Government Operations Committee on Feb. 8th, 2022

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

In your procurement practice review of Transport Canada, you noted that there were some inconsistencies in the evaluation criteria for bids. Transport Canada responded that they would implement training activities and materials and enhance the contracting peer review process.

In your view, are these measures sufficient to respond to the concerns?

[Alexander Jeglic]

At a high level, yes, but ultimately I think the real determination will happen once we're able to do the follow-up review, which happens two years after the report is issued.

I don't want to presuppose until I see what was actually implemented. Once that's better understood and known, at that point we'll be able to make that determination, as I described earlier.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Ms. Thompson.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you so much.

[The Chair, Conservative, Robert Gordon Kitchen]

We'll now go to Ms. Vignola for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

Thank you for joining us, Mr. Jeglic.

In your report, you point out that you did not have many complaints related to COVID‑19.

Has the number of complaints related to COVID‑19 increased since you produced your report?

[Alexander Jeglic]

That is a fair question. It is something we were surprised by. We were anticipating a higher volume.

I would suggest that in that first year of the report that you were highlighting, there were very few COVID-related cases. In the subsequent financial year, the cases increased, and now we're seeing a decline.

In total since the pandemic began, we've seen about 70 or so cases related to COVID-related procurement. That being said, none of them resulted in a review of complaint. None of them were fully vetted to meet all of the regulatory requirements to launch an inquiry.

David, do you want to jump in and provide just a few examples of the types of cases that we saw that were COVID-related?

[David Rabinovitch]

Sure, Alex, I'd be happy to.

I also want to apologize for the poor audio. Yesterday's test with the headphones was great. Today it didn't work and we're on our iPhones. I apologize if I'm not clear.

As Alex said, there have been about 70 since the pandemic started. One was on the barriers to participating in federal procurement. The supplier wanted to sell to the government, so we put them directly in contact with the office of small and medium businesses. I think they received about 30,000 calls from Canadian businesses looking to sell PPE, or personal protective equipment.

Another supplier complained about a discriminatory policy and that COVID purchases were not included in the procurement set-aside for aboriginal businesses, which is now called the procurement set-aside for indigenous businesses.

Another one was that a department did not provide a debriefing to a supplier whose bid was not accepted. In that case, we put the supplier in touch with the business dispute management group at the department, so that they could get debriefed.

Another one was insufficient bidding period—

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Rabinovitch.

It is not possible to go through the details of 70 complaints in six minutes, but I appreciate your ample explanations.

A number of contracts are related to national security. Do contracts of that kind undermine the companies' ability to file complaints if there are problems?

You can just answer yes or no.

[Alexander Jeglic]

Certainly the implication of the national security exception does impact a supplier's ability to bring forward an action to CITT.

One thing that has been brought to our attention is that NSE continues to be an issue associated with COVID. In 2020-21, we saw 11 NSE-related cases. In the first six months of this year, we've seen seven national security exception-related cases.

That being said, we've also launched a knowledge-deepening and sharing piece specifically on the NSE to provide for a better understanding as to what exactly it means, what exactly the prospective outcomes are and how we can make considerations for making change. That piece should be published by my office before the summer of 2022. It's something that could potentially establish reasonable grounds for a subsequent systemic review related to the national security exemption.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Your answers are always enlightening. Thank you for that.

In your presentation earlier, you said that most people are unaware of your services. You also mentioned the difficulty companies have in adhering to the contract awarding process, in properly understanding it, and so on. In your report, you also mention that your mediation services are not well known.

The procurement guide contains some tips to help companies and procurement officers with the contract awarding process. Nevertheless, how can we better inform small and medium-size businesses—the big ones already seems to be well informed—about your services, about the mediation that departments do not seem to be using much, and on the role of procurement officers in facilitating the process?

[Alexander Jeglic]

That's a great question, one that I would love to address, because it's something that has preoccupied our time from at least the outset of my tenure.

The easiest way to do this is by having specific language in contracts, solicitations and regret letters making it very clear and understandable to all suppliers that our services are available. Therefore, we've written to all deputy heads of departments and agencies under our jurisdiction asking them to include that language in those documents. We've met a certain level of success, but we'd like to see even more.

That's the primary way, but the other aspect is outreach. You mentioned small and medium-sized enterprises. You have to go—

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Jeglic, excuse me for interrupting. I apologize. Unfortunately, six minutes goes by extremely quickly, so if you have any additions to that answer, if you could provide those in writing, it would be greatly appreciated. It's a great question and we'd love to hear the answer. Thank you.

We'll now go to Mr. Johns, for six minutes.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you, Mr. Jeglic and Mr. Rabinovitch, for being here.

The annual report reaffirms the office's commitment to fostering diversity and inclusion in federal procurement. You touched a little on it.

Can you talk about some of the key barriers to diverse suppliers—indigenous, Black and other diverse suppliers—wishing to do business with the federal government?

[Alexander Jeglic]

Absolutely.

One of the main issues, as was touched on in an earlier question, is that predominantly large and sophisticated suppliers are well aware of government procurement and how it works. However, as you can imagine, diverse suppliers aren't currently part of that supply chain in a meaningful way, so they're not even entering the supply chain as subcontractors at the levels that they should.

One of the issues that we see more than anything is the lack of overall data. We don't know how many diverse suppliers are actively winning federal contracts, so it's very difficult to come up with an answer to the question you've asked without better understanding baseline data.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Can you speak a bit about how adequate the government's data collection practices have been in that regard? Has your office contributed to data collection about diverse suppliers?

[Alexander Jeglic]

That's a fair question.

Specifically to our office, along with the questions where we put to deputy heads a request to put language about our services in contracts, solicitations and regret letters, we also conducted a survey about what types of activities those departments are doing specifically related to diverse suppliers. Again, that survey was conducted almost two years ago. The results were not overwhelming, but what we have seen is a renewed focus in this area. As you heard in my opening remarks, we've done four diversity summits, and each year we're seeing more progress being made.

This year, Public Services and Procurement Canada announced that there is a departmental focused social procurement policy, so that will actually enable data collection in a much more meaningful way. Before that, there wasn't really that requisite level of policy coverage to collect the data, and that now exists. We are hopeful that this tool itself will improve the data.

It is something that I mention with regularity and it impacts all decision-making associated with how to improve systemic barriers for diverse suppliers.

[Gord Johns, NDP, Courtenay—Alberni, BC]

At the previous committee, back in June before the election, there were two witnesses representing indigenous businesses and they had been unsuccessful. They found that the government did very little to prepare them in terms of awarding their contracts.

Can you speak a little bit about what the government needs to do to develop additional processes to provide the necessary feedback so that unsuccessful bidders are able to improve their applications or proposals moving forward?

[Alexander Jeglic]

Absolutely. You've touched on another issue that we highlight with frequency, and that is the information that's shared in regret letters and the volume and the quality of information that's provided in debriefs. That's for active bidders who were unsuccessful in processes.

It's a matter of transparency and respect, so if that information is not shared with bidders—as you can imagine, these are oftentimes small and medium-sized businesses that expend resources, time and energy to bid on these proposals—then to ultimately be given a regret letter of one or two lines leaves people very unsatisfied and likely unwilling to participate.

It is an area where I think there is a renewed focus, as I mentioned. You heard me say that the Treasury Board contracting policy is migrating into the directive on procurement management. That directive is more explicit about the mandatory requirement for debriefs, so we are hopeful that there will be more debriefs.

Again, it speaks to the quality of those debriefs, so it is something that my office continues to say out loud to make sure that there are improvements.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I'm going to ask you about single bidders. It was identified in your report that 53% of competitive solicitation processes resulted in a single bidder.

Can you explain the large number of single bidders in solicitation processes that are intended to be competitive, and maybe how long this phenomenon of single bidders in competitive processes has been the norm? How could government contracting be better simplified to increase competition?

[Alexander Jeglic]

Absolutely. I will caution that it is a relatively small sample size to date. It was a trend that was noticed as we started the first few systemic reviews, and it's something we continue to track.

As I mentioned in a previous response, I can't definitively say exactly why it's happening, but there are two conclusions that our office reached without doing further analysis.

We've found that where there is an incumbent.... For example, in a services contract, there may be an existing supplier offering those services already, and other suppliers are made aware of the fact that there is an incumbent supplier. Typically they choose not to participate because of an assumption that the incumbent has the advantage.

Another rationale as to why there might not be additional bidders in competitive processes has to do with simplification. The process, as you have well noted, is quite complex and burdensome, so there are many efforts being made to help simplify it, but those efforts will never end. To be honest, it's one of those situations where you can look back two decades, and we were talking about simplification 15 or 20 years ago.

Again, concrete steps are being taken, with e-procurement being an example where low-dollar-value procurements will now be automated to make the process more user-friendly. It's anticipated that it will produce some simplification to the process.

Again, as I said, I can't underscore enough the importance of the need to continue to focus on the simplification of federal procurement.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much. I appreciate your responses.

Just so the committee knows, we are definitely having an issue with interpretation. The way we're set up here is just not conducive to it.

We are about to start the second round, which will basically be about 25 minutes, and then I would ask Mr. Jeglic if he would be okay to come back at a later time for further questioning, should the committee wish to do that at some point in time. I would appreciate that. I think it's only fair to our interpreters so that they are not stressed to the maximum here.

I'm just looking around the room to make sure that we're okay with that. I'm seeing nods, so thank you.

We'll go into the second and final round, and we will start with Mr. McCauley for 10 minutes.

Sorry, it's five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

Mr. Jeglic and Mr. Rabinovitch, welcome back. I appreciate everything that the two of you and your team have done over the years. I know you've been with us several times, and I have to say, of all the government departments we've dealt with, your team has certainly been, head and shoulders, the most dedicated to trying to improve our procurement process and other processes, so thanks very much.

I want to start going through your annual report and just pick out a couple of items and ask you to comment on them.

On the first page, it talks about the emergency spending, with the comment, “does not provide justification to set aside the duties of fairness and transparency that exist in non-emergency situations.” Has that become more of an issue? The reason I ask is that I spoke recently in the House about the government ignoring Treasury Board rules, and the comment came back that sometimes, with the volume of spending that we have, it's okay to ignore some rules.

Are you seeing an increase in departments trying to justify not following rules or the transparency, or using COVID or the volume as a justification, or is this just a warning for the future?

[Alexander Jeglic]

It's not something that we've studied specifically. It was something that we noted as a result of our study on emergency procurement. As we've seen, other jurisdictions behave in emergencies.... Obviously COVID is a unique circumstance, as I'm sure everyone can appreciate. Ultimately, it is important to still maintain certain rules, and what those rules are, because you're still asking suppliers to behave in these exceptional circumstances in accordance with the principles that you lay out. It's important that those principles be transparent so that they can participate in the process in a meaningful way.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you.

You talk about simplification a lot, which I appreciate. In 2018, this committee put forward a report asking for simplification. It was a unanimous report, and I don't think we've seen much progress or as much progress as our small businesses need.

What kind of feedback are you getting from the bureaucracy when you're putting forward your suggestions? Are you getting push-back? Are your ideas being accepted? Where does the responsibility lie in getting this stuff done?