Thank you very much, Mr. Chairman. My name is Desmond Gray, and I'm the director general of the office of small and medium enterprises and stakeholder engagement in the acquisitions branch of Public Services and Procurement Canada.
As you all probably know, the Government of Canada does expend significant resources annually for the goods and services it buys to meet the needs of Canadians. Federal procurement accounts for about 1% of Canadian GDP, so it's quite significant. On average, this translates into about $18 billion of procurement a year. This ranges in the goods and services that we buy from things like food, clothing, and office supplies all the way up to ships, tanks, and aircraft, which is a very wide range.
Of this $18 billion annually we spend, $16 billion is spent with Canadian suppliers. Last year, for example, our department issued over 23,000 contract documents. Of this amount, $6 billion was spent on DND requirements, and of that $6 billion, $4.2 billion was for goods.
Canadian federal procurement is based on the core principles of fairness and transparency. Our laws, regulations and international trade agreements generally require that government purchases be put to the open market for public bids.
Competition promotes innovation and the best value. There are some exceptions to this, provided for in the government contracting regulations, such as when only one supplier exists, or there is a robust justification to source to a single supplier. This may occur mostly in the defence context, where interoperability with allies and national security are factors at play.
Canada has for some time leveraged defence procurement for industrial benefits, and recent changes have brought broader application and more rigour to that work. A core element of the industrial and technological benefits approach is a rated and weighted value proposition.
As part of the overarching goal of getting the right equipment and services for the Canadian Armed Forces, this is a powerful lever for the government, because it requires bidders to compete on the basis of meaningful economic benefits to Canada associated with each bid. It is a weighted and rated assessment, so bidders who provide quality value propositions will stand out. We know that sustained spending over time not only strengths the industrial base, it supports research, development, and innovation, and export capabilities.
I think you all know that unlike regular goods and services we provide or procure, defence equipment is rarely standard. Even equipment described as “off the shelf” may need to be customized to meet military needs. Armoured and non-armoured military vehicles, for example, carry sophisticated equipment, and they must be able to withstand weather conditions and circumstances that are unlike those encountered in the civilian world.
The office of small and medium enterprises and stakeholder engagement, the organization I lead, was created in 2005 to specifically address the needs and perspectives of small and medium-sized enterprises selling to the Government of Canada. We assist SMEs, identify procurement opportunities, and help remove obstacles to their participation. Today approximately 35% of all of our PSPC contracts are awarded to SMEs.
Finally, I'd like to tell you a little about one other program we deliver, and it's called the Build in Canada innovation program. We believe this is a unique program that helps Canadian companies commercialize their innovations by buying and testing them in the federal government.
This program was created to bolster innovation in Canada's business sector. The BCIP helps companies, including small and medium enterprises, to bridge the pre-commercialization gap for their innovative products and services, while providing the federal government departments with opportunities to access innovation and innovative solutions. We do this by awarding contracts through an open, transparent, and competitive process with pre-commercial innovations by testing and providing feedback to these entrepreneurs about the performance of their products; by providing innovators with the opportunity to enter the marketplace with a successful application of their new product or service; and by covering the cost of the innovation and managing the procurement process on behalf of the federal government departments.
As of October this year, we have awarded 209 contracts to innovative Canadian companies for a total value of $74 million, and most recently we have been in the process of reviewing the BCIP program. We are looking to determine if it meets the goals that were originally set for it and if the program could be improved to deliver greater benefits and value to federal departments and Canadians.
Thank you for your time.
I appreciate the opportunity to appear before you, and I and my colleague will be pleased to respond to any questions.