Government Operations Committee on May 3rd, 2021

[Lorenzo Ieraci]

Mr. Chair, I would say two things. First, in terms of tracking, there is a distinction or a difference between indigenous businesses and indigenous companies versus what I'll call other under-represented groups, and I hope that's okay. Because of the procurement strategy for aboriginal business, there actually has been a government policy in place to enable the collection of data and information on indigenous businesses. We don't have something similar for other under-represented groups. As per my previous response, we are putting the finishing touches on a policy that will give us that authority to collect that data for Public Services and Procurement Canada procurements, and our electronic procurement solution will give us the system to be able to track that information and that data.

So, in response to your question, three years from now we should have data to be able to talk about which contracts are going to which companies and how many of them fall within different groups.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Ieraci.

We'll now go to Mr. Paul-Hus for five minutes.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

I am still a bit flabbergasted as to why the Liberals wanted to do this study today. It was their government that put this program in place, which didn't really work. Anyway, it's their choice.

I have seen the 2019-20 departmental results report. My colleague talked a little bit about it. In terms of the results for government procurement, there is a section in there called “Government purchasing supports Canada's economic, environmental and social policy goals.” In this section, the percentage of contracts awarded to small and medium-sized enterprises is shown and the target was met on March 31, 2020. It also shows the results for 2017 at 67%, 2018-19 at 49%, and 2019-20 at 52%. Over three years, we averaged 56%. The target was 40%. I am trying to understand why the target was lowered, when over three years the average was 56%.

Mr. Ieraci, can you explain that?

[Lorenzo Ieraci]

To tell you the truth, I have no idea. I don't know when that target was set. Obviously, if that target is exceeded, maybe we should look at whether it's enough—

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Over three years, the target has always been largely exceeded: 67%, 49% and 52%. Now the target has been lowered to 40%. I was just wondering how this decision was made.

Further down, the table refers to the percentage increase in participation in procurement processes by indigenous businesses. For 2019, the annual report says “To be determined” in the “Target” column. There was nothing about this in previous years. It said “Not applicable.” Then, for 2020, it says “To be determined” again. In short, there's nothing. My point is along the same lines as what my colleague said. There's neither a result nor a target.

Mr. Ieraci, does this seem right?

[Lorenzo Ieraci]

The report before me refers to the departmental plan. With respect to the percentage increase in participation by indigenous and women-owned businesses, last year we conducted an exercise to determine how many bids were submitted by businesses in these two categories. Our information showed that 11% of the bids were from indigenous businesses and 16% were from women-owned businesses.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

When I ask questions about these tables, I know that it isn't always easy for you to answer them from memory. I'm just trying to understand the context for the implementation of the program, which is already almost four years old. It seems as if the program is still in its early stages.

I'll turn to the report tabled by the committee in 2018. Recommendation 7 called for the reduction of the administrative burden on SMEs in the procurement process.

Has this recommendation been acted upon?

[Lorenzo Ieraci]

I spoke earlier about our work on simplifying contracts and setting up our electronic procurement system. This should help small and medium-sized enterprises do business with the government on the procurement side.

During my career, I've had the opportunity to speak with a number of business leaders regarding the procurement system. For most businesses, selling their products to the federal government, or even to provincial or municipal governments, is certainly not the same as selling their products to the private sector or the general public. The rules of the game are quite different.

I tend to tell them that we're working to simplify the procurement system. However, that doesn't necessarily mean that the process will become simple. It depends on the area in which we're working. As I said, federal procurement works differently from private sector procurement.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Are efforts being made to implement the recommendation?

I also want to talk about payments, since this issue often comes up. We know that the processes are long.

Are there any steps under way to implement the recommendations of this report, which was prepared three years ago?

You're talking about the new system, right?

[Lorenzo Ieraci]

Yes, but—

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Paul-Hus.

Again, that's another great question. If Mr. Ieraci could provide us with a written response, it would be greatly appreciated.

We'll now go to Mr. Kusmierczyk for five minutes.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

I concur. I'm rather enjoying the discussion here, and I really appreciate the excellent questions that my colleagues across the table have been asking. This has been a really enlightening conversation.

Mr. Ieraci, can you summarize for us the Black business pilot program? Tell us a little about how long it has been operational and how many procurements have been posted under this pilot program.

[Lorenzo Ieraci]

Mr. Chair, the Black business procurement pilot is something that we initiated in January. We undertook 12 procurements that were looking to be targeted towards Black Canadian businesses in Canada. They were undertaken across the country.

Of those 12 procurements, we have one that closed today, so we don't have the information on that, and we have two that are still in evaluation. Of the 11 procurements that are closed, we were successful in receiving bids in eight of those procurements from Black Canadian businesses. Four of them did not receive any bids. So far, we were able to award three contracts to Black Canadian businesses.

This initiative was undertaken for a number of reasons, not the least of which is to continue to experiment when it comes to procurement with regard to socio-economic benefits or outcomes. Already what we've seen is that we're drawing some lessons learned in terms of how those procurements went.

One of them, as I mentioned before—and my colleague Clinton spoke about the office of small and medium enterprises—was that we started to learn that to increase participation of under-represented groups, we really need to take a proactive approach in terms of engaging with businesses directly and also indirectly. What I mean by indirectly is through organizations and associations that represent, in this case, Black Canadian businesses, so that they can in turn make sure that businesses are aware of the opportunities that exist when it comes to federal procurement.

That initiative was undertaken in January. Like I said, we have one last procurement that closed today. We're doing the assessment of it. This is part of our ongoing learning in terms of how to operationalize social procurement within our department.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you. I appreciate that.

Our government also made a large investment, the first ever, through the Black entrepreneurship program, with $221 million over four years. I believe it's being led by ISED, Innovation, Science and Economic Development, if I'm not mistaken.

I want to know whether there is an avenue for collaboration or an exchange of information between the two ministries, both through the Black business procurement pilot and the Black entrepreneurship program. Are the two programs speaking to each other? I'm just curious. Is there an opportunity for that down the road?

[Lorenzo Ieraci]

Mr. Chair, yes, the two programs are speaking with each other. I mentioned the office of small and medium enterprises. I probably should turn to Clinton and give him the opportunity to respond.

One of the things we're doing as we reach out to under-represented groups, in this case Black Canadian businesses, is that we want to make sure they're aware of not only the federal government as a potential buyer for their goods or services but also the programs that exist within the Government of Canada that they may be able to benefit from. You mentioned the Black entrepreneur strategy from ISED. There are also other activities from other departments and agencies, including the Business Development Bank of Canada and others. One of the things we try to do within the office of small and medium enterprises is to provide as much information as possible to suppliers, obviously without overwhelming them, so they're aware of the various programs and initiatives that exist in the Government of Canada so they might be able to benefit from those.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

I imagine that especially some of the early-stage companies that haven't quite scaled yet might also benefit from the wraparound support and the early-stage support, coupled with the opportunities to bid on procurement, so I'm heartened to hear that the two industries are speaking to each other.

I have 30 seconds left, so I just want to ask you a follow-up question.

Through the Black entrepreneurship program, we also invested, I think, $5 million in a knowledge hub to gather data and information and research on Black entrepreneurship. Is that something PSPC could also contribute to and share data on in order to get a more fulsome understanding of Black entrepreneurship and procurement opportunities?

[Lorenzo Ieraci]

Thank you for the question.

Yes, we want to be able to provide information both to be able to support the activities and to be able to benefit from the analysis, research and work that are being done by other federal departments and agencies—ISED, Statistics Canada and others—so we can get a better understanding of the market capabilities and the market realities for not just Black Canadian businesses but also other groups that are under-represented in federal procurement so we can get a better picture in terms of market capabilities.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Ieraci. I appreciate that.

We'll now go to the third round, starting with Mr. McCauley for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks.

Mr. Ieraci, you mentioned the three in the pilot project and how you weren't able to get quotes from Black-owned businesses. What were those contracts for? Were they large? Were they small? Do you have any idea why we couldn't get them?

[Lorenzo Ieraci]

Thank you for the question.

It's a two-part answer. First, in terms of whether they were large or small, because these were pilot projects, we undertook procurements that would be under the CETA, our trade agreement with the European Union, so they were $238,000 or less.

In terms of why we did not obtain bids for those specific procurements, we're going to be consulting with industry associations and organizations to try to get a better understanding so we're not guessing why that is, so we can try to understand better why it is we didn't receive any.

[Kelly McCauley, Conservative, Edmonton West, AB]

Who in PSPC is going to be in charge of or, hopefully, accountable for achieving the 5%, and also achieving the goals for women-led businesses, so we're not sitting here again next year looking at a “to be decided”?

[Lorenzo Ieraci]

Mr. Chair, these procurements are done within what we call acquisition programs, which involve basically two groups—defence procurement and non-defence procurement. Basically that team, which includes me, needs to get that done.

[Kelly McCauley, Conservative, Edmonton West, AB]

Are you the person at the highest level for ensuring that this gets done?

[Lorenzo Ieraci]

Mr. Chair, I wouldn't presume to be. I'm in an acting position right now. There are other assistant deputy ministers. Obviously, our deputy minister is the head federal public servant for our department. I just don't want to make a career limiting move by saying yes.