Vendor Legislative Alert: New Procurement Rules Strangle Choice, Shut Out Companies
June 13, 2006

 

Ottawa, June 13, 2006….CATAAlliance, Canada's largest high tech association, has issued a legislative alert to vendors and MP's across Canada regarding serious missteps being taken by a federal department on procurement reform.

After eighteen months of Public Sector/Private sector consultations on workable procurement guidelines and frameworks, PWGSC (Public Works and Government Works Canada) has tabled arbitrary decisions running counter to their consensus commitments. Federal CIO's and Industry Canada were also apparently left out of the loop of consultations.

Key stakeholders such as vendors and association executives were caught off guard last week at a consultation meeting that presented new procurement approaches, including:

  • A third party study on Strategic Sourcing outlining roles, responsibilities, tasks, timelines, feasibility and the business case supporting proposed procurement changes -- a study not made publicly available and conducted outside the Public Sector/Private sector consultation framework.

  • An introduction of new processes such as: reverse e-auctions to determine vendor of record; changes to NMSO practices; savings levers; new methods of supply; competitive supplier selection approach; RFSO; Negotiation; Award Decision Methodology; Implementation; and OSME issues, without supporting empirical data.

"We were totally blind sided by the scope, timing and secrecy of these announcements and dismayed by the inability of PWGSC to provide any rationale for its proposed changes," said CATA President, John Reid.

Reid added, "We engaged in what we thought was genuine collaboration ,involving some of our most senior people who offered guidance through PWGSC created Commodity Councils and other forums. They have lost trust and faith in the transparency of the process."

Implications

PWGSC has changed their "Way Forward" into a "Way Backward" policy directly against the grain of measures being taken by Canada's global competitors to enhance their innovative sectors.

Preliminary assessments by vendors and industry experts point to the negative impact of the proposed changes to procurement methodologies, such as:

  • Failure to embrace Supply Chain principles
  • Fundamental structural changes to the IT marketplace, with potential long term negative impact on the viability of a number of sectors
  • Without information on processes and direction, vendors will not be in the position to respond to opportunities in a timely way
  • Services vital to both large and small size requirement, such as pre sales design and support, deployment management, staging and storage will diminish or no longer be provided
  • Reduction and limitation of choice available to clients
  • Elimination of Canadian content and associated jobs and critical knowledge base
  • Shutting out of many SMEs from fair and competitive bidding
  • Skewing of the market place in favour of offshore suppliers
  • Disregard for the valued added of intermediaries
  • Focus on price only with no regard for value added services

A Better Way Forward

As part of advancing thoughtful Public Sector/Private Sector dialogue on best practice approaches to procurement, CATAAlliance recently presented a comprehensive discussion paper to PWGSC and Industry Canada on "Prosperity, Global Supply Chains and the Role of Government Procurement." Its objective-- to stimulate the entry of Canadian companies into strategic "Global Supply Chains", demonstrating that Public Sector Procurement can supercharge our economy by plugging our companies into the world economy -- without an increase in government spending.

Reid, concluded, "The fundamental issue remains the lack of an overall industrial/economic strategy and business model for Canada; others countries have and are using government procurement as an economic lever, why not Canada? There does not appear to be a single substantive vision for how the government should conduct procurement with the context of an industrial strategy."

The ICT sector alone contributes annually to the Canadian economy 550,000 jobs (with a three time multiplier for each job loss), $130 billion in revenue, $5.2 billion in R&D investment, $18.7 billion in exports and $10.8 billion in capital expenditure.

ACTION ITEM:
CATA has opened its Vendor Survey to provide a vehicle for executives to express their concerns and interests in Procurement Changes. Please take five minutes to provide your input at:http://www.e-penso.com/survey/s?s=VendorACTcam

 

ACTION ITEM:
CATA Members can request copies of PWGSC Presentation materials and a copy of the CATA Discussion paper on "Prosperity, Global Supply Chains and the Role of Government Procurement" can be obtained from Cathi Malette at cmalette@cata.ca

For further information, please contact:
John Reid
President, CATAAlliance
613-236-6550
johnreid@attglobal.net

VendorACT Campaign:
Since 2005, CATAAlliance, the largest high tech association in the country, has been directing a VendorACT Campaign on behalf of the ICT vendor community to present its issues and concerns on the government-wide review of procurement and shared services initiative. The Campaign has included survey and research work, meetings with vendors, briefings of government and political representatives, media relations and development of communications materials.