:
I'm going to call the meeting to order.
I'm going to start off by telling people that Mr. Warkentin is a father again. He has a beautiful baby girl, born on Father's Day. So he's not here today, and we have Mr. Merrifield instead of him—I hope you can come up to the task.
We're going to have two different panels before us today. We decided to divide it in two and invite Public Works as well, because we felt we couldn't just invite you gentlemen, much as we like you, and not give the chance to Public Works to respond or to address some of the issues you may bring up.
We have as witnesses, from the Canadian Business Information Technology Network, Mike O'Neil, who is the chair, and Jeff Lynt, who's a director; as well as David MacDonald, as an individual.
Usually we allow our witnesses to make a statement for up to 10 minutes. I don't know if you have one statement from Canadian Business Information Technology and then another statement from Mr. MacDonald.
Would you have a statement to give as well, Mr. MacDonald?
:
I wish to thank the committee and the members, and everybody else present here, for allowing us to speak to you today.
My name is Mike O'Neil. I am chair of CABiNET, Canadian Business Information Technology Network, which is a non-profit organization representing about 20 IT professional service providers, mainly based in the national capital region. Our combined sales are valued at over $100 million and we have about 1,000 subcontractors and/or employees working for our companies.
Let me first start by taking the time to review this issue. What is at stake here today: first, the Government of Canada's ability to find cost-effective solutions that meet its needs; the Government of Canada's control over its IT projects and initiatives; the very existence of many small and medium-sized enterprises, or SMEs, that until now have provided loyal and cost-effective services to the Government of Canada; innovation, flexibility, and entrepreneurship that will soon disappear due to the way the proposed procurement model is being structured for this initiative; and last, the financial stability and job security for about 5,000 highly trained professional IT resources in Canada.
Currently, the Government of Canada purchases commodities that can be described mainly as hardware and software products and network bandwidth. It also purchases IT professional services that support these products--develops architectures and provides operational support, etc. Both types of procurement are clearly separated in the acquisition process today.
At the present time, SMEs have competed and won between 65% and 70% of the value of the contracts for IT professional services within the federal government. The total value of all contracts awarded by the federal government for IT professional services was recently estimated at $600 million annually. SMEs have won the great majority of these contracts due to their ability to effectively respond to the federal government's needs, their knowledge and abilities, their low overhead costs, their flexibility, and their innovative solutions.
The government has tried in the past to bundle several contracts and develop large IT projects. For the most part, they failed to deliver on expectations, went over budget, and became unmanageable. Examples are the firearms registry and the Secure Channel project.
When the government contracted for services and solutions in what we call “chewable chunks”, i.e. manageable projects, the projects typically succeeded. The shortcomings of the large bundles contracts were made clear in reports from the Auditor General and the House of Commons Standing Committee on Public Accounts.
The government's brightest new plan is to have an even bigger project. Their reason is to cover anticipated cost savings and an aging workforce. Let us clearly explain that we are not opposed to what is called the shared services initiative. We are adamantly opposed to the bundling of IT professional services with generic commodities, such as network bandwidth, and we are in general opposed to the bundling of IT professional services contracts.
What is the government proposing? Based on a request for information, an RFI, published on the government's electronic bidding system MERX in December 2007, presentations made by Steven Poole, CEO of the information technology services branch at PWGSC and an amendment to the RFI that was published on Friday, June 6, the government intends to bundle the commodities and the IT professional services together in order to issue four what we call “pillar contracts”, each of a value that could exceed $1 billion annually for a period of up to 20 years.
Is bigger better? This simplistic approach to problems makes absolutely no sense and can only be conceived by people who are not spending their own money. Additionally, it makes no financial sense.
As you know, the cost of products in the IT world has decreased immensely in the past few years. In the last 15 years, the cost of network bandwidth and computer hardware has decreased to a fraction of what it was 15 years ago. For the Government of Canada to suggest they can purchase products for a 15- to 20-year period and save money in the long term defies any prediction made by industry analysts. When this question was raised with Mr. Poole, his reply was that the government would find ways to negotiate with the winning bidder to solve this problem. We believe that to commit the government to such a lengthy contract period makes no sense whatsoever.
Lack of ongoing competition will also increase the cost to taxpayers. Currently, when RFPs are issued, many companies, including SMEs, can compete, and they're aware of the fact that generally most technical evaluations of the bids are fairly close. Bidders know that costs will be a deciding factor. The ensuing competition results in lower costs for taxpayers. By eliminating all SMEs from the bids, the government will be creating a situation where two or three large IT companies will dictate all prices, which historically has never resulted in reduced pricing but rather has increased it.
It's hard to understand why, in this case, senior bureaucrats are trying to eliminate competition while in most sectors the government is attempting to establish competition to reduce costs. A classic example is the home telephone industry.
In the past, similar attempts involving large IT professional services contracts have resulted in cost overruns and project delays. Recent examples include the firearms registry and the social services system that was attempted in Ontario in the late 1990s. A number of additional examples can be easily provided.
We urge you not to take only our word for it, but also take the words of an officer of Parliament, the Auditor General, and those of Ontario's provincial Auditor General, who both condemned large IT projects.
It is interesting to note that when the Canadian government decided to establish an efficient and cost-effective system to collect taxes--in this case the GST--it turned to a local group of SMEs that successfully delivered the requirements in a cost-effective and efficient manner.
It also makes no organizational sense. The negative impact for the Government of Canada resulting from this proposed acquisition model doesn't stop at financial considerations. The government will also lose its ability to count on the flexibility and innovation that characterizes SME companies.
SMEs are able to offer various solutions. We're not bound to one model; we're not tied to a single system or vendor solution. SMEs offer a challenging, innovative, and interesting model to our employees and subcontractors. Due to the type of employees that SMEs attract, they are able to better service their clients. Handing a single contract to one company for a period of up to 20 years will destroy any need for ongoing research and innovation within that government sector.
At this time I would like to introduce Mr. Jeff Lynt, who is president and CEO of one of the fastest growing IT companies in the Ottawa-Gatineau region. His company specializes in service management consulting.
My name is Jeff Lynt and I own a small business in the Ottawa-Gatineau region. I live on the Quebec side and employ approximately 40 people.
The government's proposed changes will either force me to lay off a number of my employees and subcontractors or become subservient to a large company. This will force me to cut salaries; however, history has shown that the cost to the federal government will be the same or higher. My company will lose the ability to innovate and propose solutions to our clients and will be constrained by the business model of the larger company. Once the large company is able to hire enough employees, likely by raiding our resources, it will terminate its contractual relationship with us and this will be the end of opportunities with the Government of Canada in this sector.
SMEs are the engine that drives the economy. This is not a statement that I invented for this presentation; it is a statement that was heard during the last federal election campaign by the Conservative candidates who touted their parties' championship of SME issues. The latest proposal makes no sense. Their response to our concern was to state that large companies would be given points in their evaluation if they had a plan to provide subcontracts to SMEs. This is an insulting and demeaning offer. At this point, SMEs compete and win about 70% of the contracts awarded by the federal government. Why would we suddenly be satisfied to subcontract to companies that we regularly beat in open, fair, and transparent competitions?
In April of 2006, the new Public Works and Government Services minister, Senator Michael Fortier, stated that the government will make it easier for small business to bid for government contracts. I certainly did not think the government would go back on its word and do the exact opposite of what it promised. My sincere and deepest hope is that the Conservative members of this committee and the parliamentary secretary to the PWGSC minister will announce today that it was a mistake and that the government will honour its commitment to SMEs.
My financial stability, and that of my family, is on the line. My business is at stake. I urge you to make a motion today to send to the House asking the government to cancel its plans, initiate true consultations on this issue, and respect its promises to SMEs.
Thank you very much.
:
Good morning. My name is David MacDonald. I'm a subcontractor working with an SME that is not a member of cabinet and on a contract unrelated to the federal government.
You may wonder why I'm here today. It's simple: the government's bundling of IT professional services contracts will have a direct and major impact on me and all others in my profession. The disappearance of SMEs will decrease competition for our services. At this point, there are a number of SMEs vying for our services. This allows us to secure a daily rate that ensures adequate revenues for our families. With no competition, our rates will be driven down, and this will have a significant impact on my livelihood.
The other concern I have is that large companies usually hire employees rather than subcontractors. This will force modifications to our business models, and those forced to enter an employee relationship with these companies will lose income and have their individualism stifled through corporate policy.
One might wonder how this will result in decreased costs for the federal government. Past RFPs show that large companies, even with their own employees, are more expensive than SMEs with subcontractors. The reason is simple: they have a higher overhead and a larger financial responsibility to their shareholders.
There are approximately 5,000 professionals like me who will be directly affected by the government's decision. If it made business sense and had real economic benefit for Canada, perhaps I would have been more reluctant to appear here today. Unfortunately, this is not the case. This is a bad plan that will have a very negative impact on everyone but a few senior bureaucrats, whose legacy will have been the destruction of the information technology SME sector and the unearned growth of a couple of already large companies.
Thank you.
We noted in Mr. Poole's presentation that he describes the future winner of bids for these billion-dollar contracts as partners. We choose to describe the government as our client. There is a fundamental distinction.
The government as the client presently drives the agenda in contracts it awards. Mr. Poole recognizes that as a “partner” the government will not be able to make all the decisions required to protect the interests of the taxpayer in awarding these monstrous contracts. Instead, it will have to attain the agreement from its “partner”, the winner of the bid.
We think this philosophy is wrong for the federal government. We ask you to remind the PWGSC senior bureaucrats that the will of the people is expressed through Parliament, and that when a parliamentary committee makes a recommendation, one should not ignore it and do exactly the opposite.
Mr. Poole cannot plead ignorance since he was already a witness in front of the public accounts committee, where he clearly stated that PWGSC did not agree with these large IT contracts.
We ask this committee to force this government to fulfill the promise it made to Canadian voters and promote continued direct access to government contracts for small and medium-sized businesses. It should give us the opportunity to increase our share of government contracts rather than eliminate it.
We hope you will ask the government to guarantee that SMEs will be given the ability to bid directly on the $600 million in contracts currently awarded by the government in IT professional services. SMEs have proven their ability to get the job done for their clients in an efficient manner. We have proven our ability to serve Canada well. We have also proven our ability to win these contracts through competitive procurement. Do not allow the government to take away our ability to bid directly for its business.
Thank you.
:
Thank you, Madam Chair.
[English]
I wish to thank the witnesses for appearing in front of us this morning. I understand this was done in an urgent manner, so there are some different points I would like to question you on, if you don't mind.
Some years ago this same committee and other committees were faced with very similar, and I'm choosing my words, “attempts” by the Department of Public Works and Government Services Canada to bundle deals as far as office equipment and temp services were concerned. In both of these cases we were successful in making sure that everybody understood, including everybody in Public Works, that these attempts were particularly bad for small and medium-sized businesses and for the Canadian economy and were probably excellent for a very few suppliers that would be chosen under, might I say, “dubious” or “questionable” circumstances. In both of these attempts we were successful in making sure this bundling did not happen on a large scale as had been planned.
Mr. Lynt, you are local. You covered the fact that you live on the Quebec side. You are well aware of the problems that I would encounter as a member of Parliament for the riding of Hull—Aylmer, where huge numbers of people employed in the IT sector would be out of jobs. I am pinch-hitting here this morning, but I presume, from reading transcripts from one or two of this committee's past meetings, that most small or medium-sized companies would be excluded from the tendering process because they could not meet certain conditions. Presumably some of these conditions would be something like having business offices in several Canadian cities.
Tell me, do you have offices in cities other than in the national capital region?
Mr. O'Neil, I listened to your presentation with much interest. I have a very simple question to ask you. Although this bundling process has not necessarily been put into place as we speak, this committee heard the testimony of a company owner, a gentleman by the name of Donald Powell, who owns a company identified as TPG Technology Consulting Limited.
I don't know if you're aware of Mr. Powell's testimony in front of this committee on June 10, but Mr. Powell was relating a situation about a bid in which he had been told unofficially that he would be the lowest bidder, so he could expect to have this contract. He alleges and argues that within the department there were—let me call them—funny games played, and somehow, miraculously, following a suite of coincidences, an employee was removed from the department and another employee decided there was going to be a reconsideration. The points worked out for the assessment of the bids somehow would have been modified, and as a result his company did not get the contract, but rather it went to CGI.
Are you under the impression that even though this bundling process has not started, the department, under the direction of the present government, has already started putting into place these much larger contracts?
:
Yes, basically. We've gone through a request for information process driven by PWGSC, which closed in mid-February. The activity that kick-started us was on June 6, when we received an update on MERX stating that the government would be proceeding with this RFP in the fall and that it was a very high-level assessment of what they might be changing for the RFP, based on feedback from the industry. The one thing was that they would award points to prospective bidders for having a strategic plan to engage SMEs as subcontractors.
As we have said in our speeches, we win 65% to 70% of the competitive bids in the federal government today by bidding against the same large integrators that are going to be the only ones capable of bidding on this contract. This is a billion-dollar opportunity annually, in four pillars. The first one is on the street in the fall, if it's allowed to proceed, and that's network services.
We have engaged the support of several other organizations in the last couple of days, in particular the Canadian Advanced Technology Alliance, CATA, the Canadian Federation of Independent Business, as well as the software product association, the Canadian Information Technology Providers Association, or CITPA.
:
Thank you, Madam Chair.
Welcome.
Most of my history has been as a small business individual, so I well recognize your concerns and anxieties over either perceived or potential unfairness.
While I state that, I think as a government we have an obvious obligation. We're not here to pick winners and losers, whether it is a large corporation or SMEs. We're here to deliver product, service, and price to and on behalf of the Canadian taxpayer.
Should you have a strong case, and it appears obviously you have both the track record and the history of doing so, I believe that.... Quite frankly, I'm not stuck on your focus. It's sounding more like whining than giving solutions. I would like to see your focus have more teeth in it. I'd like you to be able to say, we are more cost effective because of this reason--bang, bang, bang.
I believe much more specific information has to come out. I think we need that. I think we need that cost comparison. And I might give you an example. Mr. O'Neil, you pointed out on the question that was put forward with shared services.... I think your response was very, very good, but I'd like to put it in a bit more context now.
A number of years ago we had a great deal of difficulty with a number of our competing departments with IT technology, particularly with communication. Whether it was the armed forces, the police forces, or public safety forces, they didn't have shared data. In other words, one branch or industry of protection or safety didn't even communicate well with the other. They seemed to be operating different systems with different levels of communication, so the efficiency and effectiveness was not there.
A proposal was brought forward to integrate so they would be able to more effectively communicate. That idea was brought forward, and I think the transition is in process. The Auditor General has informed us that significant progress has been made. This was an example of a shared service working well.
Are you suggesting that you're not opposed to the efficiency and the effectiveness of it, but when it gets into servicing and/or being able to bid effectively, you're being shut out? Is that what you're saying?
:
There have been a number of points made.
I'd like to say that I take particular offence to Mr. Kramp's point about whining—in light of the fact that there are families at risk here, mine particularly.
I suggest to you that the solution you refer to is exactly what SME brings. SMEs supply the innovation to the Canadian economy. I appreciate that you said you were at one time a small innovative company.
At one time, Alexander Graham Bell invented the telephone, and if it wasn't for that great invention the world would be very different. He was a small business at the time.
I also want to note that I see some individuals around the room playing with their BlackBerrys, which came from a small company called RIM, which appears to have changed this room, if not the entire world, with mobile devices.
Innovation has driven this economy and has built Canada to what it is today. We now risk destroying that ability. Note also that this Ottawa area was built from a lot of spinoffs from companies whose innovation was responsible for growing a local IT economy.
I think that eliminating small business and not allowing us to provide our specialized services does a disservice to Canada. We offer specific solutions to our clients, and it is what they want. We don't win 70% of the business because we're not offering good solutions at good prices. We win this business because our clients are interested in our services, and they agree with our approach. We're not stymied by one model, one size fits all, trying to fit a square peg in a round hole, as the large integrators often say.
For some reason, bureaucrats have been convinced that bigger is better, and that is blatantly wrong. It's not true—it's never been true. It's always been small business that has driven our economy, and it's just as simple as that.
:
Thank you, Madam Chair.
I want to thank the witnesses for coming forward before the committee. All of us have found what they've had to say very interesting and very important. I think all of us should be troubled and concerned about the actions the government is taking to limit bidding, particularly by small and medium-sized businesses and enterprises, and to prevent access to that $600 million in contracts that has been spoken about.
I think this is quite a shame, and all of us are very much concerned about it. I hear there might be a motion coming from our colleagues in the Bloc, which I think is worthy of support. The statements have already been made by members, and the witnesses have also articulated quite well their concerns. I think all of us should share their concerns, because it doesn't make any sense at all what the government is doing at the moment.
I don't really have too many further questions. Maybe they have something they want to add, because all of us are concerned about competition out there, especially when we're dealing with businesses, some located here in the Ottawa area and in Canada, that are going against large multinational and foreign companies. They're not providing local jobs, as these companies are doing. Why would we favour them at the risk of not supporting our own domestic enterprises and businesses?
It's also true, Madam Chair, that these small companies, with a bit of support and over time, become large companies. They go from 40 employees to 400 to 4,000 employees. These are the companies that most likely will have success in the future, and we definitely have to be supportive and do everything we can I think as members of this committee to make sure they're given their fair share.
This is about fairness. It's about access for everybody, and it's about not limiting these particular bids. When they're given an opportunity, they're just as effective and they do just as well. In fact, they are beating the big companies when the tender is up and they bid. They're doing extremely well. And it seems that somebody has found a creative way to in fact eliminate these very successful businesses that are providing value for our money and for taxpayers. I find it a bit shocking that now, all of a sudden, they have limited access. If anything, if we want to have value for our dollar, what needs to be done is to provide access to everybody, not to limit access. I think they've articulated very well a very good case. Members around here have also expressed their deepest concern, shock, and dismay at what's taken place.
I don't know if there are any other comments they want to put forward. We have the picture, we know the picture, and now it's a question of whether the committee should act on it.
If there's any further time, they might have a comment or two to make.
:
Thank you, Madam Chair.
We have heard a great deal of information this morning. I'd like to come back to my colleague's question about when exactly you learned of these major technological changes. I have to say that when I first arrived at this committee, I did ask some questions about IT and the changes at PWGSC over the past 10 years. We held a similar debate several years ago, when we wanted to promote integrators. So then, we are familiar with the various arguments associated with this issue.
My colleague put a question to you. Since 2007, it appears that efforts have been made to fast-track the process to favour large integrators. There are very few of them on the market. Certainly, there are reasons for doing this, and we'll hear about them later. You mentioned that on June 6, some major changes were made to requests for information.
As for how the situation evolved between December and June, PWGSC initiated certain actions that you are aware of and demonstrated that it was cost-effective to take this approach, move forward with this plan and do some feasibility studies. I'd like to draw a parallel between this situation and what's happening at Citizenship and Immigration Canada.
Mr. Lynt, you spoke of the immigration system. I was once a member of the Standing Committee on Citizenship and Immigration and each time we reviewed budget requirements, we received repeated requests for more money. This is an example of a major project that experienced cost overruns, specification changes and major delivery delays. The system is still not operational today, even though it was supposed to be ready several years ago.
Could you tell us again about the new request for information process and how your small business learned of it?
:
In the space of nine months, they have managed to put the entire SME sector at risk. This is a major concern and I think the committee needs to urgently consider this matter.
You also mentioned other agencies, including small business associations. We receive a considerable amount of material at our offices. I recall that in 2006, we had some meetings with the CFIB. In a letter reporting on its meetings with Minister Fortier, the CFIB also expressed some surprise at the government's plans for a number of sectors, specifically, the IT sector, the engineering sector and the goods and services sector. Supply was one of the topics discussed. The government had a tendency to use major suppliers at the expense of regional offices and suppliers with access to federal contracts.
Have you ever laid eyes on a feasibility study of this approach or model? The Auditor General has complained repeatedly about the way in which major projects are handled. Recently, she talked about her opposition to or reservations about the contract awarding process. She also alluded to public accounts. I don't know what more to say, if only to stress the urgency of the situation.
It seems that everything will take place in the middle of the summer, when Parliament is in recess. The same thing happened last year in the case of other projects and other major government initiatives.
I'll leave it at that. Thank you.
:
Madam Chair, thank you for this opportunity to appear before this committee as you discuss the procurement activities of Public Works and Government Services Canada.
[English]
With me are Steven Poole, who is the chief executive officer, and Maurice Chénier, the chief operating officer of the information technology services branch.
[Translation]
With me is Jérôme Thauvette, Director General of the Services and Technology Acquisition Management Sector of Acquisitions Branch.
As ADM of Acquisitions Branch, my job is to acquire goods and services on behalf of clients both within Public Works and across the Government of Canada.
[English]
Mr. Poole's job is to provide IT services to other government departments on an optional basis and to manage Public Works' internal information management and information technology services.
With respect to the relationship between our two branches, the information technology services branch identifies what it needs to carry out its functions, and the acquisitions branch acquires those services and products, as we do for our clients outside Public Works.
Public Works takes very seriously the role of small and medium-sized enterprises in Canada's economy and Canadian communities. Through our department's office of small and medium enterprises, we have been making an explicit effort to make it easier for smaller firms to compete for and win government business.
In the two years since the creation of dedicated SME offices across the country, departmental employees have interacted with more than 30,000 individuals and businesses, and the number of small and medium-sized firms registering as suppliers to Public Works and Government Services Canada has steadily increased.
On average, over the last three years, 68% of all contracts let by Public Works, accounting for 39% of contract value, have gone to SMEs. Moreover, SMEs in recent months have proven very successful at qualifying for new standing offers and supply arrangements for informatics professionals, which we posted on MERX at the end of last year.
These were issued following extensive consultations with industry and are available for use by all government departments. More than 200 firms qualified, of which about 72% are SMEs with 100 or fewer employees. Companies that did not qualify initially will be able to compete again during our annual updates.
[Translation]
As well as providing opportunities for Canadian businesses, Public Works continues to focus on modernizing government operations and obtaining optimum value for Canadians.
One of the ways we are doing this is through our Information Technology Shared Services initiative, one aspect of which is the Government Enterprise Network services initiative—a cross-government network for services such as telephone and internet access that will reduce duplication and make more efficient use of resources.
The Governments of British Columbia, Ontario and Quebec have already gone down the path of shared services, as have several large private-sector firms.
We have been consulting with industry—including associations representing small businesses—on the contract requirements for the project over the past two years.
[English]
While most of the feedback has been favourable, we have heard some concerns and made adjustments accordingly.
For example, we have introduced more rigorous definitions of the professional services within the scope of the strategy and removed certain services. We also now plan to put in the bid solicitation mandatory provisions that bidders include an SME subcontracting plan in their proposals. There will remain a need for IT professionals to manage the implementation of these services and to monitor them.
[Translation]
Madam Chair, the RFP has not been issued yet. We will continue to consult with industry on it and on all future large-scale IM/IT procurements.
However, we will also establish a structure for a more formal consultation process that will include senior departmental officials as well as our Office of Small and Medium Enterprises. This will provide assurances to both the industry and ourselves that we have the same understanding.
Madam Chair, we look forward to your questions.
:
Thank you, Ms. saint pierre.
[English]
I listened to you, and I'm listening to you now, and sometimes I wonder whether there is in Public Works and Government Services the same disconnect that I see in other departments, where the upper echelons are not aware of what is really going on. We hear from the industry and they're saying they haven't been consulted, and yet you're saying, “We are consulting. We are continuing to consult.”
I hope we can make that mesh, because I think it's very important that we don't put aside the small and medium enterprises, which really are the innovation and really much of what goes on--they drive the economy.
I put that to you because too often as chair of this committee I run into that disconnect between the upper echelons and the actual people who are doing the work. And are they really doing what you think they're doing?
I'll give you half a second to answer that, and then I'll go to Mr. Proulx, because it's a very big concern of mine, and it's something that I've seen across government over the years.
I'm asking her the question, so she can try to answer.
:
Ms. saint pierre, I think you're very brave to meet with us today, given this whole issue and how it could affect your credibility.
By the way, I want you to know that I do hold you in high esteem. Your courage is a credit to you. I do, however, have a few questions. At the conclusion of your statement, you say this:
We also now plan to put in the bid solicitation mandatory provisions that bidders include an SME subcontracting plan in their proposals.
To my mind, it is clear that the witnesses who testified before you and described the problems they were having were absolutely right in saying that outrageous contracts would be awarded to large firms, that they would be shut out of subcontracts and that there was nothing they could do about it.
You continue: “[...] we will also establish a structure for a more formal consultation process [...]” Mr. Poole told us that he had consulted with people and made some presentations. Understandably, credibility is taking a bit of a hit here.
Would you care to respond?
:
I'd be more comfortable answering that question in English, Madam Chair.
[English]
In 2003 there were significant studies around the expenditure review committee, and there were many conclusions from that. One was that information technology could be managed much better in government.
There were several studies that allowed us to pursue various proofs of concept and approaches to confirm a general approach. We are in consultation with industry about that general approach at this time.
There are significant indicators from research, from professional firms like Gartner, as well as information from other provinces like B.C., Quebec--Centre de services partagés du Québec--that show there are significant benefits to pursuing this line of procurement and services.
There are many public policy forums that all say this direction is worthy of pursuing. We're pursuing it, but we're trying to do it in the most consultative way we can so that we know we're doing the right thing for Canadians. There are many benefits. We're talking about not only very significant efficiencies.
[Translation]
Let me briefly explain to you what's involved here.
[English]
With regard to network and telecommunications services, everybody knows that when you plug in your telephone or your computer, a whole bunch of things happen. There are wires, there are boxes, there are switches, there is software. When we are replicating all of that, because the departments have a lot of it in a stovepipe-duplicated way, it makes for way too much expense.
We can go to some federal buildings where there is more than one department, and there will be what we call “multiple wiring closets”, multiple sets of wires. We don't need to do this.
We're trying to get the federal organizations to work together to do IT better. It is very complex.
:
Thank you for being here as witnesses, and my thanks also to Messrs. O'Neil, Lynt, and MacDonald. Thank you for taking the time out from building your businesses to be witnesses, to give us your information and feedback on this process.
Any government that comes into office, Liberal or Conservative, has an obligation to examine the status quo and see whether it can be improved. We sent out requests for information, three of them on this subject. Then you have a request for proposal to see if you can increase value for taxpayers. Then there is a process of evaluation, consideration, and debate. You put the tip of your toe in the water, and the status quo seems to have a bit of a conniption fit about it. And that's fine. But we have an obligation to look beyond the status quo to find the best value for taxpayers. If it is not there, then we re-evaluate and go forward.
I've always had the view that debates are better than having competing interviews with witnesses. So if Messrs. O'Neil, Lynt, and MacDonald do not mind, I am going to take some of the questions that they put in their statements and put them to you.
To Mr. Poole, about the June 6 RFI, Mr. O'Neil says:
The government intends to bundle the commodities in the IT professional services together in order to issue four “pillar” contracts, each of a value that could exceed $1 billion annually for a period of up to 20 years. Bigger is better. This simplistic approach to problems makes absolutely no sense and could only be conceived by people who are not spending their own money. It makes no financial sense.
I invite you, Madam Saint Pierre, to comment.
:
Thank you, Madam Chair.
Thank you very much for coming today.
I think the big issue we find on our committee is that people come to us with all kinds of red flags. We have to draw on our witnesses, and often our concerns are put to rest, and sometimes they're not.
Our first round of witnesses said that in the bundling process that's under way there will be a couple of big winners and potentially many losers. Two of the big winners that were mentioned were CGI and IBM, which happen to be on the TPG contract. Those are two of the very big players that were mentioned as possible winners out of this deal.
Madame Saint Pierre and I have talked in the past about this contract. It's become a bit of a symbol of the problems that small and medium-sized players are having in getting contracts.
When you and Mr. Fortier were here, I was asking about the basic rules to ensure fairness. One of the issues we talked about was the fairness monitor. I asked a number of very clear and straightforward questions: is there an obligation to bring in a fairness monitor; is there a financial requirement for the fairness monitor; is this something that's discretionary? In each case the minister answered very, very clearly that a fairness monitor could be applied, but not necessarily, that there was no financial point at which it automatically kicked in.
You sat beside him. I would assume that the minister knows his stuff and that he's being backed up by his staff. Yet the further we looked into it, that doesn't seem to be the case.
We asked Mr. Shahid Minto, who was the former risk officer, about fairness monitors. He said that the fairness monitor is “a Good Housekeeping seal of approval...and it works”, and that “on all large projects there has to be a really, really strong reason not to use one”.
From our understanding, the fairness monitor kicks in at $250 million, so are we being given the wrong information here?
:
Madam Chair, Mr. Angus, thank you for the opportunity to speak about the fairness monitor policy.
[English]
I'll turn to English and try to be as clear as I can in relation to this.
The Department of Public Works adopted a framework in 2005 related to the fairness monitor. Since then we have had 23 situations in which a fairness monitor was used in procurements. Those could be large procurements or smaller procurements.
It is very clear in that framework that there is no mandatory requirement for a fairness monitor. That being said, it is mandatory to consider the involvement of a fairness monitor for requirements over $250 million.
In our consideration, there are certain criteria that we need to look into, such as the nature of the requirement, the complexity of the selection process, the nature of the industry, and so on.
:
So you're basically telling me that you aren't obliged on a contract that's up to $400 million. I just wanted that on the record, because what we see written is that $250 million is the kickoff point at which the fairness monitor has to come in. We now have you on record saying, “No, that's not the case”.
I don't have much time here.
Mr. Poole, earlier one of my colleagues asked you a question about Mr. Jirka Danek, and you said he was not a shareholder, or the largest shareholder in a company, even though he works for Public Works.
You wrote a letter, though, to TPG dated May 29, 2006, stating that Mr. Danek was a controlling shareholder of a public company called Avalon Works, which has been providing service to Public Works for a number of years, and which is a significant subcontractor on the ETS contract, which is held by TPG, and which gets a significant percentage of its revenue from its relationship with TPG.
Why did you just tell us that you didn't know he was a large shareholder in a company that bids on Public Works contracts?
:
You say the research shows that you are on the right track. This research and these studies are based on documents or facts not necessarily connected with the federal government or with known SMEs that have provided testimony here.
I'm amazed that you trust this research. The federal government is a very special niche, quite different from anything else in society. So then, I would put a big question mark next to these findings.
Mr. Poole, if you were asked to put a moratorium on what you're now doing... On October 19, 2006, furniture manufacturing firms told the committee that PWGSC's actions were adversely affecting their industry. In November 2006, we heard complaints from other people. Last week, a witness told us that things were not going so well. Again today, companies are facing the prospect of having to close their doors because of your actions. Yet, you haven't done any studies and you have nothing to base yourself on to prove that the direction you are taking is fair, honest and right.
Mr. Poole, if a summer-long moratorium were imposed on your plan and you were asked to come back before the committee in September or October to present a clear, concise and coherent action plan to convince parliamentarians that you are on the right track, would three or four months give you enough time to come up with such a plan? It may seem clear to you, but we have nothing in writing.
:
I recognize the intent of this. I think the motion was premature, and it was honestly made before the witnesses' testimony. But as such, I might suggest a potential compromise that I think would work. It follows along with what Mr. Angus was thinking.
We heard testimony, obviously, that we have a consultation process in place. There were actual timeframes allocated to that. It was mentioned by PWGSC that consultations were going to take place in August and September of this year. Then, of course, it would be 2009 before they went to a potential RFP.
I would like to suggest that this committee, after having heard the testimony today, invite the witnesses who were here today and/or others, at the committee's discretion, to come back so that we can see two things: we want an indication that there was active participation and a consultation process, and then, of course, we'll want to see the general direction of the consultation process after that.
We want to be able to make sure that we have adequate information going forward and adequate representation from both sides of the spectrum. I think it would be incumbent upon and the responsibility of this committee to bring witnesses back after the consultation process to see if we're satisfied with it.