Government Operations Committee on April 30th, 2020

[The Clerk]

I have the list here. They include the chief of human resources at Treasury Board, and the board's associate assistant deputy minister, employment conditions and labour relations; Patrick Borbey, president of the Public Service Commission; and the president of the Public Service Alliance of Canada—

[Kelly McCauley, Conservative, Edmonton West, AB]

Those are federal employees, okay.

[The Clerk]

They're all federal employees, essentially. There are several others as well.

[The Chair, Conservative, Tom Lukiwski]

Is that agreeable to everyone?

[Kelly McCauley, Conservative, Edmonton West, AB]

It works for me.

[The Chair, Conservative, Tom Lukiwski]

Seeing no objection then, Paul, I think you've got your marching orders.

That seems to be sufficient.

Now Paul again, I'll defer to you. Will we be able to suspend for a few moments as we get our second-hour witnesses prepared?

[The Clerk]

Yes, I do recommend you suspend briefly.

Thank you very much, Mr. Chair.

[The Chair, Conservative, Tom Lukiwski]

Colleagues, we are suspended for a couple of moments. We'll reconvene as soon as possible.

[The Chair, Conservative, Tom Lukiwski]

We are now in session. I would ask all witnesses who are about to make presentations to remember that if you are speaking in English to please make sure that your comments are on the English channel. If you are speaking French, make sure you're on the French channel.

Lastly, we have only about 50 minutes left, because we must conclude at 4 p.m. to allow our technicians to get ready for the next Zoom video conference. We have two opening statements, one from Mr. Jeglic and one from Mr. Ieraci. I would ask that colleagues, and gentlemen, you try to keep your comments as concise as possible to allow as much time as possible for questions from our committee members.

Mr. Jeglic, with that brief introduction the floor is yours, sir.

[Alexander Jeglic, Procurement Ombudsman, Office of the Procurement Ombudsman]

Thank you to the chair and members for inviting me back to the committee. It is my pleasure to be here. I hope I can be of assistance.

I am joined today by the deputy procurement ombudsman, David Rabinovitch, who is also participating via Zoom from his residence.

I would like to begin my remarks by thanking Canada's health care workers who are on the front lines of this pandemic risking their own health and well-being to lead us through these difficult times.

I would also like to thank all the people who work behind the scenes and provide essential services to ensure that Canadians can eat well, and stay in a safe place.

I also thank the public servants at all levels of government, across Canada, who work tirelessly to ensure access to screening tests, medical equipment, personal protective equipment, financial assistance and other necessary supports.

Thank you to the IT, translation and administrative professionals who make it possible for us to work remotely, including enabling us to do the important work the committee is doing today.

Now, I would like to explain to you my role and mandate. I would like to explain my role within federal procurement as some of you may not have been here on the committee when I was last here, two years ago.

The Office of the Procurement Ombudsman opened in 2008 with a focus on providing small and medium-sized businesses an avenue of recourse for procurement and contracting issues. My office operates at arm's length from other federal organizations, including Public Services and Procurement Canada.

While I report the Minister of Public Services and Procurement, the minister has no direct involvement in my office's daily activities or the content of my reports.

Specifically my legislative mandate is, first, to review complaints regarding the awards of certain contracts for goods below $26,400 and services below $105,700; second, to review complaints regarding the administration of certain contracts regardless of their dollar value; third, to review the department's practices for acquiring goods and services to assess their fairness, openness and transparency, and to make recommendations for improvement; and fourth, to provide alternative dispute resolution, like mediation services when requested and agreed to by the parties to a federal contract.

As you can see, the mandate is quite specific. This is because the Canadian International Trade Tribunal has jurisdiction to review complaints about the award of contracts above these thresholds of $26,400 for goods and $105,700 for services.

Now I will talk a little bit about the Government of Canada and its COVID-19 response.

My office specifically has not been inundated by COVID-19 procurement and contracting related complaints. My office's key services, which are reviewing complaints about the award of lower dollar value contracts and providing contract mediation services, are more likely to be needed in subsequent phases of the recovery. When the office of small and medium enterprises asked for our help in responding to the over 26,000 calls and emails from suppliers looking to sell COVID-19 related products to the federal government, we immediately sent them several employees to assist in contacting these companies to move the process forward.

We have heard from some suppliers regarding COVID-19 issues, and I will briefly describe some of these interactions.

One supplier contacted us with complaints about the procurement processes for chartered evacuation flights. However, as the dollar amounts of those contracts were well above the threshold of my mandate, we let the supplier know that the CITT has jurisdiction to investigate these types of complaints.

We've also received inquiries from suppliers about selling hospital beds to assist with COVID-19 outbreaks; sending bulk PPE supplies to the government; waiving normal procurement requirements; selling disinfecting materials; selling medical masks; donating hand sanitizers, and how to sell the same in the future to the government; and how to purchase specific types of ventilators.

For each of these inquiries, just as with non-COVID-19 inquiries, we explain our mandate to the supplier in case they need our investigation services or our remediation services. We provide them with an answer directly or point them to a federal organization that can. For example, the companies that contacted us wanted to know who to call for masks and hand sanitizers. We directed them to the office of small and medium enterprises, which you will hear from next and which is specifically designed for this purpose.

We have not received any formal requests for mediation services in regards to either COVID-19 related contracts or other contracts that may have been impacted by the COVID-19 pandemic. As mentioned earlier, it is anticipated, however, that formal complaints and mediation request may come further down the road. For now, it's too soon, as COVID-19 related contracts are just being put into place.

Moving forward, to be proactive, my office is studying the issue of emergency contracting, both in terms of how the contracts are put in place as well as what transpires when contractual obligations cannot be met due to unexpected emergency conditions known as force majeure.

We intend to share our research with both federal departments and suppliers, to help all parties to federal contracts know how to proceed when crises such as COVID-19 happen. We also want to hear from all Canadian suppliers, including small and medium-sized business owners and diverse business owners, to learn about their experiences during this crisis so we can share the information broadly with contracting organizations.

As time passes, we anticipate receiving complaints from businesses that hoped to but did not obtain federal contracts during this crisis and mediation requests regarding existing contracts that were not completed due to the crisis. As always, we will be there to review these complaints and to provide our mediation services so that businesses and departments can get back to business. My office has a successful track record in mediating contract disputes, and I urge all of you and anyone listening to contact us for help in this area. I would welcome the opportunity to come back to this committee in the future to report back on our COVID-related work and findings.

In closing, I would like to thank committee members again for inviting me, and I would be pleased to answer your questions.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Jeglic, on your economy of words.

We will now go to our second presentation.

Mr. Ieraci, the floor is yours.

[Lorenzo Ieraci, Director General, Office of Small and Medium Enterprises, Public Services and Procurement Canada]

Good afternoon, Mr. Chair and honourable members of this standing committee, and thank you for having me here today.

My name is Lorenzo Ieraci and I am the director general of the office of small and medium enterprises at Public Services and Procurement Canada. Joining me today is Louis-Martin Parent, director for the national capital region.

Today I would like to focus my remarks on two areas. First, I will provide an overview of the office of small and medium enterprises, OSME, and how we work to assist smaller companies in federal procurement. Second, I will highlight how we are supporting the broader efforts of Public Services and Procurement Canada and the Government of Canada to acquire the equipment and supplies our front-line health care workers need in the fight against COVID-19.

Mr. Chair, let me begin by providing a brief overview of OSME. OSME was created in 2005 to specifically address the needs and perspectives of smaller businesses selling to the Government of Canada. Our organization has a network of six regional offices stretching from Victoria to Halifax. In addition to our regional offices, we also have a toll-free national information line, which companies can call if they have questions or need assistance.

Our dedicated team helps companies in a number of ways. First, we raise awareness of the fact that our organization exists and is a resource available to them for assistance. Second, we educate companies on the federal procurement process and on where to find information or opportunities. Third, we provide direct assistance to those interested in participating in federal procurement. In addition, we seek to advocate on behalf of smaller companies both within Public Services and Procurement Canada and, to the extent possible, with other federal organizations. Our goal is to identify and reduce barriers that smaller businesses can face when doing business with the Government of Canada.

Mr. Chair, OSME also encourages Canadian companies from traditionally underrepresented groups and helps them participate in federal procurement. To do so, we work with external stakeholders, partners and associations to reach their respective constituencies. We want to ensure that they are aware of OSME and the services we offer, so that the federal government can benefit from the great diversity of Canada’s business community.

We do all this through activities such as free seminars, webinars and one-on-one meetings. In essence, we try to make it as easy as possible for smaller businesses to reach us so that we can answer their questions and help them on their journey through federal procurement. In addition, we make information available through our website, buyandsell.gc.ca. This website provides information on federal procurement, as well as most tenders or solicitations undertaken by PSPC and other federal departments and agencies.

Moreover, OSME works with provincial and territorial counterparts to explore opportunities for collaboration. As a result, our department has signed agreements with 11 provinces and territories in support of the Canadian collaborative procurement initiative. The objective of this initiative is to allow provinces and territories to use our department's procurement instruments when it is to their benefit. During this pandemic, we have worked to make procurement instruments that may assist provinces and territories available to them. As you can see, OSME offers a lot of information, tools and resources to help Canadian companies, particularly smaller ones, to participate in federal procurement.

Mr. Chair, I would now like to briefly highlight how OSME is supporting the government’s efforts in combatting the COVID-19 pandemic.

On March 12, 2020, Public Services and Procurement Canada issued a call for action on the buyandsell.gc.ca website. The response has been enthusiastic. We have received more than 26,000 forms through our website, including roughly 16,500 from Canadians and Canadian companies.

In addition to communicating via email with Canadians and Canadian companies that have submitted forms, OSME has been working to reach out to speak to those who submitted forms. This is allowing us to obtain additional information on the goods or services that these companies are offering. We are capturing this information to help our procurement team assess and triage the information received. We also want to ensure that these companies are aware of our services. In essence, we want to encourage them to consider doing business with the federal government as we move through this pandemic and emerge from it. After all, the Government of Canada buys roughly 25 billion dollars' worth of goods and services annually, and there will be opportunities for many of these companies to do business with the Government of Canada moving forward.

Mr. Chair, even though OSME does not actually procure or issue contracts directly to companies, we are nonetheless engaged and working diligently to do our part during the pandemic. Although we have had to shift our focus in a temporary but complementary way, OSME’s mission remains the same. We want to help smaller companies do business with the Government of Canada and represent their views and interests within federal procurement.

In closing, Mr. Chair, I note that OSME is appearing alongside the procurement ombudsman and his office. As Mr. Jeglic identified, OSME and the office of the procurement ombudsman have had a positive and mutually respectful working relationship for years.

While always being mindful of the fact that the ombudsman and his office need to maintain a level of independence, we still collaborate when mutually beneficial. This is particularly the case when informing companies about the services that both our organizations offer to them. As we move through this pandemic, OSME will continue to remain focused on helping smaller companies do business with the Government of Canada.

Thank you for the opportunity to appear before you today.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Colleagues, we have approximately 40 minutes left, which means we will not get two complete rounds of questions, but we'll go as far as we can.

I also point out to Mr. McCauley that we will get into the second round of questioning. If you still want Mr. Manly to take one of your speaking slots, please conduct yourself and your colleagues accordingly.

We will now start with our first intervention with Mr. Aboultaif. You have six minutes, please, sir.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you.

Mr. Ieraci, there are 26,000 applications, with 16,500, or about 60%, being Canadian. How will you be able to identify those companies? I can imagine most of the applications are related to COVID-19 services and supplies. What is your mechanism for making sure that the companies you choose to recommend for procurement are the right ones to refer?

[Lorenzo Ieraci]

As I indicated, of the 26,000 forms that have been submitted, roughly 16,500 of them are from Canadians or Canadian companies. We're following up with all of these companies to have conversations with them and to gain additional information.

The companies that came forward and submitted forms fall into two broad categories, generally speaking. Category one companies are those who are offering personal protective equipment. Category two companies are those offering other goods or services, which might not be personal protective equipment, but nonetheless might help the Government of Canada. I'll deal with category two for just a moment, and then I'll come back to category one.

When it comes to category two, we as an organization have been pointing out to companies that our department's primary focus right now is to buy personal protective equipment. Many of these companies that have come forward have identified goods or services that we as a government are likely to need moving forward. In this regard, we want to make sure, first, that they are aware of our office and that we can assist them in understanding federal procurement. Second, we want to make sure that they are also aware that they can register on an email notification service in two very simple and quick steps, which will keep them informed every time a tender is issued that is specific to the good or service they're providing.

This situation has given us the opportunity to reach out to a lot of these companies and to make sure they are aware of the services available to them.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Do we know if these companies have a supply chain in Canada or are they relying on international markets to bring products into Canada, specifically PPE?

[Lorenzo Ieraci]

With regard to personal protective equipment, when we reach out to companies we are asking them for more information, including the question you just asked, which is where their supply base is, whether it's domestic or international. We're obtaining as much information as we can and we're recording all that information, including a company's business number, whether it has the required medical device establishment licence, and what kind of products it has. We also give companies the opportunity to confirm that the products they are looking to sell conform with the standards established by Health Canada and the Public Health Agency of Canada. That information has also been made available on our website. We capture all of this information to be help our procurement team identify potential companies moving forward.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

With the COVID-19, this emergency is the number one issue and time is definitely very important. How are you structured to be able to shorten the process as much as possible to be able to flip this information to be useful for the procurement agencies or departments to act quickly on it? How long would it take you, from the moment you see the inquiry or the application in your system, until you act on it? Is there an average time for that in the last few weeks?

[Lorenzo Ieraci]

Over the last couple of weeks, we've been actively engaged in reaching out to all of the domestic companies that have submitted forms. In the course of the last two to two and a half weeks, we've reached out to just over 12,000 of the 16,500 applications and are obtaining information from those companies. As we obtain the information, we are updating our database and are sharing that information on a regular basis with our procurement team.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

I'm sorry to cut you off.

Have we experienced new entities within Canada that you've never seen before that are coming forward with new, innovative ideas? They want to help at all levels of supplies and so forth. Have you experienced that from being there? Have you looked at the buyandsell.gc.ca website to see who the new players are here and whether we can benefit more from them?

[Lorenzo Ieraci]

The answer is yes, absolutely. As I mentioned before, we've had a lot of companies approach us that may not have typically thought about doing business with the Government of Canada. For those who truly have innovative approaches or those who are looking to be able to retool or do different business in order to be able to have domestic capacity, we work in collaboration with our colleagues at Innovation, Science and Economic Development Canada, or ISED, because they have programs in the field of innovation. They're also responsible for the retooling element of that. We make sure that those companies are aware of the fact that our partner department at ISED is an avenue for them to be able to explore options to be able to obtain support.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

How much time do I have?

[The Chair, Conservative, Tom Lukiwski]

Mr. Aboultaif, you have no time left, but thanks for asking.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you.

[The Chair, Conservative, Tom Lukiwski]

We will now go to Mr. Weiler for six minutes, please.