Government Operations Committee on April 24th, 2018

[Kelly McCauley, Conservative, Edmonton West, AB]

I get one good question a day. That's probably it.

[Voices]

Oh, oh!

[Annette Verschuren]

Elyse and I haven't designed the procurement programs. We haven't had the time. We talk about challenges, and we talk about recommendations.

I will tell you, I started this business, NRStor. I'm a developer of energy storage projects. My first success was when I got a three-year contract with the IESO for a flywheel installation in Ontario. That gave me the credibility to go to BDC and get a loan for half of that capital. I paid it off before it was due.

That started me, honest to God; it allowed me to go to the next project. It allowed me to invest in other stuff. This is how it actually works. It gave me the confidence to go look for money. For one of the companies we had, I had to go to Switzerland to get the capital. I got my equity in Canada from LiUNA, which is a great labour union pension fund, but I had to go to Switzerland to get the money for the expense, $120 million.

Again, it's building that. If I have a contract, if women-owned businesses have contracts to support that, that really accelerates it. There are situations where people get one-year contracts. I realize that, but maybe in the set-aside you can define what's in that set-aside and figure out how to allocate it.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks. That's why I'm asking. I'm worried that we tend to simplify things. I would hate for people to think, “Oh, we have a set-aside, so it's fixed”, when we have this huge bureaucracy that prevents people from bidding.

[Annette Verschuren]

Yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

What's the point of a set-aside if we're setting aside maybe for a placeholder that's not benefiting women, or a bunch of tiny, little contracts? Maybe we should focus on a smaller set-aside but a larger, longer-term contract that's actually going to develop the capacity that we need.

[Elyse Allan]

You have to think of the transactional cost of getting ready for the bid, right?

[Kelly McCauley, Conservative, Edmonton West, AB]

That's what we hear a lot.

[Elyse Allan]

To your point exactly, if that cost is just too overwhelming.... It's true for big companies too. I mean, you're always comparing how much time and effort to get what prize. Like, what are you going after?

I think if in designing the program you think about the outcomes you want—maybe you want to give access to capital and you want to give collateral—then hopefully that will lead to a design that allows for longer-term or bigger contracts, or renewal processes or something.

[Annette Verschuren]

I would also say that with innovation, it's the same thing. Elyse addressed a lot of the stuff. We have the same requirements for regulation for a big company and a small new company trying to introduce innovation in our country. We need to accelerate that. We really need to find another sandbox in which we can get this new technology.

The Americans have done it extraordinarily well in CARPA and ARPA and in other major programs that they have introduced. We need to get quicker at this. Women-owned businesses can really take advantage of that.

We have the same track for everything. A big company like GE has to fill out the same procurement material as a little company with 12 people. It's wrong. It's not working.

[Kelly McCauley, Conservative, Edmonton West, AB]

No, and that's what I wanted to get on the record—

[Elyse Allan]

We don't want to do it either.

[Voices]

Oh, oh!

[Annette Verschuren]

I know, Elyse. I know how hard it is. I'm through this. I get it. You don't want it either.

I get it, but it's even worse. You're restricting growth.

[Elyse Allan]

I totally agree.

[Annette Verschuren]

It's restricting growth.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's why I'm saying we have to fix the ease of procurement as a first step, almost.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Jowhari, you have five minutes, please.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair.

Okay: I'm going to stop laughing now.

Elyse, I want to go back to your closing comments. You talked about the strategic procurement, and you highlighted four pillars, as I call them. One was solution-based procurement—basically outcome-based—which is great. We've heard a lot from other witnesses on it. You talked about supply push. You categorized it as unsolicited offers. Then you talked about set-asides, which we've talked a lot about here. Finally, you closed with the fourth pillar, which is a demand-pull program.

I'm new to the committee, and those two I have not heard from other witnesses in the forms that were discussed. Can you expand on supply push and the demand-pull program? How can we effectively use those for procurement, SMEs, supporting women, and supporting the target we have of going from 7% to at least 15% so that we are compatible with our neighbours down south?

[Elyse Allan]

Sure. I'll do my best.

Some of this came through the work on the growth council. I know I won't do it justice, but there's more in the reports of the growth council, where it was really a way to try to drive innovation. The supply push is really about the idea of how we make sure that the procurement process is open to unsolicited offers. If you have a good idea—let's say at GE, which is close to home—about how we can bring power in a new and different way to the north, who do you go to and where do you go to for that? I don't mean to use that as a specific example as much as to try to articulate it better. If Annette has a new battery storage idea that's perfect for northen or rural communities, there are not necessarily easy open doors to bring an unsolicited offer.

Let's say the government isn't looking for this, but you have a great solution. Where can you take it? Who's there to listen who can potentially do something with it as well? It's not just having the open door to pitch it; it's having an organization that's able to respond.

[Majid Jowhari, Liberal, Richmond Hill, ON]

It's very interesting that you mention this. I have a lot of different interest groups come to me and talk about blockchain as a new technology and how blockchain could help solve some of the government challenges or bigger challenges. Now I can relate to what you mean by supply push.

Annette, did you want to speak on that?

[Annette Verschuren]

I'm good.

[Majid Jowhari, Liberal, Richmond Hill, ON]

You're good on that one? Okay.

On the demand-pull program, can you help me with that?

[Elyse Allan]

The demand is where the government might say, if we could come up with a really cool new idea.... I think the IESO example that Annette gave would be a good one. Let's say they said they wanted to try new forms of storage capability on the grid. But what is kind of new? Government, which has the biggest capacity to actually take risk, in some ways, is oftentimes—

[Majid Jowhari, Liberal, Richmond Hill, ON]

Well, we're taking a risk with your money, but that's okay....