Thank you very much for this opportunity to participate via conference. This is the first time I've done this, but it's a great opportunity for me.
Good afternoon. For those of you who aren't aware, I'm Paula Sheppard. I'm the CEO of the Newfoundland and Labrador Organization of Women Entrepreneurs here in Newfoundland.
We are the only provincial organization dedicated exclusively to women entrepreneurs, and we work with about 1,000 women every year in all stages of business development, right from the inkling of an idea up into perhaps selling their business. Our mandate is to connect and support women within Newfoundland and Labrador to start, grow, and advance their businesses.
At NLOWE, we believe that tapping into the growth potential of women-owned businesses is an economic imperative, which is why ensuring that these businesses are fully engaged in the government supply chain is so important. At the same time, we recognize that the federal government must work within existing laws, regulations, trade agreements, and so on, while still looking for ways to engage diverse suppliers.
I'm sure you're aware that in Canada nearly 47% of small or medium-sized enterprises have some form of female ownership. According to Statistics Canada, just over 15% of SMEs are majority female-owned. However, women-owned businesses make up less than 5% of domestic and international suppliers to corporations and government.
In Newfoundland and Labrador, female-owned businesses are very small. In our client base, we call them micro-businesses. Most of them have one to four employees. In fact, 97.5% of all businesses in this province would be considered an SME.
Why are there so few women-owned businesses in the supply chain of the government? There are many factors at play, and I'm going to highlight some of them here for you today.
First, there's often a perceived lack of SME capacity, capability, or track record, and therefore they're often perceived as a higher-risk option.
Many SMEs do lack mature business processes and procedures, mainly due to their small size. The business owner is often the person completing the bids and tenders while also being responsible for the day-to-day operations of their business. This lack of developed processes and procedures often hinders them from getting contracts, but without getting awarded the contracts, they can't scale their businesses in order to grow successfully.
Complex bidding and contracting procedures, coupled with this lack of knowledge about the tendering process, are also a major barrier for SMEs. As I mentioned, they may already lack business structure and the supports that allow them to be the successful bidder. When the process is complex and time-consuming, many are not even bidding, because the process is too onerous. If they do bid, they may not be fully aware of the requirements to be successful.
Often there is a disproportionate bidding cost based on the size of the contract. Costs of supplying a performance bond or guarantee or of having a higher level of insurance than currently held cut directly into the bottom line of these businesses. Oftentimes these requirements can be adjusted, as they are based on previous contracts and tenders and not the current one.
Government often has lengthy payment intervals after the contract is awarded. Many small businesses struggle with cash flow, and adjusting payment schedules will make the contracts more accessible.
As you can see, current procurement models are not inclusive, because the bidding process is not targeted to SMEs. The process is complex, time-consuming, often targeted to the same suppliers, and often consists of large bundled contracts for which small businesses may be able to complete part of the work but not the contract in its entirety.
It is difficult to track process when it comes to supplier diversification, as limited monitoring and reporting is taking place. Tracking and monitoring are key. If it's not measured, you can't see if changes are impactful and successful.
At NLOWE's Women's Economic Forum series in 2016, participants communicated overwhelmingly that they expect government to buy from women-owned businesses to help build the supply and service community.
One of the recommendations we put forward in the resulting action plan is that government should expand its supply chain to include more women-owned businesses. For those who would like to read our full report, it is available on our website at www.nlowe.org/actionplan.
Women business owners often do not have the necessary contacts or networks that typically lead to greater business access, and they often face significant challenges because they are more likely to be undercapitalized than their male counterparts.
The Canadian Taskforce on Women's Business Growth estimates that a 20% increase in total revenues among majority female-owned enterprises will contribute an additional $2 billion per year to the Canadian economy. Therefore, in our current economic climate, we cannot afford to overlook this untapped resource. We must fully engage women in the economy by building the capacity of women-owned businesses and opening up the supply chain to diverse suppliers. By not engaging this group, government is missing out on innovation and value, and as a result small businesses do not grow.
Given the potential positive impacts on community economic empowerment and capacity-building, NLOWE encourages the government to consider the following actions.
First, ensure that the procurement culture and strategies of government align with the growing diversity of the small business community and contribute to a healthy economic environment.
Develop and implement a supplier diversity strategy that includes procedures, goals, targets, education, and monitoring.
Develop policies and procedures that engage diverse suppliers. For instance, develop a policy stipulating that if three quotes are required, at least one of the potential vendors must be a female-owned business.
Offer programs for mentoring and supplier training to develop diverse vendors and build capacity so diverse-owned businesses learn how to improve their operations, their goods and services, and their approach to bidding on contracts.
Educate procurement departments and purchasing decision-makers about the importance of supplier diversity.
Simplify tendering and contract procedures. Oftentimes small businesses don't have the capacity or knowledge base to spend the time completing the forms required to bid.
Provide feedback to unsuccessful bidders. Businesses that are unsuccessful in the bidding process need to have constructive feedback on why they were not successful in order to increase their chances of winning the bid the next time.
Implement early payment terms. Most small businesses struggle with cash flow. They are often unable to wait extended periods of time to be paid. Ensuring that contractors get paid on a timely basis will greatly increase the chances of engaging SMEs.
Finally, develop strategic relationships with supplier associations, such as NLOWE, to build and strengthen the supply database by including diverse suppliers. These associations can be used to help distribute bid notifications or connect government with potential suppliers.
Making changes to the current procurement processes would open the doors to female-owned businesses that may not have been able to bid on projects before. Gaining experience in bidding on contracts and ultimately supplying to a new market would help these businesses develop and scale to grow exponentially, which would spin off into the Canadian economy.
An additional goal is to have these companies sell to new markets and possibly export their products and services as a result of their increased experience in selling to the federal government.
NLOWE is pleased to play a key role in assisting with the development and implementation of these policies, and we look forward to the benefits as they drive growth in our economy.
I'd like to give you some insights related to individual women's businesses that are currently doing public and federal procurement to let you get an insight into these people themselves.
As Paula mentioned, we certify or verify a business 51% owned and managed and controlled by women. We call them WBEs, women business enterprises. Four provided us with some insights for your information today: Maureen Sullivan, the president of National Education Consulting Incorporated; Ema Dantas, the owner of Language Marketplace; Lise Patry, the owner of Patry Law; and Donna Lee Smith, with both P1 Consulting and P3 Advisors.
We asked them three questions. The comments covered a range.
The first question was “What successes have you had in public procurement?” These were the answers:
||I've been awarded contracts for every public procurement process that I've responded to but there aren't many RFPs for legal services as it's a category for procurement that is excluded from the trade agreements.
||We are fortunate to have several contracts with the Federal government now and we have done it through public procurement—it only took us 17 years to get to this stage!
|| We bid on government contracts regularly, and have an excellent success rate at the provincial and municipal levels. We have not seen any opportunities for our services from the federal government.
||I am the owner of 2 businesses. ... We are very successful on provincial and municipal procurements...but have not been very successful [with] the federal government.
The second question was “What challenges and barriers have you experienced related to public procurement opportunities?”
One of them explained, again, that it's difficult because of trade agreements. There aren't many RFPs, and they're difficult to find. As Paula mentioned, the federal government tailors some of the procurements to larger organizations that have already had experience, security clearance, and so on. It costs a lot in time and money to respond to federal government RFPs, so one has to think about it before engaging in that request for proposal preparation exercise.
Finally there's the idea of price. The government tends to look at price and not so much at value. That's becoming more of an issue.
Some feel it's the status quo, that it's easier to work with a certain supplier they've already had in a contract than to go with others.
They've tried to navigate the federal government tendering site for opportunities. They've found few that are relevant. They're difficult to find. These people are the experts already, and many of them are training public procurement entities, so if they're finding it difficult and they speak the language, they figure it's going to be incredibly difficult for smaller companies with less experience.
As one person said, they don't see any real barriers with their skill set, but the size of procurement really makes it obvious that the federal government is not interested in dealing with small and women-owned businesses; they would rather deal with larger entities.
What are some of the tools and resources that could support future success for public procurement opportunities?
The resources are there, but they're hard to find. The only things they can think of is more transparency in the contracts that are awarded, streamlined bidding systems, and efforts from federal bureaucrats to stretch their procurements to engage small business participation, perhaps complementing the roles of larger procurement. Simplified procurement requirements are mentioned again.
If I could summarize one point that I want to leave you with, women business owners who are here and doing business with public procurement are those risk-takers and job creators. They're the enablers. They are looking for some tools, and they're simple. They just want additional points of value for being women-owned. They also want to consider value for those who are partnering with the larger entities that already doing business with women. Those are some tools for change.
The 's mandate letter is very clear. It says:
||...developing initiatives to increase the diversity of bidders on government contracts, in particular businesses owned or led by Canadians from under represented groups, such as women, Indigenous Peoples, persons with disabilities, and visible minorities, and take measures to increase the accessibility of the procurement system to such groups while working to increase the capacity of these groups to participate in the system
We have to work together. In working together, WBE Canada has had a track record of success and recognition from both corporations and public procurement.
Since 2009 we've been a non-profit organization that's worked to increase the participation of women-owned business and supply chains, and we are called a council. I've alluded to that before. We verify or certify that a business is 51% owned, managed, and controlled by women. Once certified, these women are connected with buyers in both corporate and public sectors that are seeking diverse suppliers and innovative products and services.
Beyond certification, we also work on education and training and capacity-building, but the focus is on that procurement lens.
Again, WBE Canada is a certifying council. I would also say that there's an ask I have of this group: extend your ideas a bit around who else could be considered under-represented. We already have certification councils for other groups, including the gay and lesbian community and veterans. It's important to consider all who could benefit from these ideas.
Again, I would say we work already with large corporations, the major financial institutions in Canada that have supplier diversity, and two of the largest automotive companies, Toyota and General Motors. We work with the telecoms, including Bell and Telus, and the largest municipality in Canada, the City of Toronto.
Leverage the tools that are there. Confirm the diversity requirements that you've already set out. Make sure that the business is certified, that they are women's business, and that they are able to support that public procurement eligibility.
Finally, there are opportunities for public policy. What a perfect time. You're in procurement modernization. This is the time to enable those activities that we've just been speaking to. The federal government can easily develop federal policy initiatives to develop bidders. You've identified them. Consider the options available.
There are point counts provided in RFPs to the bidders who are diverse or who intentionally have programs that recognize and measure and develop those companies that are already looking at and developing and working with diverse suppliers. You do it both ways, with the diverse suppliers and also the companies that are already doing business with the federal government, in recognition together.
We put ourselves up to be a convenor, to bring together the national councils that are doing diversity and certification to support procurement modernization
Incorporate the best practices. There are lots of great programs out there, from Canada's largest municipality to government to the Pan Am Games in the past, and to the U.S. government.
In closing, I say there are lots of great places right now in modernization to do this. There is an intent and a will to do it. There are a lot of good things available from organizations that are really already developing those procedures, like NLOWE. Bring this all together and you can be successful.
Sure. We just finished a three-year project with Status of Women Canada that was funded specifically to help women-owned businesses in Newfoundland and Labrador get business in the natural resource sector because of the Hebron project, the White Rose extension, all of those natural resource projects, and the mining and hydroelectricity projects that we had going at the time.
As we were working through those processes, a lot of the things we discovered were the things I talked about today—the size of the bidding, that it was not debundling for small businesses, that our businesses weren't a really good fit. There were hardly any tier 1 contractors. They were usually tier 2, 3, or 4 contractors within it.
As we started to evolve that process when we talked to these major operators, the first thing they all said was.... In Newfoundland and Labrador there are benefits agreements, so for a lot of those, especially around the Hebron project, they had to have a women's' employment plan and a gender diversity strategy for procurement as well. They would come to us and say government is requiring us to do it, but government's not doing it themselves. Then the women-owned businesses were saying the same thing. They said that if you're imposing these sanctions on other people, you should be leading by example.
We did communicate some of that to the provincial government. Also, in that process we started having meetings with Memorial University. Two things happened here.
One was that as we started talking to the provincial government, we realized that the purchasing act in the province was being revised, finally. It's not in place right now, but they are working on the policies right now. There is one piece that talks about value and gender diversity in the procurement process. They also are talking about best value versus lowest price, because that's also an issue, as Mary alluded to as well. We're working with them right now to help them develop and implement those policies.
The second piece is the university attended our economic action plan forum in 2016. The president came to us and said the university is one of the biggest buyers in the province, and we think there's going to be a fit and that, like the province, there's a responsibility of the university as the largest institution to buy locally. Buying locally, of course, includes these diverse suppliers.
The main thing with the new project is that we're targeting working with the provincial government and the university and two other corporations that we're in the process of identifying right now as a good fit for us. We're starting with how we can help them as a service provider, because like Mary, we've been working on supplier diversity policies since 2009.
We recognize that this is not a quick fix. This is not something that is going to happen right away. There are a lot of constraints in Newfoundland and Labrador, and of course the Atlantic accord and all these things come into play. Federally, of course, you have your trade agreements and all these different layers, so how can we as an organization with our expertise help bring these things in that are easy to do, lower cost, best value, and really stimulate the local economy?
I can try to do the same. I think, specific to my market, supply diversity in terms of the market is.... Mary's market is based in Toronto, so she has a lot of these larger corporations and head offices in her market.
What we found and learned from the Hebron project and all of these oil and gas pieces that came in is that the first thing we need to do is manage expectations. If the federal government is going to roll out a policy or anything like that, it needs to manage the expectations. What happened with the oil and gas industry here is that everybody thought that with the benefit agreements, they were automatically going to get some of this business, which they didn't get, so it set some things up. There was some mismanagement of expectations.
What I think we really need from a supply and service community is the mentorship and the communication. We recently talked to Nalcor Energy, which is the crown corporation here. What Nalcor did right away was bring its procurement people into our office to meet with some of our business owners one on one. They could just ask questions directly: what is this? What is that?
I know the federal government has some of that, but it's important to have that question-and-answer accessibility and training piece because what's holding a lot of people back is that they're just afraid of it. They're not sure what's happening with it.
Mary talked about this, and I talked about it as well. When you have a small business that has four employees and you're the person who's running it, and then you have to spend three business days working on a bid and you're unsuccessful, and you went out and purchased extra insurance or extra bonds or had a lawyer look at it.... I mean, in a lot of these instances, the requirements are way above what they need to be. If it's a $100,000 contract, really, what requirements do you need to have?
Please let me know when there are two minutes left, because I'm sharing my time with Ms. Ludwig.
Thank you all for being here. It's quite interesting to hear about women's businesses and what you're doing to help women's businesses. When I was in Bangladesh, they were talking about how women's enrolment in business, or empowerment in business, would contribute 3% to the GDP. Thank you for bringing that figure from Newfoundland's perspective.
I find there are a lot of challenges that women are facing, and having been a small and medium-sized enterprise myself who worked with business owners, I know it is very difficult to figure out how to go through government contracting.
I'm wondering whether any of your membership, as you're advocating on their behalf or training them, have looked at OSME, the Office of Small and Medium Enterprises.
I'm going to give you two questions, and maybe you could address them that way. There's also the innovation fund. Are they approaching that fund to be more innovative?
From a Newfoundland perspective, you talked about micro-businesses, and I guess Royal Bank used to be very supportive of micro-businesses. How do you gel those micro-businesses synergistically so that they can bid on programs?
My last question is, would you like an American system whereby they set aside 5% of the government procurement for women-owned businesses?
First, with regard to the 5% set-aside, for percentages of set-asides, you have to be careful. I would like to say yes, that I would support the 5% set-aside, but we need to find out who's available to supply. One of the issues that we had here in Newfoundland and Labrador was that we didn't want to go out and say you had to do a certain percentage of business with women-owned businesses if we didn't know that they existed in terms of being able to supply.
What is your supplier capacity versus the contracts you're putting out? That's a very big information piece. Is there a match? If only 1% of businesses can even bid on these contracts and you're asking for a 5% spend, you might be setting yourself up for an unsuccessful project. Really, it's about fact-finding and making sure there's a fit between them.
On the other part of your question on the innovation fund and OSME, yes, we do use OSME. We find OSME is very helpful when it comes to outreach. I think there's a larger role for OSME, us, and our business owners, and I think that's going to have to be spearheaded. I mean, we do it all the time, and we do bring OSME in, and they do work with them, but what's missing in that equation is the knowledge about possibility. If they think it's more possible, and we take down some of those barriers and make it easier to do the work with the federal government, our members will be more likely to then come and bid on those projects.
In that connection, our businesses are very small here—one to four employees, I would say. Revenues are also less than $200,000 for most of our members, so what we've been encouraging.... It's taken us a long time, and this is a cultural thing. I think Mr. Whalen would be able to support me on this, but traditionally Newfoundlanders have been holding things very closely and are very secretive and tight, because they don't want someone else to know what their business is and know what's going on.
We see this in a lot of markets. We've worked very hard over the last few years to let these people know that if you're a small business with one to four employees, you may never have the capacity to do this on your own. You have to partner with somebody else. We've done a lot of development on our side to help our businesses learn how to consult a lawyer to get a partnership agreement, how to team up on contracts, and how to be successful in that piece, because if we don't encourage them to work together, sometimes they're not going to be able to get it on their own anyway.
With regard to the innovation fund, yes, we are aware of it. What I don't like about some of the programs that the government has is that they're very sector specific. If you're looking at innovation tech, ocean tech, or aquaculture, those are not the sectors that women are in. WBE Canada talked about that as well. Most of them are in the service sector, and they are highly under-represented in the innovation and tech sector. We need to work on that. I think we're 10 years away from it.
I see you're going to cut me off.
Good morning, ladies. This has been a fascinating conversation.
Looking at the fact, Ms. Sheppard, that you spoke specifically about micro-businesses, and Ms. Anderson, that you spoke about limited contacts, networks, and under-representation, I have two questions here.
One, is there a possibility, or does it exist, for an online workshop on the procurement process, specifically addressing the resources, the eligibility, the networks, mentoring, and supplier training, as well as the potential and the opportunities with partnerships?
Two, because these are micro-businesses, many of them with one to four people, what's the best way for the federal government to promote such a workshop and to reach them with their limited contacts and limited networks? In some cases these women are working in their basements or in isolated situations, and we want to pull them out of the basements and get them to experience more.
Good afternoon. I did prepare so that I could be succinct and to the point.
By the way, this is the second time I am a witness—not at this particular committee, but I did a witnessing in 2011 as well. Maybe you'll get a bit of progress in 2017.
My name is Dr. Sue Abu-Hakima. I am co-founder and CEO of the Amika Mobile Corporation. Our company in its current form was founded in 2007. This is my second start-up, my second company, my second SME. The first one we built was an AI company that was actually a spinoff from NRC's government R and D labs in 1999. We built it up as a compliance company. It was acquired by Entrust, which is a secure messaging corporation, and it had 18 patents behind it.
Over my 17 years as an entrepreneur, my companies have contributed over $21 million to the local economy. This number is based on investments and M&A results in terms of selling our compliance business unit, the first acquisition, as well as revenues. We've created approximately 250 high-tech jobs over the years, which, according to Invest Ottawa, you can multiply by four, because each one creates four spinoff service jobs. That's a total of about 1,000 jobs that I personally would have been involved in.
The current company is Amika Mobile. It is self-funded by angel investment and focused on critical and emergency communications for public safety and security, including integrations that leverage automatic detection of mobile devices in public places. If you had my product today, I could discover your mobile devices and take you to safety if, heaven forbid, all hell breaks loose, as happened in Parliament in 2014.
Amika Mobile has had approximately $3.5 million's worth of angel investment, which is not a lot, given our output. Our current senior team participates as angel investors, and as such, we are all very committed to the company. We would raise $5 million in investment if we could, but there continues to be an absent venture capital market in this country, especially for women-owned businesses, so we accept it. I've been at it for 17 years. I know how to work through it.
You should know that only about 4% of all companies typically get venture-backed, and female ventures, sadly, get only about 0.1%, which is a really sad number. That's very little. According to a report published by Janice McDonald and Claire Beckton, eight out of 10 women get rejected by banks in terms of financing, even though we run approximately 46% of the SMEs in this country, or close to 950,000, according to their report as well as the Startup Canada numbers.
We are noticing that BDC is starting to be more active with women in terms of loans, but they have very steep terms and a very small equity fund directed at women, in comparison to their $8-billion budget, which they typically focus on male-led ventures. That's a discussion for another day.
Let's talk about procurement.
We certified as an international women-owned business this year. I noticed that earlier you had witnesses on the Canada version of what we did. We've done international certification. That's going to open a lot more corporate customers to us, as they all have set-asides of 20% to 30% procurement for women, which is a huge number. Walmart, in particular—I was at an event last week in Toronto—has announced $20 billion's worth of procurement from women's businesses for 2018. That is fantastic for us. We are already excited and talking to them about it in terms of procuring our products.
We have a multi-million-dollar quotes funnel, so please don't feel sorry for us if we can't get venture capital. We do it through revenues, with many opportunities from the United States government, which also has a set-aside of 20%. We have over 150 global customers active in our company funnel, but I'm going to skip all this.
We have also won a lot of awards, and we have about 12 patents to our name. This year, we were selected for a third year in a row as the best emergency communication solution by the U.S. Govies, and FEMA has also picked us for a top award. As I mentioned, we have innovative and unique technology. We can do automatic discovery at airports. We are being used in United States stadiums now, and we are growing.
In terms of government programs that we've leveraged—and I'm sure this is the kind of stuff you guys are curious about—we've certainly benefited from government programs such as SR and ED, PRECARN, IRAP, BCIP, and CIIRDF.
I've been an entrepreneur for 17 years in tech, in Canada, as a woman, and with no venture capital accessible, I've been very good at ferreting out other programs for both the start-ups that I've done in tech.
IRAP, I would have to say, was a godsend for quite a while, but at some point they aligned themselves with BDC and stopped funding women, which is ridiculous. They've gone through a review, and now they have a new president. I would like to give him kudos. I'm happy to report that he's supporting women and trying to remove gender bias from NRC, so hats off to him.
SR and ED has also, of course, been a godsend for us, because we're so innovative. We've also partnered with and supported universities and colleges through collaborative research funded through the Ontario centres of excellence, PRECARN, and NSERC to help train students and make professional research more relevant.
CIIRDF is another program that has been a more difficult grants program because of their processes that seem to penalize the SME in terms of workload and administration, but they've allowed us to work with a good partner in Israel and fund a project.
I also wear a community service hat. I served as the vice-chair of the board of directors of the Ontario centres of excellence and I was also an adviser on NSERC's private sector advisory committee in terms of the national centres of excellence. I do understand research. I understand trying to do clusters. I understand trying to build the innovation capability in this country. The reason I do this is I'm trying to encourage more men and women to go into STEM, especially young people. Both of my kids, by the way, are STEM graduates, so I'm very proud of that.
In terms of government procurement, we've responded to at least 50 RFPs from the Government of Canada over the last 17 years. That's a lot of RFPs, and they are a lot of effort. We have not won a single one. That is ridiculous, but it's true. Even in our first company, which was a compliance-based company with content analysis, our products were always selected as the top technical innovative products in an RFP, but we still didn't win the contracts. We were never awarded the contracts.
You're not necessarily going to like me for saying this again, and I'm sure everybody else says it: the reason for this, I have to tell you, is that I'm an SME, and nobody gets fired for buying IBM. We could add Bell to that, or CGI.
—or PeopleSoft, or any of those large companies, despite their deployments not working. Once Entrust acquired my business.... Entrust was a secure messaging company that used our content analysis to see what was in an email before deciding to encrypt it and send it off. By the way, you use it in the Government of Canada, and have for a number of years. Once Entrust bought our compliance business—we were selling a compliance server that dealt with email and sensitive content in email—it essentially turned around, and the Government of Canada bought our product. Remember, AmikaNow!, my first company, was a spinoff from NRC that did AI and content analysis. I couldn't sell to the government, so as every other software entrepreneur has done, I eventually had to exit. I built it up and I exited. Then Entrust turned around and sold a site licence to the Government of Canada, 250,000 users, for approximately $5 million. Now I have to tell you that you still benefit from this today, and it still benefits from this today. As an SME, I went in with the golden handcuffs, did my time—my three years—came out, and started a new company. We certainly don't benefit from it today, and this is many years later, about 13 or 14 years now. That's a really good example of our technology certainly being good enough to get into the government, but you don't buy it.
Luckily, in 2010 we finally found out about a new program called the OSME program, the Office of Small and Medium Enterprises, which is part of PWGSC. We went there, and we were very excited. Thank you very much for setting them up. We signed up for their training.
Then they announced through OSME, I think, the CICP, which was the precursor for the BCIP, the build in Canada innovation program. In my opinion—and I've now been an entrepreneur for 17 years—it is a fantastic idea. It is the natural next step in getting innovative technology in trial with federal government departments, especially for someone like us, who has leveraged IRAP and SR and ED. We benefited from your other programs to do the innovation and the leading-edge stuff, and now we can take it into the government.
When they were in trial with us, while the testing labs at CRC in Shirley's Bay were in the BCIP with us, they had their first haz-mat emergency. Isn't that a good way to test if an emergency communication and safety system works? Obviously, they finished the testing. We were successful. They bought the products and they've been paying us support now since 2011, so they're a customer.
The second example is...it helped us understand the process.
Just give me 30 seconds. I won't give you more details on that.
We tried again to reply to RFPs. Again we were not successful, so we innovated again. Again we applied to the BCIP, and this time we were successful with some more work. We actually chose a completely different department, CBSA. I'm happy to report that CBSA has been our customer since 2014 because of BCIP, not because of any responses we've done to RFPs. Again, we integrated with gunshot detection, which is leading edge. The RCMP wanted it, etc., but nobody would buy it. We applied to the BCIP, innovated again, and now the RCMP is testing it through BCIP.
The bottom line, to me.... I know the BCIP is $40 million. I honestly think it should be a $250-million program, very similar to IRAP. I have said before that we keep throwing money at the banks, but that's not where we should go.
I'll stop there.
The purpose of the build In Canada innovation program is to help Canadian companies move their state-of-the-art goods and services from the lab to the marketplace by giving the company that first major reference sale. The Innovation, Science and Economic Development website states that:
||Between 2011 and 2013, small businesses accounted for 27 percent of total research and development expenditures, spending $13.0 billion over the period.... Lacking both a credit history and the collateral needed to secure a loan, over 80 percent of start-ups used personal financing to finance their new businesses.
I know there is a need for checks and balances to ensure that government money is spent wisely. As a small businessman who wants to do business with the government, I would also appreciate anything that can speed up the process.
Across Canada, the risk that is taken by entrepreneurs is shouldered, in my view, largely by individual Canadians and their families. Risk stifles innovation, a key theme about which I will make several points and recommendations.
Government should reward risk-takers within its ranks. BCIP may cover the financial risk by paying for the innovation. The test department also takes risks by providing the human and physical resources during the test. These people also have full-time jobs, and agreeing to take part in these tests means taking on extra workloads. For a program like the build in Canada innovation program to be really successful, there needs to be a way to recognize and reward the efforts of the test departments and their people.
Our first BCIP award was for Text-to-Software, our software development platform. To achieve this award, we first had to try and fail our first build in Canada attempt. This was an expensive lesson to learn, and we took out of it the need to hire outside expertise to write our first proposal. I would estimate our investment to make the attempt and win cost approximately $50,000. For a small business, this is no small sum, and we took considerable risk at the outset with only a limited expectation of winning.
While recent process changes have brought improvements, it can still take more than a year from the start of the application process to the awarding of the contract. Small businesses can easily launch and go out of business if they fail to secure sales targets after investing in those opportunities.
This is an example of risk and how it plays into whether a firm can even make it through a BCIP procurement.
Happily, we did win on our second BCIP attempt.
I would recommend that when an entrepreneur is arriving with a new product, service, or solution, it should be a government-wide policy that everyone in government, from director to manager to employee, be required to welcome the innovator in every way they can. Further, after a successful BCIP test, an automatic transition to an internal government incubator, specifically for these successful products, would be an effective way to accelerate innovation. Currently BCIP winners still need to hunt for their next client. This problem could be solved entirely if BCIP companies were automatically connected with demand under an automatic procurement program.
Many bright stars in government have helped us along the way.
One of them was Bruce Covington, a key advocate and our first client for our innovation at Public Services and Procurement Canada . He and his group were very supportive and proactive throughout our first BCIP experience.
I therefore recommend that BCIP winners should be able to rate and recommend their test departments on an official list. If the government were then to have a policy of recognizing and rewarding the top innovative test departments, then it's likely we would see the pace of innovation inside the government accelerate.
Text-to-Software automatically creates customized software from text. In our first build in Canada innovation program test with Mr. Covington and his team at PSPC, we were able to create a customized data classification system for 22.5% of the internal PSPC budget. We showed that going codeless works, completing the project on schedule despite a three-month delay.
It's fair to say that all of us felt that the result of this BCIP test could have gone further. We learned from that experience and have been working with our partner, Meyers Norris Penny, to leverage all the BCIP results we have achieved into new cloud-based services designed for government. These are now available to government departments on the software licensing supply arrangement. BCIP can be thanked for enabling efficiency-minded C-level managers with our new codeless solution.
Also, it was Mr. Bruce Covington at Public Services and Procurement Canada who first recommended that we work with a larger partner. This is what began the relationship we have with MNP today, our largest private sector partner and Canada's largest Canadian-owned accounting, tax, and business consulting firm. With MNP as the lead applicant representing SageTea, last month we were even able to achieve an SLSA, a software licensing supply arrangement, win for all of our BCIP program-tested products. Often a smaller company needs to have a bigger one help it along when doing business with the government. I therefore recommend that the government do more of this by getting private firms, big and small, to work together in complementary ways.
We utilized the BCIP program follow-on sales program to test Text-to-Software at the Department of Fisheries and Oceans. There, using Text-to-Software, we built two customized software applications in only five weeks. These are now available to the Department of Fisheries and Oceans as well as across government through the SLSA.
Today we are just beginning the test of our second BCIP innovation, SageTea Link, with Employment and Social Development Canada as the test department. SageTea Link is an ETL—extract, transform and load—tool. What that means for most of us in the room is that with SageTea Link you can automatically migrate and link valuable data from unsupported expensive-to-maintain systems to new supported ones. This is a huge problem in government.
A key component of our current BCIP innovation is artificial intelligence. SageTea has partnered with Lemay Solutions, an Ottawa-based Al company that is a subcontractor with MNP on the current BCIP test. As a result, we are also now including a new artificial intelligence module with SageTea Link. This new product, SageTea Link Deep Learning, enables our customers with easy-to-use artificial intelligence. MNP is doing a security audit of our software to ensure it meets the government's IT security requirements.
Our experience with the BCIP program and the Office of Small and Medium Enterprises has been exceptional. The build in Canada innovation program is a terrific program. It has made an incalculable difference to SageTea Software's mission to be a global standard for software development.
Thank you. Merci.
I could, but I didn't bring any cartridges.
Brookfield told us there are government regulations that apply to all these federal government buildings, whereby they have to be tested every 30 days by something called bacterial culture—you know, in petri dishes, as in high school biology. Brookfield told us that they know the petri dish approach takes two weeks and is not very accurate. They wanted a DNA test that was possible to undertake on site rather than by sending it off to a lab, so we made it for them.
Then they walked us into Public Works and Procurement Canada, and public works—who sets the standard—said to us, “This is exactly what we've been waiting for for years. We always knew that culture testing sucked. Finally, here's the technology we want.” Then they said there's a thing called BCIP that would be perfect for funding the definitive scientific study to show how good DNA testing is vis-à-vis culture testing.
PWPS told us they've been wanting to fund this study for years, but they don't have the budget themselves, so BCIP allowed them to do it. Thus $500,000 has now funded, over 12 weeks, 51 cooling towers in Ottawa, Toronto, and Montreal. The results are about to be released in a few weeks, and I can tell you they are explosive. It's coming, then, but I can't tell you what the results are.
What is happening now is that DNA testing is going to become the standard for testing every office building, hospital, school, shopping mall—every building that has a major air conditioner. We're talking about a multi-billion-dollar global export opportunity, and it's going to be driven by standards, because people don't want to die, especially public sector employees. They care about the quality of the buildings they work in.
Public Works and Procurement Services, for example, has asked us to help them update the standard. It's going to apply to all the government buildings. It's going to be released probably in January or February. We're now talking with the Standards Council of Canada and commercial real estate guys. It's probably going to be rolled out across the world.
We find BCIP was an amazing success for us. If it didn't exist, we wouldn't have this billion-dollar opportunity in which we're probably going to be the world leader. It's going to be incredible.
The thing we're finding now concerns what happens after BCIP. We'll probably be able to engage a government relations firm that's going to help us on the procurement side, because to navigate all the acronyms and who we talk to, such as Treasury Board.... We're just learning all this for the first time.
That would be our one suggestion. After companies graduate out of the BCIP, how do we get help on procurement to roll it out in Canada to every province and municipality, worldwide, to New York—all that stuff?