Questions and Answers on the Economic and Fiscal Update 2006

November 24, 2006

As part of the Economic and Fiscal Update 2006 tabled yesterday, the Government announced that it is adjusting its savings forecast for Procurement Transformation.

Q1. Does this revision mean that Procurement Transformation is in jeopardy?

A1. No. Procurement Transformation is well under way and the Government is committed to its success. However, it is taking more time to reach its full potential, largely because of the adjustments we have made to our approach over the last few months. This led to a revision of the savings forecast over the period 2007-08 to 2011-12. The initiative will nonetheless achieve substantial savings for Canadians.

Q2. What adjustments have you made to your approach?

A2. As we moved forward with the implementation of Procurement Transformation and received feedback from suppliers and departments, it became clear that we needed to make adjustments. As a result, we are:

• increasing our efforts to involve suppliers and are giving them more time to adjust to changes;
• giving departments more time and support to build internal capacity and put in place new procurement practices; and,
• improving PWGSC’s capacity to support the transformation.

These positive steps naturally have an impact on cumulative savings. However, Procurement Transformation is about much more than savings. It is about demonstrating to Canadians that they are getting value for money and that the government is running its operations efficiently. It is about improving transparency and accountability. And it is about ensuring fairness and openness in procurement.

Q3. Is this $1.4 billion reduction applied against the $2.5 billion in savings announced in Budget 2005? Will you only save $1.1 billion?

A3. No. The period covered by the projections is not the same.

In the 2005 Budget, a savings target of $2.5 billion was set for fiscal years 2005-06 to 2009-10 (Year One to Year Five of Procurement Transformation). The annual savings were set low in the first two years and then ramped up for the last three years.

In the 2006 Fiscal and Economic update, the projections are for the years 2007-08 to 2011-12 (Year Three to Year Seven of Procurement Transformation). Because of the recent adjustments to our approach, Procurement Transformation is taking longer to achieve its full potential. In strict accounting terms, this means that there is a "shortfall" relative to the initial plan.

The savings will still be quite substantial for the Government, and are working on setting new targets for the coming years. We will report on progress in the 2007 Budget.

More importantly, we will demonstrate to Canadians that they are getting value for money and that the government is running its operations efficiently. We will improve transparency and accountability in procurement. And we will ensure fairness and openness in procurement.