Government Operations Committee on March 27th, 2018

[Kelly McCauley, Conservative, Edmonton West, AB]

We were misled then.

[Mike Pacholok]

I would think that our social procurement program is in part one of the ways to help address it. With contracts under $100,000, people would just contact the same vendors they know. We're trying to open that up so that small and medium-sized businesses that are diversely owned have an opportunity.

We're still working on other avenues with respect to simplifying our larger contracts, which I think is a problem that most public sector organizations are trying to deal with. We're trying to move to an e-procurement system so we can do electronic submissions. We're trying to pull back on requirements, and being mindful of things—

[Kelly McCauley, Conservative, Edmonton West, AB]

Sorry, can you give us any details of anything you've done to streamline the process that you found to be successful, or you've had feedback that it's been successful?

[Mike Pacholok]

I think this social procurement program is one example that's been successful. We've heard quite clearly from the—

[Kelly McCauley, Conservative, Edmonton West, AB]

It's not necessarily the social procurement part, but I'm thinking towards small and medium enterprises. Is there anything you've done to streamline the system to make it easier for small companies to bid on Toronto procurement projects?

[Mike Pacholok]

I would say that we're still working on a good example. We're trying to do more outreach. We still struggle in the bigger contracts to break them down so that small and medium-sized businesses can participate.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

You've spent a lot of time talking about your social projects. How do you measure the results?

One of the issues we've heard from some of the women entrepreneurs as well as the indigenous businesses is that sometimes people are starting up a shell company with just one person up top who might be indigenous, and then everyone else is not, and they're winning contracts.

How do you measure how much value you're adding to your target groups?

[Mike Pacholok]

To clarify, we don't have targets with respect to groups, but I understand the issue that is being presented. We work with the supplier councils to help try to make sure that their program is being rigorously met, and we monitor them. We've only been up and running for over a year now, so we'll have to keep monitoring to ensure that those issues aren't resulting where someone is just setting up a sham corporation to get around the issue.

We are trying to measure the amount of spend generally with diverse suppliers, without a specific target for any specific group.

[Kelly McCauley, Conservative, Edmonton West, AB]

You mentioned $3 billion that you're spending, and then $1.8 billion is directed towards a certain area.

How much is directed toward target groups, though I know you said you don't use the word “target groups”. Nevertheless, you have some targets that you've set for delivering business to certain, I guess, identified groups. How much are you actually accomplishing? What percentage are reaching with those identified groups you're trying to help, be they female entrepreneurs or certain social groups?

[Mike Pacholok]

Sorry, I don't have the percentages with me.

I know that in 2017, for women-owned businesses, we had about $17 million worth of spend with them, and that was primarily driven by one contract, which was a construction contract.

[The Vice-Chair, Liberal, Yasmin Ratansi]

You have 30 seconds left.

[Kelly McCauley, Conservative, Edmonton West, AB]

I only have about 30 seconds left. How are you getting this information out to the various identified groups that you're trying to push business towards or get involved in the process?

[Mike Pacholok]

We're setting up supplier network events with our supplier councils. We have our own internal ones, and we have ones with them as well. We try to get out about 12 times a year to push this message.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay, thank you.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Just so that everybody confirms we have unanimous consent to sit until 11:30, I'm fine.

Mr. Blaikie, for five minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

I want to ask an anecdotal question.

I understand that sometimes the barriers for diverse suppliers are things like the complexity of certain contracts, which we talked about earlier. Also, with some cases, a bond is required, especially in construction work, and it's not that the company can't complete the work, but they can't put up the bond, so they get excluded that way.

On that end, I'm wondering if there's some work being done or changes being made by the city to the conditions of the contract to try to make some of these contracts more accessible.

[Mike Pacholok]

For contracts that are under $100,000, generally speaking we don't do construction contracts through there, but when we do, we wouldn't require a bond. We have a policy that bonds are only applicable above $250,000. A general concern that we're always facing in procurement is ensuring that the mandatory requirements put into the call documents by the respective division or department aren't specifically excluding people on the basis of their not having done business with the city before. We work hard to try to eliminate things like that.

Now with CETA, we want to be more mindful of how we phrase the requirements so that they are as broad as possible, while we're still trying to drive towards ensuring that we get a qualified contractor.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Okay. Thank you very much.

Again anecdotally, I've heard stories of diverse suppliers sometimes being awarded a subcontract by larger contractors who fit the bill in terms of bidding requirements and performing work second-hand for cities or other governments across the country at a severely discounted rate. At that point, the larger firm really is just getting paid to find the talent. They're not actually performing a lot of the work.

It seems to me that part of the success of a supplier diversity program would be in trying to connect with those suppliers directly, pay them what they're getting paid by the larger companies, and not have to be responsible for the extra costs. My understanding is that this is a relatively new program for the city. Has it been long enough that there are some success stories you can point to, or is it still in its development phase? Has it worked? Have you seen any bump in numbers? Have you found a particular case where, in the opinion of the city, they were able to save money on a project for having connected directly with diverse suppliers?

[Mike Pacholok]

There definitely have been success stories. For example, when dealing with an organization as large as ours, convincing the department to actually follow through on the process properly is a challenge in itself. We managed to get 42 contracts awarded to diverse suppliers in 2017. That might not sound like a lot of contracts, but this was something new. We're doing hundreds and hundreds of these small contracts, so there's success there.

We've also had success in just raising the profile. I mentioned that there was a contract won by a woman-owned business in construction. It helps drive the reality that it's possible to achieve working with this city or working with the government without any preferential treatment. She's one of our great advocates for ensuring that other companies that could be certified as diversely owned are getting there, so that they can get access to these contracts as well.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Great.

Thank you very much.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Mr. Ayoub, you have five minutes.

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

Thank you, Madam Chair.

Mr. Pacholok, I am especially interested in contracts above $100,000 that were mentioned in your presentation.

Do you have the translation?

[The Vice-Chair, Liberal, Yasmin Ratansi]

They do have the translation, yes.

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

Okay. I just wanted to make sure.

For contracts above $100,000, you are saying that you encourage bidders to adopt a supplier diversity policy. Do you encourage those bidders by giving them points if they meet certain criteria? How does it work more specifically?