down because that now includes the tax. That increases the burden on contracting. It makes it more difficult. I realize that sole-sourcing is not popular, but some of what you're doing instead creates sole sources. It creates sheer monopolies. What we see with national defence is that it awards 10-, 15-, and 20-year contracts to single organizations, which essentially become sole-source; and with all respect to the incumbents, it increases the temptation to charge as much as the market will bear. We think you should really look at what's possible under procurement rules, to reduce the number of contracts you actually put out on the street while avoiding sole-sourcing.
One thing we'd like to see is that you declare your budgets. Particularly in the consulting world you can have a $10,000, $100,000, or $1-million solution. Please tell us what you want.
You need to also display price realism.
To reduce the burden on industry, have page-count limits on proposals. This is done in the U.S. and in many other places. We've been in on the design of the polar icebreaker. Our proposal was longer than the design and build, which the U.S. government is looking for, for its polar icebreaker.
Please look at our past performance. Please evaluate it. We'd really like that.
I'll leave you with one other point, which is innovation. Fifteen to 20 years ago, the government encouraged innovation through the unsolicited proposals program. The build in Canada innovation program is a good but partial substitute. It only covers build in Canada, and that's a small fraction of our economy.
There are many other items we'd like to propose solutions for. I'll leave the rest of it to any questions you may ask.
Thank you again.