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House of Commons Hansard #112 of the 40th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was office.

Topics

Remarks by Parliamentary Secretary to the Minister of Canadian HeritagePrivilegeRoutine Proceedings

4:25 p.m.

NDP

The Acting Speaker NDP Denise Savoie

I thank the hon. member for Mississauga South for raising substantive and very serious issues. Concerns about one's reputation are indeed very serious. I will take this under advisement and come back to the House to report on it if necessary. I say if necessary because there was a suggestion, as I understood it, that an apology might address the issue, so the Speaker will return to the House to report on this matter.

Before resuming debate, it is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Notre-Dame-de-Grâce—Lachine, Infrastructure; the hon. member for Hull—Aylmer, Public Transit; the hon. member for Random—Burin—St. George's, Fisheries and Oceans.

The House resumed consideration of the motion.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:30 p.m.

Liberal

Judy Foote Liberal Random—Burin—St. George's, NL

Madam Speaker, I am pleased take part in the debate on the importance of small and medium sized enterprises. This was a topic that was looked at and addressed by the Standing Committee on Government Operations and Estimates.

It is an issue of vital importance to our economy. Even though it has been dealt with in committee and there have been recommendations coming out of our committee, any time there is an opportunity to speak to this issue, it is one that we need to take advantage of. When we have a venue, such as this one, where those engaged in small and medium sized enterprises can tune in and hear the debate about what has happened not only in committee but now here in the House of Commons, that is an opportunity we should take advantage of.

There has been a great deal of concern expressed by small and medium sized businesses about access to government contracts. When we look at the federal government and the fact that it buys approximately $14 billion worth of goods and services each year from thousands of suppliers, it is no wonder that small and medium sized enterprises want to be able to take advantage of this opportunity.

What we heard in our committee from business people was their constant frustration at not being able to access the system in a way they could afford. What we heard from those who appeared before our committee was that the process that was in place that they had to utilize in order to access contracts and put in proposals was very cumbersome.

While it may be possible for larger businesses to take advantage and use that type of process because of the resources they have available to them, that is not the case for small and medium sized enterprises. When extra burden is put on a small and medium sized enterprise in terms of making the process so burdensome for them, they probably say that it is not worth the effort or they end up putting so much effort into it only to turn around and find that they did not win the contract. That becomes a problem for those businesses.

I think we all recognize the importance of small and medium sized enterprises in our country. In the riding of Random—Burin—St. George's, which I represent, it is certainly the backbone of the economy, as it is in the province that I represent, which is Newfoundland and Labrador. When we look at rural communities, the majority of businesses are small businesses. In fact, I would go so far as to say that there are very few medium sized enterprises in rural Canada.

It is really important that we do everything we can to assist small and medium sized business, many of which probably hire less than 10 people. The definition of a small and medium sized enterprise is 100 people or less. I would venture to say that there are lot of small businesses in our country that hire a lot fewer than 100 people and these businesses are the backbone of our economy in rural communities.

What we heard time and time again from the witnesses who appeared before our committee was just how cumbersome the process is. They came before our committee because they recognized an opportunity to actually make the case to try to get the process more streamlined and to try to get someone to accept and recognize that there are issues here in terms of small and medium sized enterprises being able to make any kind of headway in terms of being able to access government contracts.

Part of the fear that we hear all the time from small and medium sized businesses is the bundling of contracts and the fear that in bundling the contracts they will not have access to them. Larger businesses would be able to take advantage of the opportunities and then end up downloading or subcontracting business to that small or medium enterprise. What we heard was that the small and medium enterprise would like to have the opportunity to bid of its own accord.

Another issue t became apparent as we listened to the witnesses who appeared before us. When we talked about the value of federal government business in our country, the volume of federal contracts awarded to small and medium enterprises in 2004-05 went down from 68% to 67% in the following year and in the following year down to 64%. We saw a bit of a bump in 2007-08 to 65%. There are some very serious issues here as far as small and medium enterprises are concerned because they are gradually seeing an erosion of their access to government contracts.

We did hear overwhelming testimony that small and medium enterprises are frustrated with the federal procurement process. It is cumbersome and expensive to compete in the request for proposal process to the government and not paying interest on overdue accounts. Many small and medium enterprises have just given up trying to bid on federal government contracts.

That is serious and it is certainly serious for rural parts of our country because the majority of businesses in rural parts of Canada are small and medium sized enterprises. If they are going to give up, what does that say about the opportunity for people in rural Canada to be employed? What does that say about opportunities for people who want to stay in rural parts of our country but who, because there is no employment opportunity, will be forced to leave and move elsewhere?

The committee was trying to get a handle on what exactly the government needed to do to respond to the issues that were making it frustrating for small and medium sized enterprises.

Some of the witnesses who appeared before us were quite open about their experiences knowing full well that sometimes the committee was televised and that their names and their businesses would be used in the report. However, the level of frustration was such that it was something they were prepared to do. That tells members just how serious an issue they felt they were facing.

What was really interesting was the growing sentiment among some small and medium sized enterprises that it was not worth the effort and investment to bid on federal government procurements.

Mr. Charles Duffett, the senior vice-president and chief information officer from the Canadian Advanced Technology Alliance, provided the committee with an example of a small to medium sized enterprise that found the federal procurement process overly slow and complicated.

Liquid Computing, an Ottawa area technology business, developed a powerful computer that reduces the space and the electricity used by current data centres. According to Mr. Duffett, the board of directors at Liquid Computing gave instructions to Liquid's chief executive officer not to sell to the federal government because in their view, “In their view, it's a waste of time. It takes up too much energy, and nothing goes anywhere”. In the two to three years it tried to sell its computers to the Canadian government, Liquid sold four units to the United States government.

That is telling when our own government has a process in place that is so burdensome that a company looking to sell its product must look elsewhere and must give up on the federal government.

The committee also heard testimony detailing other barriers in the procurement process that small and medium-sized enterprises faced when trying to bid for federal contracts. For instance, in testimony before the committee, the Business and Institutional Furniture Manufacturers Association, an organization that leads, advocates, informs and develops standards for the North American office and institutional furniture industry, stated that the industry had perceived that public works had “moved from a historically inclusive procurement process to a more exclusive process”.

We heard this time and time again from witnesses who appeared before our committee, so much so that witnesses were brought in to find out if in fact this was the case for all small and medium-sized enterprises. Unfortunately, we heard it was a serious issue.

We have made recommendations as a committee and the federal government has acted on some of those recommendations. However, it is important for us to speak to the issues today so people will have a real appreciation of how difficult it is for those businesses on which we come to depend for employment to perform in our country.

We heard similar testimony from the shipbuilding industry. The shipbuilding industry has a very high profile in my riding. In fact, we are looking at building boats of all sorts and we are looking at an opportunity to access federal contracts. However, it appears that accessing those contracts is a very cumbersome process.

There is another small business, with about 100 employees, in my hometown called Dynamic Air Shelters. It is looking to access federal government contracts through the Department of National Defence. Again, I am constantly hearing the refrain over and over that the process is too complicated. The amount of work required to complete a request for a proposal is such that, if a business does not have 10, 20 or 30 people who are designated to do nothing but complete the RFP, then there is no way it will even have a chance of being in the ball game.

It is a serious issue. We have to look at the importance of small and medium enterprises. We have to do everything we can to ensure they can access federal government contracts. With $14 billion worth of contracts, there should be no reason why small and medium enterprises cannot access a significant portion of that business.

When we talk about trying to respond to the concerns that were brought before the committee, the committee came up with several goals.

The first is the procurement process must be improved for small and medium enterprises to facilitate their awareness of and access to federal contracts. We heard time and time again how important it was that this be achieved.

We were also told about the importance of coordinating federal programs for small and medium enterprises. Having to deal with so many different departments became an issue for them as well. That is why it was important to talk to the CEO of the Office of Small and Medium Enterprises, the office that was created in the fall of 2005 to address the concerns of SMEs.

Even though that office was created in 2005, four years ago, we still hear these concerns from small and medium-sized enterprises. If we have an office that has been put in place to deal with the issues that small and medium-sized enterprises have been raising, why are we still hearing, again and again, that these issues still exist?

It was interesting to speak to the CEO of the office and again to hear the inroads and changes she was trying to make to try to accommodate small and medium-sized enterprises. There is still a lot of work to be done and we need to ensure that this office has all the resources it needs to respond to the concerns being raised by small and medium-sized enterprises.

The chair of the Canadian Business Information Technology Network told the committee that he found the office had no power and could only act in an advisory role, and that was serious to hear. He really did not think the office had any teeth, that it really could not deliver on behalf of small and medium enterprises, that it really was not in a position to change what was happening throughout the federal government in terms of making it more acceptable to small and medium-sized enterprises. He continued by noting that the office should have more clout to deal with the recommendations of the information technology industry on how to protect small and medium enterprises.

Appearing before our committee as a witness was the chair of the Canadian Business Information Technology Network. It was a follow-up to what the gentleman had already had tried to do to somehow make things easier for small and medium enterprises, especially in the information technology area. Appearing before the committee was something he saw as an avenue that he could pursue because the changes that he had looked for and hoped to see come about as a result of the OSMA still had not happened.

A gentleman from the Nanaimo Shipyard Group suggested that the office should consider focusing its research on regional spending by the federal government. If it spends a large majority of its money in one area, then it should be looking at whether small and medium enterprises are well represented.

Again, this is something we continued to hear, that there really was no emphasis being put on the importance of small and medium-sized enterprises. Request for proposals were put out there and anyone could access them and fill them out. However, the sense was that in some instances, the process was not at all meant to accommodate small and medium enterprises. That is a serious concern for those of us who are familiar with the importance of small and medium-sized enterprises.

If something is not done, if the recommendations that came out of our committee are not followed, then we will find ourselves in a situation where again we will have a committee looking at the importance of small and medium enterprises, looking at trying to do what needs to be done to accommodate them to ensure they continue to operate as part of our economy in a way that is fulfilling and profitable for them.

However, if a company gives up on the federal government because it thinks it is a waste of time, a waste of money and a waste of energy, but can sell its product into the U.S., what does that tell us about what small and medium-sized enterprises have to endure in order to do business in Canada?

We really need to make changes that will be accommodating to small and medium-sized enterprises. I am hopeful the recommendations that came out of our committee will be followed. It is really important for people to know that those recommendations exist and that we are doing everything we can as a committee to ensure that their concerns are being addressed.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:50 p.m.

Conservative

Chris Warkentin Conservative Peace River, AB

Madam Speaker, it is interesting to be in the House to hear what is in fact quite a rehash of what the committee heard and the recommendations that were brought forward. It almost seems the hon. member from that time forward has not kept up with what has happened in this area.

I know she expressed interest in the committee and it may be something the committee could look at to update ourselves and become aware of the successes that have resulted from the committee's report.

I note the hon. member talked about the cost and complexity of small businesses trying to compete for government contracts. Significant things have been done so small and medium-sized businesses have access to government contracts, such as the ability to go on MERX and not have to pay the fee and the reduction in the size of contracts, so they, with the resources they have, can fill out the requests for proposal.

The hon. member talked about needing 12 or 13 people to fill in the requests. Many of the departments already have a streamlined process for small and medium-sized businesses specifically so they do not have to pay thousands and thousands of dollars to hire consultants to fill out the complex RFPs. That is done, it is being done and it is a great thing. Maybe this is news to the hon. member and it will helpful to her.

The other thing I think she would recognize is the success of the Office of Small and Medium Enterprises, with 23,000 companies being assisted.

Would the hon. member be interested in looking at the current state so we can review it and be updated on it in committee rather than here in the House and would she not be interested in hearing more? Clearly—

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:50 p.m.

NDP

The Acting Speaker NDP Denise Savoie

The hon. member for Random—Burin—St. George's.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:50 p.m.

Liberal

Judy Foote Liberal Random—Burin—St. George's, NL

Madam Speaker, I am going to ignore the sleight in my colleague's remarks. We work well in committee and that is fine.

I am well aware of what has been done. I am also aware that issues still need to be addressed. I continue to get representations from small and medium-sized enterprises that really need more, and we need to do more.

While I accept what my colleague has said, and again I am well aware of what has taken place, the issue is we need to respond, in whatever way we can, to try to ensure that whatever concerns, issues and needs small and medium-sized enterprises have, that they are indeed dealt with.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:50 p.m.

Bloc

Diane Bourgeois Bloc Terrebonne—Blainville, QC

Madam Speaker, I am realizing today that we did not give this topic enough attention in committee. The committee must continue its examination. I asked that we bring in industry representatives to give us more information.

Is my colleague worried about that famous draft that was issued this summer by Public Works and Government Services Canada? I am talking about the solicitation of interest that Public Works issued this summer, in which the terms were changed, perhaps to confuse the members sitting around the committee table. Now, we talk about managed services instead of professional services.

Nevertheless, a solicitation of interest was issued even though the committee had asked the department to wait before going ahead with its plan to bundle contracts, and even though small and medium enterprises had said they were concerned about the way government contracts would be awarded from now on, especially in the information technology field.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:55 p.m.

Liberal

Judy Foote Liberal Random—Burin—St. George's, NL

Madam Speaker, in response to that, yes, I am concerned, and that is the genesis of my concern with respect to what is happening with small and medium size enterprises. It seems that when we go down one path, we are assured that things are being addressed and that there is no need for concern any more, but then we turn around and there is a different approach being taken, and we have no idea where it came from.

So, my concern, again, for small and medium size enterprises is that on the one hand we are being told one thing, and as a committee we might feel comfortable with that, but on the other hand, we are hearing about things that are happening which are just not at all in keeping with what we would like to see for small and medium size enterprises.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:55 p.m.

Bloc

Serge Cardin Bloc Sherbrooke, QC

Madam Speaker, it is great that the Liberal member is concerned about small and medium enterprises, particularly given that we all know that very small enterprises are the ones that, in very many cases, do the work and fill jobs in various regions and sectors.

However, in this context, the government and Public Works and Government Services Canada seem to want to bundle four megacontracts worth nearly $1 billion each per year. They say that there will not be a problem and that they will use small and medium enterprises, distribute the work fairly and get them involved.

Does the member believe that the huge corporations that get these megacontracts will automatically do everything in their power not to use small enterprises, but to reduce costs as much as possible? If so, then small enterprises that the government does business with through intermediaries will continue to suffer the most and probably experience additional job losses.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:55 p.m.

Liberal

Judy Foote Liberal Random—Burin—St. George's, NL

Madam Speaker, I thank my colleague for the question and the observation. The member is right. It is an issue.

Certainly it is an issue that I have heard about from small and medium size enterprises, the whole idea of bundling and small and medium size enterprises being able to access a significant portion of the contract or even being given the amounts that they require in order to do the work. It is a serious issue. I have heard from small and medium size enterprises that they really do feel they are being left out. When we talk about bundling, the concerns of the smal and medium size enterprises are on the back burner because the focus is on the larger enterprises that in fact win the contract. I would say that at the end of the day we will not know, we will never know, if we do not do everything we can and ensure that the government does everything it can, so that small and medium size enterprises are protected in this kind of an environment.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:55 p.m.

NDP

The Acting Speaker NDP Denise Savoie

There is time for a very brief question. There is a minute and a half left. The hon. member for Peace River.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

4:55 p.m.

Conservative

Chris Warkentin Conservative Peace River, AB

Madam Speaker, I hope that the hon. member did not take my earlier comments as a slight. I do apologize if the hon. member took any offence. I think what she has brought forward is important, in terms of concerns that she has, and I think this is something that we, as government and as members of all parties, need to address.

In terms of the bundling, she talks about it as it was current when we were discussing it at our committee. The government has responded to concerns related to bundling. There has been a decision by government such that if departments have any desire to bundle contracts, they have to have a strong argument for doing so. In fact, they have told departments that they should resist bundling. So, clearly, this is a step in the right direction.

I wonder if the hon. member would take the opportunity to say, yes, in fact, even on this issue, there is progress and we hope--

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5 p.m.

NDP

The Acting Speaker NDP Denise Savoie

Order, please. I would like to give the hon. member for Random—Burin—St. George's the opportunity to respond. There is 35 seconds left.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5 p.m.

Liberal

Judy Foote Liberal Random—Burin—St. George's, NL

Madam Speaker, with respect to what has in fact transpired with bundling and with departments being advised that they should not bundle, I think members will appreciate if I am a little circumspect and if small and medium size enterprises are a little circumspect, given the history. We will need to see that indeed things are transpiring as they should. Again, circumspection is, I guess, the name of the game today, and we are just a little nervous about what will happen.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, I am glad to join the debate today on the concurrence motion on the seventh report of the Standing Committee on Government Operations and Estimates as it pertains to small and medium size enterprises and their access to federal procurement contracts.

I am proud to be the vice-chair of the committee and was proud to participate in the study that resulted in this report. It was a unanimous report. There was not a great deal of argument or debate about the content of the report.

My colleague from the Bloc Québécois felt it was necessary to move concurrence on this report today because the same issues that gave rise to the investigation and the study continue to plague small businesses today as they seek access to their fair share of government procurement contracts.

I want to thank my colleague from Terrebonne—Blainville, Quebec for the opportunity for us to speak at some length today on this subject.

Let me begin my remarks by pointing out that 98% of all businesses in Canada in fact fall into the small and medium size business category. I learned something when that was brought to our attention. I had no idea.

Even more noteworthy is the fact that SMEs employ 5.1 million Canadians, almost half of the entire private-sector workforce. In fact small businesses accounted for 80% of the job creation between 1993 and 2007. During that period of time, large businesses actually shed jobs. It was the large enterprises that were cutting back and reducing staff. The engine for economic growth, almost the entire backbone of the economy during that period was the job creation from small and medium size enterprises.

We can see why the government should have a real interest in making sure that the procurement by the federal government, which represents a huge volume of financial activity, goes to the sector of the economy that will give the biggest bang for its buck. We argue, and the committee unanimously concluded, that is the small and medium size sector, the SME sector.

However, let me quote from the seventh report of the government operations committee, and this is in the very neutral language put forward by the researcher of our committee, who crafted this report:

The Committee heard overwhelming testimony that SMEs are frustrated with the federal procurement process. From cumbersome and expensive-to-complete RFP processes to the government not paying interest on overdue accounts, many SMEs “have just given up” trying to bid on federal government contracts.

That was the unanimously adopted language of this report. Even the government-side members of the committee did not disagree that this was what our committee heard from small and medium size enterprises. They are frustrated by the process and by the government not paying interest on overdue accounts to the point where they have simply given up. They have found it too expensive and too cumbersome to even participate in the bidding process to get access to the tax dollars being invested.

I do not know if it is a deliberate trend. We did not prove that. We did not prove that it was the policy of the government to simplify its procurement by going sole-source or going to larger enterprises, especially in the IT sector. We do know that the bundling of contracts, especially in the IT sector, has shut out a vast number of actors in that sector. They are justifiably frustrated.

It was a satisfying committee study to take part in, because we heard real passion from real actors in the economy.

We were not dealing with abstracts in this study. We were right down on the ground with the people who are the driving engine of the economy, and they were telling us that the system is broken. Access to government procurement contracts is so frustrating. The wheels have fallen off it. The arse is out of her, as they say in Newfoundland. It is simply not working for them. Therefore, they came to us; they appealed to us; they urged us in the strongest possible terms to bring the message back to government that they want in.

There used to be a saying, the west wants in. Well, SMEs want in, in a substantive way, and they asked us to bring that message to Parliament. We did through this report, but what has been frustrating to us, and I know it has been frustrating to my colleague from the Bloc Québécois, is that the government's response to our report is inadequate. I do not think the Conservatives heard us in any meaningful way. The language they use does not reflect the urgency in our report.

Let me give one example to illustrate what I think is a wilful blindness on the part of the government to the urgency in this sector. Our goal number three said simply that

[t]he federal government must ensure that due consideration is given to small and medium enterprises when considering the bundling of contracts and standing offers.

The response from the government is that it commits to “review best practices related to the consolidation of contracts”.

Everybody who has been around here for a while knows that is bafflegab for stall, delay, rag the puck, buy ourselves some time, status quo. That is what it really means. “We will review best practices” means we will do absolutely SFA, if I may put it that way.

That is a very frustrating response to one of the key recommendations. I want to share what we heard about the bundling of contracts. There seems to be a feeling on the part of government that bigger is better in terms of dealing with one big supplier instead of many small ones, but that way of thinking, that logic is folly. In fact, I argue, it is dangerous, because if we put all our eggs in one basket, especially with our relationship with an IT contractor who is essentially supplying our mainframe and then providing that main government service of IT connectivity, we are vulnerable; we are at risk. I would argue it is an issue of national security, but it is certainly at least a danger in that we have contracted out the ability to service our own systems. We have contracted them all out to one entity that may or may not be stable in the long term, that may be sold, that may merge with other companies, that may have its own internal difficulties, or that may turn into an Enron and have a terrible corporate collapse.

The government has put us at risk if it goes to that single entity, plus there is the other effect that we are concerned about. Some of these big actors, the ones that seem to get the big bundled contracts, are major Canadian success stories. We bless them for their success. We wish them well, but we will never grow another generation of success stories if we let them starve for business. Unless some of the smaller actors get a piece of the action, they will never grow into big actors, hire more people and become international players as some of the big contractors are now.

It is only reasonable that we want to patronize the developing sector, the entrepreneurial sector, the small and medium size businesses that will become our next major players in the IT sector. That work should be spread around for national security reasons, for reliability reasons and for the reasons of providing better opportunity to more players in the field so that we can grow another generation of entrepreneurs.

Above and beyond all that, there remains the question of why we are contracting this work out to begin with. There is a pretty good argument. We are not like any other business. This is the Government of Canada. There are security issues and there are compelling reasons why this should be kept in-house, that the design, the operation, the repair and maintenance of our internal communications, our IT component for the Government of Canada, should not be contracted out to the private sector, because we do not know if we can guarantee the security once the control of it leaves our hands.

I wish there had been more of an emphasis on that in the study that we undertook. It was not part of our mandate, but I think it is worth noting in the context of this debate.

Another thing that is worth noting in the context of this debate is that the expenditure of Canadian tax dollars should be done in such a way as to provide as much benefit to Canadian taxpayers as possible. That means not only achieving the initial objective of the spending, the procurement of goods and services, but hopefully achieving secondary objectives as well, such as providing jobs and opportunities for Canadians. That means to the greatest extent possible we should be buying Canadian goods and services, within the limitations of the trade agreements that we are a signatory to and that we have ratified. We should be knocking ourselves out. We should be going the extra mile to make sure that we are buying Canadian goods and services and IT whenever possible. Let me give one example where we have fallen down in that regard and I think it will shock the House.

The Canadian military needed troop carrier buses. The forces already have a whole fleet of Canadian made buses. They needed 32 new ones. A tender was put out for new buses. There were only two bidders. One was a company in Quebec that makes some of the best carrier buses in the world, I argue the second best, because there is another company in Winnipeg that makes what I argue are the best buses in the world. Both of those bus companies bid on the Canadian armed forces' troop carrier tender. Who got it? Mercedes Benz in Germany. The really shocking is that the difference in price was less than one-half of one per cent. That is by how much it won the contract, less than the cost of a set of tires on one of those buses is what it won the contract by, but lowest bid gets it. Unless there are three Canadian bidders, the made in Canada procurement policy does not kick in.

What kind of a message does this send to our NATO allies around the world and in foreign theatres of operation? It says that if they want to buy a good troop carrier bus, they should buy a German one, because that is what we did. We abandoned our Canadian bus manufacturer in Quebec, our bus manufacturer in Winnipeg, our unemployed standing outside the gate looking in. Germany is building the troop carrier buses that carry our armed forces, all for the sake of less than $5,000 per bus on half a million dollar buses. That is an appalling situation that ignores the best interests of Canadians.

Surely there should be some kind of a lens through which the procurement officers look when they make these purchases. Is this purchase in the best interests of Canadians? Is the best price always the best value? These are questions that need to be asked. It was the final recommendation of our report, to advise procurement officers, or perhaps recommend to the government that the officers be given more latitude to consider the whole cost and value of their purchases. In some cases the lowest cost is not always the best value, if there are quality issues at stake and if there are other maintenance costs.

In this example most of our troop carrier buses are Canadian made but 32 of them will be German made. We now need new tools. We need new training for the mechanics to maintain them. We needed Canadian military officers to fly back and forth to Germany to supervise the manufacture of them.

Whatever savings there might have been in this example were burnt up by all of the other additional costs. The best value would in fact have been either the Quebec buses or the Winnipeg buses. It certainly was not the German option.

These are some of the frustrations that came to our attention as committee members. We had compelling testimony from the wood furniture manufacturing industry. They are very strong actors in Quebec and in the province of Manitoba. We heard from the window and door manufacturers, the furniture manufacturers and the shipbuilding industry. It was not just the IT sector that was frustrated with the lack of access to government procurement.

One can imagine the amount of office furniture the Government of Canada buys. These are things Canada is known for. We have strength in these areas. These are areas of expertise. Canada is a centre of excellence in furniture building because we have access to the resources and we have a long history and tradition in this industry. Would it not make sense that when the Government of Canada needs to buy furniture, it would give some preference, within the limitations of our trade agreements, to Canadian manufacturers? That is not being protectionist. That is being a proud Canadian nationalist. That is what that is.

We see the Americans doing it. We see the Americans going beyond that with their buy American program. We are not recommending that we match the buy American program with a buy Canadian program. Within the context and limitations of NAFTA, we are allowed to show preference for a Canadian product if it is within 7% of the price range. In my example of the buses, if we had availed ourselves of the opportunities that are already available to us, we would have had Canadian buses right then and there.

We had an interesting study, but we are not at all satisfied with the government response to our seventh report of the government operations committee. There is one thing that came up in the context of our debate and I will close with this recommendation. Small and medium size businesses indicated three areas that they were frustrated with: first, government procurement; second, their problem in finding venture capital; and third, the extraordinarily high federal tax rate on small businesses.

I would like to point out that in the socialist paradise of Manitoba, the business tax rate on small businesses is in fact zero. If the federal Conservative government were not strangling the growth potential of small businesses with its crippling small business tax, more Canadian small businesses might be able to fight through some of the other disadvantages, such as their inability to get government procurement.

I hope that my Conservative colleagues are listening to this plea. If they would stop persecuting small businesses with these crippling small business taxes, we may in fact be able to aspire to a burgeoning SME sector in this country. As I said, 80% of all the jobs created between 1993 and 2007 were in that sector. We should be doing all we can to encourage them.

I did have one more point that I would like to make. I was interested in the remarks of my colleague from Newfoundland. She was talking about the shipbuilding sector. We did have representation from the shipbuilding industry. There were some very interesting recommendations and quotations from the shipbuilding sector to which I think we would be well advised to pay attention. However, if I cannot find them in my notes, I can always talk about something else.

Let me deal with one of the other recommendations of the report and the government's response to it. We were disappointed that the government's response to the seventh report of the government operations committee was thin, almost to the point of being patronizing. I do not think it took our recommendations seriously. Let me give one example.

Recommendation number four is that the federal government must establish a system of fairness to encourage departments and agencies to use SMEs.

Disappointingly, the government reacted by saying it is essentially already doing all it can to encourage SMEs. Our recommendation was more along the American model, where the office of small and medium enterprises actually advocates on behalf of small businesses and helps them to ensure that they get a set-aside quota of all the government procurement contracts in that country.

That is the direction we want our Office of Small and Medium Enterprises to take. It is not just to provide information. We want them to take them by the hand, if necessary, guide them through the morass of RFPs and help them achieve a specific quota so that we can proudly say that we support SMEs, not stifle them.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:20 p.m.

Bloc

Diane Bourgeois Bloc Terrebonne—Blainville, QC

Madam Speaker, I would like to begin by congratulating my hon. colleague. He gave an excellent speech that was also very interesting. He broached the topic that I presented this afternoon from another angle, one that was not necessarily taken at committee. I find that rather strange. It is a more down to earth angle, the angle of consequences. I would like to congratulate him and say that I feel very privileged to work in committee with someone who has so much experience and who brings these kinds of ideas to the table.

Given that the committee members had asked for studies, a business case, before going any further in terms of a megaproject or megacontracts, I would like to ask him if he is at all concerned about the solicitation of interest and qualification that appeared this summer? What does he think of that? What does he think of the fact that even the terminology has changed, when the minister had just told us that we would never see professional services disappear from these huge contracts, as well as the fact that the term “professional services” has been changed to “managed services”, which means one might presume that they are simply avoiding the question? How does the member feel about all of that?

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:20 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, I share my colleague's concern that the access is becoming more difficult in terms of being able to understand the proposal process. Frankly, many of the witnesses we heard from in the small and medium size business sector said it seems that just as they begin to learn the game, the rules change. Not only is it a difficult and complex process, but it is an ever evolving, ever changing process that makes it that much more difficult to take part in. It becomes a smaller and smaller elite group that has figured out the magic formula. It is like Rumpelstiltskin where one has to know the magic word in order to spin straw into gold.

The terminology changed, and my colleague referred to compounds, the degree of difficulty facing those wishing to avail themselves of these very lucrative and important contracts not only for the continuity of keeping the employees in these companies busy, but growing the companies to be able to hire more Canadians.

As I said, we heard overwhelming testimony. That is not my language; that is the language of the drafters of this report, the researchers, and the language was ratified unanimously by committee members. The committee heard overwhelming testimony that SMEs are frustrated with the federal procurement process, from cumbersome and expensive to complete RFP processes, to the government not paying interest on overdue accounts. Many SMEs have simply given up trying to bid on federal government contracts.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:25 p.m.

Conservative

Chris Warkentin Conservative Peace River, AB

Madam Speaker, I appreciate my colleague's involvement in our committee. He brings forward a lot of good points, especially today when he is talking about cutting taxes. I hope the next time we bring forward a budget that cuts taxes he will divert from his usual practice of voting against and vote for that particular initiative.

However, I thank him for his interest in promoting the idea of lower taxes especially for small businesses as they are one of the major contributors to the Canadian economy. As a matter of fact, they employ many Canadians and they are absolutely the driver of the Canadian economy.

As it relates to a number of things that we heard in committee, I agree with him and I supported the wording, that people were concerned about and frustrated by the process.

I talked to a person who works in a department today. He is working to expand the standing offers for that particular department. It is moving from a case where over the last 20 years there has been a single supplier for a service, essentially a monopoly. The government is actively pursuing additional competitors to that particular contract so that we do not continue to have a single supplier.

I agree with the hon. member. The government responded to the concerns. We see this in action on a daily basis in every department, across departments. Specifically today, I heard of one where it is moving away from essentially a monopoly. I wonder if the hon. member thinks this is a good process.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:25 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, there certainly has been the widespread belief that some government contracts are structured and bundled in such a way so as to favour one obvious beneficiary and sometimes year after year.

I will use for an example the Royal LePage relocation contract, a multi-billion dollar contract to move military families and government personnel and take care of their real estate needs. It seems like a stacked deck. It is one of those ring toss games on a carnival midway where no one can win. Only the one who has the magic formula seems to get this contract and it is always Royal LePage.

If there is progress in that regard, I would be the first to celebrate it, but I think we have a long way to go. It is not a fair game yet.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:25 p.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Madam Speaker, the member for Winnipeg Centre does such a great job of representing Winnipeg.

I had the honour of sitting on that committee a few times and I heard some of the serious concerns that many of the small and medium sized enterprises and businesses across our great land had to deal with when dealing with the government.

One of the things that I have been actively involved with is the credit card issue. Small and medium sized businesses are being hammered with interchange fees that continue to drive their profits down. We seem to be stifling innovation because they do not have money now to spend on research or for hiring more people.

I can think of some great businesses in my great riding of Sudbury, such as Herold Supply and B & J Music. All of these businesses are--

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:25 p.m.

NDP

The Acting Speaker NDP Denise Savoie

I regret to interrupt the hon. member but I would like to give the member for Winnipeg Centre 30 seconds to respond. I will soon have to interrupt this debate for other business.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:25 p.m.

NDP

Pat Martin NDP Winnipeg Centre, MB

Madam Speaker, I thank my colleague from Sudbury for raising a critically important issue for small and medium sized businesses.

I should point out that my colleague from Sudbury has been the single, foremost champion on the issue of credit card reform and credit card fairness, exposing the atrocious gouging that takes place in today's marketplace associated with credit cards. It is not only the consumer who is being victimized but small businesses have been stuck with these interchange fees, user fees, et cetera and they are also victims.

We are glad we have champions like the member for Sudbury who is advocating on behalf of ordinary Canadians and small businesses like those he mentioned in his riding.

Standing Committee on Government Operations and EstimatesCommittees of the HouseRoutine Proceedings

5:30 p.m.

NDP

The Acting Speaker NDP Denise Savoie

It is my duty to interrupt the proceedings on the motion at this time. Accordingly, debate on the motion is deferred until a future sitting.

The House resumed from November 5 consideration of the motion.

Criminal CodePrivate Members' Business

5:30 p.m.

NDP

The Acting Speaker NDP Denise Savoie

It being 5:30 p.m. the House will now proceed to the taking of the deferred recorded division on Motion No. 388 under private members' business in the name of the hon. member for Kitchener—Conestoga.

Call in the members.