Thanks, Annette.
I would like to thank the committee for accommodating the logistics and allowing me to participate by telepresence.
I'll talk briefly about targeted procurement. Procurement programs are really a very important way for growth-oriented businesses to access capital and networks. In the United States, small businesses that became suppliers to large corporations and governments saw their revenue grow by 250% on average and their number of employees grow by an average of more than 150%. Large contracts such as those that are offered by government and large companies can also serve as collateral, which allows the entrepreneurs to secure loans. If you will recall, Annette mentioned that access to capital is one of the barriers we see facing many women trying to scale their businesses. Procurement programs also give entrepreneurs more credibility when they're seeking this outside capital, and it helps them also link into larger supply chains.
Our work has highlighted the benefits of increasing access for companies that are 51% or more owned, operated, and controlled by such under-represented groups as women. For example, Accenture and General Motors are terrific examples of large companies that have used such programs to drive better results for the bottom line. At Accenture, having a diverse supply chain has been a strategic priority for more than 20 years. Through their program, Accenture now spends about 30% of total procurement on diverse suppliers, with 6% to 8% of that going to women-owned businesses.
There's a strong business case for targeted supplier programs. Reports by the World Economic Forum as well as Canada's Conference Board outline important benefits. These include things like increased customer satisfaction, because the customers see you working with a diverse supplier base; higher revenues; better employee retention, because of the connection employees see to that reach-out in terms of a diverse and targeted supply chain. You also generally have a more robust supply chain, more competition, and increased access to new markets.
Implementing targeted procurement programs in Canada is something that we think is incredibly important. In the United States, action on targeted procurement programs started nearly 50 years ago. As a result, as Annette and I discovered, it's actually quite advanced. The U.S. government itself has a goal of procuring 5% from women-owned businesses, and over 95%—that's 95%—of Fortune 500 companies have their own targeted supplier programs.
Closer to home, we're very heartened by commitments in the 2018 federal budget, which highlighted how federal procurement can drive business growth. We look forward to hearing further details about this commitment, which seems somewhat similar to the U.S. women-owned small business program we've learned about. As the budget states, the government will “set an objective of increasing the participation of women-owned small and medium-sized enterprises...in federal procurement so that they constitute at least 15 per cent of SMEs supplying the Government of Canada.”
As the government moves toward implementation, we offer four considerations that we think will be vital to success. One is to set viable goals. The second is to collect and use data. Third is to reach out to women businesses. Fourth is to verify eligible companies. I'll just briefly articulate around all of those.
Around goals, we commend the government's commitment to 15%. By the same token, there is a big difference between awarding 15% of total nominal SME contracts and awarding 15% of the total available funds. We think the most effective way to effect change would be to create a set-aside reserve to award to women entrepreneurs based on a percentage of total available procurement funds.
The second area is about data collection. We certainly believe we need a strong baseline of current government procurement won by women-owned businesses, broken down, if possible, by industry sector and issuing department. This could be used to chart the progress of any initiatives going forward over time.
The third area is about reaching out to women-owned businesses. Another major portion of our report actually focused on the role of the private sector in expanding their own targeted supplier programs. Our suggestions to business, which include efforts such as attending conferences and summits, and working closely with networks, accelerators, and incubators, should also be applied to government. Basically, how do we get the word out so that women learn about these programs and actually engage?
The final area is to verify eligible companies. The government must provide clarity on the threshold for what qualifies as a women-owned enterprise. We suggest establishing, or actually endorsing, a program of third party certification to minimize abuse. There are a number of different organizations that already do this. Certification should focus on substantive management and control rather than necessarily ownership.
Beyond those specific measures, the committee should also consider the recommendations that were made by the growth council.
There were a couple of recommendations that focused on procurement. There are four basic approaches to strategic procurement that seem to be used in other countries, which might guide the formulation of a strategic procurement program here in Canada. One is solution-based procurement, which actually specifies the outcome you desire, rather than specifying specific equipment or services that are to be purchased. It's outcome-based.
The second type of procurement is called “supply push”. It opens the procurement process to unsolicited offers, exposing the government to innovative ideas and options that officials might not know exist. Basically, it encourages innovation and new approaches.
The third type is set-aside reserve, a share of government spending for certain types of suppliers, such as small business. This could include what we're talking about today, a pool of capital set aside specifically for women entrepreneurs or women-managed businesses.
The final type is demand-pull programs. This is where agencies intentionally create demand for new or nascent technologies.
Those are a few ideas around implementation. Annette and I certainly thank you for the opportunity to address the committee, and we welcome your questions.
