Government Operations Committee on Oct. 6th, 2022

[The Chair (Mr. Robert Kitchen (Souris—Moose Mountain, CPC)), Conservative, Robert Gordon Kitchen]

I call the meeting to order.

Welcome to meeting number 32 of the House of Commons Standing Committee on Government Operations and Estimates. The committee is meeting today to begin its study of diversity in procurement. We have representatives from Public Services and Procurement Canada with us today. The last 30 minutes of the meeting will be be devoted to committee business.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Members are attending in person in the room and remotely by using the Zoom application.

Regarding the speaking list, the committee clerk and I will do the best we can to maintain the consolidated order of speaking for all members, whether participating virtually or in person.

I would like to take this opportunity to remind all participants who are here at this meeting that taking any screenshots or taking photos of your screen is not permitted.

I would like to welcome the witnesses here today, and Ms. Royds again, who was with us on Monday. It's good to see you again.

You will each have five minutes for an opening statement.

I understand, Mr. Mills, that you will begin.

[Michael Mills, Assistant Deputy Minister, Procurement Branch, Department of Public Works and Government Services]

Good afternoon, Mr. Chair and members of the committee.

Before I begin, I would like to acknowledge that the land on which we gather is the traditional unceded territory of the Algonquin Anishinabe people.

I would like to thank the committee for giving me the opportunity to speak to Public Services and Procurement Canada’s commitment to diversity in procurement in my role as the assistant deputy minister of procurement.

I’m joined today by my colleagues Mollie Royds, PSPC’s associate assistant deputy minister of procurement; Levent Ozmutlu, director general of our strategic policy sector; and Clinton Lawrence-Whyte, the director general of Procurement Assistance Canada.

As you are aware, PSPC procures goods and services on behalf of federal departments and agencies. Those procurements range from office supplies to military ships and everything in between.

The department buys approximately $24 billion worth of goods, services and construction each year from nearly 10,000 suppliers.

It is part of PSPC's responsibility to use our purchasing power to support Canada's economic, environmental and social policy goals. That includes ensuring a wider diversity of suppliers from under-represented groups, which have historically faced systemic barriers to success.

Mr. Chair, I would like to take the next few minutes to explain our actions to attract a wider diversity of suppliers. Consultations with indigenous peoples, Black and other racialized Canadians, women, 2SLGBTQI+ Canadians, Canadians with disabilities, and other communities have been critical to their development.

In January 2022, PSPC launched its supplier diversity action plan, which includes concrete steps to increase the participation of businesses from under-represented groups in federal procurement.

Recent pilot projects were critical in informing this action plan. For example, PSPC administered a Black business procurement pilot to expand procurement opportunities for Black entrepreneurs.

A cornerstone of this supplier diversity action plan is our policy on social procurement. This policy has broadened the definition of value for money of federal contracts in order to foster greater economic and social opportunities for under-represented groups, and it empowers our procurement specialists to pursue their objectives in their day-to-day work. This policy demonstrates our commitment to continue to promote federal procurement with under-represented suppliers.

By enacting this policy, we are making it clear that including more under-represented groups among our suppliers is now a core objective of our procurement function.

To support the department's efforts, we are currently developing a supplier diversity program, which will outline concrete actions to support increased participation from under-represented suppliers.

In addition, Mr. Chair, PSPC has also been working towards addressing the inequalities that exist between indigenous and non-indigenous peoples.

In August 2021, the minister of PSPC announced the implementation of a mandatory requirement for federal departments and agencies to ensure that a minimum of 5% of the value of their contracts are being awarded to indigenous businesses. PSPC is working in close collaboration with indigenous partners and other government departments to develop tools and guidance to support the implementation of the 5% target across government.

By increasing contracting opportunities, we are able to help generate economic prosperity in communities that have not traditionally shared in this country‘s economic wealth.

PSPC is also modernizing its procurement practices by making procurement easier, faster, and more accessible for suppliers, particularly those from under-represented groups.

As part of our modernizing efforts, a new electronic procurement solution was launched in 2021, and more recently, CanadaBuys replaced Buyandsell as the official source for tender and award notices for federal procurement. These innovative tools will give us access to better procurement data, which will further support our decision-making processes.

These are some of the examples of how PSPC has been modernizing the federal procurement processes, and is working towards a world-class procurement system that drives value for money and simplifies its procurement process.

In conclusion, PSPC is committed to moving forward on this very important work of modernizing procurement and diversifying the federal government's supplier base to ensure that it better reflects the Canadian population. And while we have taken important steps, we recognize that more needs to be done.

Thank you.

I'd be pleased to answer questions from the committee.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Mills.

We'll now go into questions. We will start with Mr. McCauley for six minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Chair, thanks.

Witnesses, thanks for joining us today.

Over four years ago, this committee tabled a unanimous report called, “Modernizing federal procurement for small and medium enterprises, women-owned and Indigenous businesses”. Fifteen of the 40 recommendations were specifically toward indigenous and women-led and women-owned businesses.

How may of those 15 recommendations, keeping in mind it was well over four years ago, have been implemented?

[Michael Mills]

Thank you, Mr. Chair, for the question.

I believe we're making progress on the majority of those—

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay. I didn't ask if you were making progress. How many of those 15 have we implemented, keeping in mind it was June of 2018?

[Michael Mills]

Some of the items will take a longer period of time to fully implement. We are making progress on the majority of them. I'd be happy to get back among those which were able to be implemented in short order and how many—

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay. This may give you a sense of déjà vu, because I asked the identical question probably about two years ago in this committee, and we got back nothing, actually. We got word salad back. I would like concrete information on when you're getting back to us.

I'm going into this because, again, it was over four years ago that we presented very clear, straightforward information. One item was on tracking how much business is going to women-led or indigenous businesses.

When I look at GC InfoBase, the most recent numbers for results, under “Percentage increase in participation to procurement processes by businesses owned by women”, I see that the date is to be determined. Here we are, four years and three months after we recommended it, and it's “date to be determined”. If you look for indigenous, and this was right from Treasury Board, you see it's “date to be determined”.

I have to ask what PSPC is doing when, four years and three months after the fact, we're still looking at date to be determined.

[Michael Mills]

Thank you, Mr. Chair.

I think this is one on which I don't want to get too detailed, but we are in the process of implementing a new electronic procurement system. Within the electronic procurement system—

[Kelly McCauley, Conservative, Edmonton West, AB]

Let me interrupt right there. It's been four years and three months, and we still don't even have results. We don't even have a goal for these items. What's it taking?

When I look GC InfoBase, I see the number of bodies. The full-time equivalents at PSPC has grown, I think, by over one-third, so it's not a lack of resources. Is it a lack of will?

[Michael Mills]

Mr. Chair, I would like to clarify.

We are doing procurements with women-owned businesses. We are doing procurement with indigenous-owned businesses. We're doing procurements with diverse businesses. As we implement a new electronic procurement system, we are making efforts to make sure we collect the information that, going forward, will enable us to more accurately track in real time the volume of that procurement.

What I'm not able to report on right now, because we're still in the implementation—to be completed by June 2023—of the electronic procurement system—

[Kelly McCauley, Conservative, Edmonton West, AB]

Why does it take so long to just simply track that? Again, it's been four years and three months. If you were in the private sector and someone said, “You know, you've got four years and two month to get this done”, you would have had it done. Why is it that four years and three months later, we're still implementing?

I look at your “2022 to 2023 Departmental Plan” and “Percentage of participation in procurement processes by Indigenous suppliers”, and of course it goes back several years. For 2018-19, it's “Not available”; 2019-20, “Not available”; 2020-21. The “2022 to 2023 Target” is 11%, but it says “This target has been established in accordance with the following baseline data” as a guess of what it was for previous periods.

You have unlimited resources, it seems. You've added thousands and thousands of bodies to PSPC. It's a priority. It was recommended by this committee. It's a priority from this government in the mandate letters. Why does it take so long to get done?

I'll be blunt here. I'm doubting the sincerity of PSPC's desire to actually get this done if we're seeing four years and three months and you're just now kicking off an action plan.

[Michael Mills]

Again, Mr. Chair, the implementation of our systems is very complex. It's a multi-year process to do that, and we do now have the systems in place.

Another dimension is that collecting the information on the identity of business owners requires a careful analysis of privacy considerations, ensuring that we're safeguarding the collection of that important private personal information within our systems. We had to do the necessary work to make sure we were collecting that information in a secure fashion that was respectful of legislation such as the Privacy Act, and that has taken time.

I would also like to note that over the course of that period, we were also very taxed as an organization in responding to the COVID-19 pandemic.

[Kelly McCauley, Conservative, Edmonton West, AB]

I would understand the taxed part if you were a regular organization with x number of bodies that hasn't changed, but your department has grown from 12,000 to over 17,000. I don't see how adding thousands upon thousands of bodies would leave you taxed on something that is not only a high priority from this committee but is also set out in the mandate letter by the minister herself.

I'm dumbfounded that again I'm asking these questions, and nothing seems to be getting done.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. McCauley.

We'll now go to Mr. Jowhari for six minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair, and thank you, Mr. Mills, for your opening remarks.

You talked about how PSPC launched its supplier diversity action plan in January 22. Help us set the stage. You've talked about pilots and you've talked about some of the programs, but if we take a step back, can you explain to us where we were, for example, three years ago, and the dimensions of this diversity program and where we are today?

[Michael Mills]

Thank you, Mr. Chair.

I might ask Levent to answer this one in terms of the policy responsibility. He can talk a bit about the policy context and where we've been over the last three years.

[Levent Ozmutlu, Director General, Strategic Policy Sector, Procurement Branch, Department of Public Works and Government Services]

Thank you, Mr. Chair.

The journey began back in 2018 when we started a continual process of gathering more information and testing for improvements in relation to supplier diversity. This is one of the cornerstones of the supplier diversity action plan.

As you've indicated, since that time we've taken significant steps in establishing the social procurement policy and we are working towards establishing a social procurement program that will further allow us to implement the measures that we're looking at with respect to leveraging procurement for the benefit of all Canadians and for increasing supplier diversity in the businesses with which we do business.

We're expecting to see progress as it relates to data collection, which is yet another element of this process. My colleague could also elaborate on some of the steps that we're taking with respect to outreach with under-represented suppliers and the coaching services, as well as other supports that are being provided.

Thank you.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Ozmutlu.

I understand that naturally there are different stages of executing the program. Can you talk about the measures that these programs plan to have in place to enable us to be able to monitor their progress?

[Levent Ozmutlu]

Certainly, yes.

As we start implementing the steps, we'll be looking at the impacts that we have with respect to the number of contracts that are awarded to under-represented suppliers, both in terms of participation of these suppliers in the procurement process, by bidding on them, as well as the number of contracts that are awarded.

As was indicated by Mr. Mills earlier, data collection is now under way. We've launched the supplier profile questionnaires in the EPS system, and CanadaBuys is now up and running. As we start collecting more data on the businesses we do these transactions with, we'll be in a better position to understand more fully what their profiles look like, and from there establish baselines that we can further analyze.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

I'll go back to make sure that I understand. We have rolled out programs, and you talked about the different programs. You've indicated that there are measures in place. Do you have targets for measures for a specific period of time that we could get as part of the regular reporting?

Let's say we are trying, for example, to achieve 5%. You talked about benchmarking. If we are at 2% for indigenous, do we have, as an example, concrete steps to take if we are planning to achieve 4% by this time, 5% by this time? Are such measures and such targets available?

[Levent Ozmutlu]

Thank you, Mr. Chair, for the question.

Indigenous procurement is one area where we can talk about some concrete targets. The 5% mandate, as you may be aware, was announced by the government, and we're implementing that as we speak, in a phased approach. We will have departments essentially meeting those targets in a three-year time period.

We have the first phase, which is ending at the end of this fiscal year, and within six months of the end of the fiscal year, we will have indicators as to what percentage of the business was actually awarded to indigenous firms. That includes contracts that were directly awarded to indigenous suppliers as well as subcontracts, because, as you know, the ecosystem is quite important as it relates to procurement.

[Majid Jowhari, Liberal, Richmond Hill, ON]

We have programs, and it looks like we have measures, and we have targets. You were very specific about indigenous groups in this area.

Do we have similar ones for other groups that we are trying to make sure are represented?

[Levent Ozmutlu]

Thank you, Mr. Chair, for the question.

As alluded to earlier, for the other groups that we are talking about, we are in the process of establishing the baselines by collecting information about the companies with which we do business so that we can get a better appreciation of the makeup of the businesses and what their profiles look like.

I would add that this is a multidimensional exercise, and we will be asking them questions about which groups they fall into. In many cases they actually fit into more than one group, so that's also another interesting aspect of this exercise.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

You opened up the concept of data and data gathering. Naturally, one aspect is setting a baseline, but there's also having the data elements that are needed to be able to monitor and track it.

Can you comment on what steps you are doing to make sure that not only do we have the data, but also the target, the years and the measures and KPIs?