Summary Report:

Fall 2005 Consultations with Small and Medium Enterprise (SME) Suppliers to Government

The Office of Small and Medium Enterprises (OSME)

1. Context and Format

In late 2005, the newly formed OSME hosted six workshops for small company suppliers to the government. At the workshops SMEs were given the means to identify their concerns with respect to government procurement and their proposals for how these concerns could be addressed. The consultations proved to be a very useful means to discuss plans for procurement transformation, to gain insights from SMEs on possible and perceived impacts on them, and to develop a better understanding of the department's role in ensuring that SME suppliers are treated fairly in government procurement.

In particular, the consultations addressed two points:

1. SME concerns about the transformation of government procurement; and
2. Specific recommendations for how to address these concerns.

2. Locations

The OSME organized a workshop in each region of the country with participants from several cities assembling in a regional hub for a one-day workshop. The workshops were held between September and November in Halifax, Montréal (Quebec), Ottawa (National Capital Area), Toronto (Ontario), Edmonton (West), Vancouver (Pacific).

3. Participants

In total, over 155 senior SME managers and owners participated in the series of workshops. The OSME also collected feedback from individual SMEs unable to attend the sessions. To compensate partially for the opportunity cost of being away from their businesses, the government paid participants' travel expenses and a $500 honorarium. In total, nearly 200 individuals and businesses were consulted.

Participants represented a cross-section of the government's diverse supply areas, and reflected industrial sectors where SMEs are most active in government supply: professional services, office supplies, temporary help, construction and information technology.

Industry associations also sent delegates: the Canadian Federation of Independent Business, the Canadian Advanced Technology Association, the Information Technology Association of Canada, the national and several local chambers of commerce and the Canadian Association of Management Consultants.

Finally, the consultations also brought together suppliers and government participants for several focussed discussions of government procurement in three policy areas:

1. Aboriginal suppliers with Indian and Northern Affairs Canada and the Aboriginal Business Council discussed Aboriginal procurement;
2. High-tech firms with Industry Canada discussed procurement of innovative products; and
3. Environmental firms with PWGSC's Office of Greening Government Operations and Environment Canada discussed green procurement.

4. Participants' themes

The participants identified five broad areas of concern. These themes recurred in almost every workshop. The summary below, as with each of the attached individual workshop reports, accurately summarizes the participants' feedback without attributing comments to particular individuals. The summaries and reports do not reflect the opinion of the Minister of Public Works and Government Services Canada or the Government of Canada.

Theme

Description

Access

SME suppliers cited a lack of access to government contracting opportunities as their most pressing concern. Suppliers blamed this lack of access on several factors, notably on the decision to make standing offers (SO) mandatory for ten groups of products. The professional services and office supplies categories were identified as most affected.

Accountability

Participants cited a concern that there was insufficient accountability in the procurement system. They said that this missing accountability impedes the government procurement process. Generally, they were in favour of adding a Procurement Auditor function, increasing transparency, and facilitating feedback on suppliers' performance to close the accountability gap.

A "one-size-fits-all" approach to transformation

Suppliers indicated that they viewed planned changes to government procurement as being based on a commodity-managed, "one-size-fits-all" approach. In particular, suppliers cited a concern about plans to consolidate the supply base and drive volume price discounts. Participants noted that differences in the structure of various product and service categories ought to require unique procurement approaches.

Socio-economic considerations

Participants asserted that procurement decisions should consider socio-economic issues and policy objectives such as regional development, innovation, the environment and Aboriginal development.

5. Participant recommendations

In addition to citing concerns, participants in the consultations suggested approximately 75 unique recommendations for improvement. These recommendations are fully documented in the detailed summaries of each workshop.

6. Government Actions to date to respond to these SME issues and proposals

With advice from supplier groups and PWGSC experts, the Government has developed and implemented a number of initiatives to address SME concerns.

• OSME will establish regional offices. During the recent consultations, it was apparent how important it is for each region to have its unique resources to support smaller suppliers. These new offices will be located in Halifax, Montréal, Ottawa, Toronto, Edmonton and Vancouver and will lead the work of training, engaging with, assisting, and learning from their SME supplier communities.
• The Government is creating the position of Procurement Auditor to review procurement practices across government on an ongoing basis to ensure fairness and transparency, and to make recommendations for improvement. The Procurement Auditor will also review complaints from potential suppliers after contract award with respect to procurements of goods and services that are covered by the Agreement on Internal Trade, but which are below the monetary thresholds of that Agreement ($25,000 for goods and $100,000 for services).
• Professional Services Online is a computerized online marketplace recently established to help departments source smaller scale professional services. This new system provides SMEs with increased access to government business while adding transparency and auditing features to provide a better level of accountability.
• In January 2006, the department re-competed the regional master standing offers for office supplies. This re-tendering will allow smaller firms to compete for access on the government's supplier list — these lists are now the mandatory contracting method.
• The department is clarifying which professional services not currently covered by any standing offers.

7. Conclusion and next steps

The Government, PWGSC and the OSME continue to work to advance the interest of SMEs and regional firms in government procurement. The 2005 workshops were only the start of an ongoing dialogue between the Government of Canada and its smaller and regionally-based suppliers.