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.