Canadians have been shortchanged, and IT vendors have been blindsided by the federal government’s latest approach to procurement reform, says Canada’s largest IT advocacy group.
Ottawa-based Canadian Advanced Technology Alliance (CATA) obtained numerous copies, from its members, of a letter in which Public Works and Government Services Canada (PWGSC) advises vendors that Budget 2005 requires the government to cut procurement costs by $2.5 billion over five years.
In the letter, obtained by IT World Canada, vendors are expected to absorb 10 per cent in price reductions, dubbed the Fed’s 10 Percent Solution by CATA, over the entire range of services they provide to the federal government.
The PWGSC memorandum states, “This is about more than generating savings. It is about better accountability, increased transparency, demonstrating results and showing Canadians that they are getting value for their money – the fundamental tenets of good government.” It is about better accountability, increased transparency, demonstrating results and showing Canadians that they are getting value for their money…excerpts from PWGSC memorandum Text But according to John Reid, CATA’s president, there’s another side to the story.
“If we ask the vendors to take a 10 per cent reduction, that is a savings” for the government, said Reid. “But there is also a cost. I have seen responses from the vendors that (the price reductions) will squeeze other cost areas. (Vendors) may reduce their sales forces or their marketing budgets.”
CATA is calling for the PWGSC to turn over calculations that show just how much money the government expects to save via its cost-cutting move. CATA means to compare the supposed savings against the potential economic hit that lost jobs and less spending among IT firms would bring. “The calculation is quite important,” Reid said.
When IT World Canada contacted PWGSC, the organization was unaware of the CATA press release. But Christian Laverdure, PWGSC departmental assistant, responded later in the day, stating that the group has had numerous meetings with CATA and Reid and both were aware that the price reductions are voluntary. “Suppliers are free to make their decisions on such factors as whether or not they have made recent price reductions,” Laverdure said. “The incentive being offered (to vendors for price reductions) is increased business volume.”
Laverdure said vendors could expect 40 to 60 per cent increases in (the procurement) of certain commodities if the vendors agreed to make the price reductions.
“Up to now I haven’t received any complaints from any of the suppliers,” Laverdure said. “Market value is going to determine what the prices are. When the new mandatory standing offers come up for renewal the government of Canada can expect a better bulk price.”
Laverdure’s guess is that competition is going to be fierce but it is going to be there.
Still, CATA’s unimpressed. In its press release the organization says the “arbitrary” changes run counter to commitments by PWGSC Minister Scott Brison to link procurement reform to Canada’s Innovation agenda. As part of that agenda the government is committing itself to building a world-leading economy driven by innovation, ideas and talent by pursuing economic and social success together. One of the key elements of the government’s plan is to invest aggressively in the skills and talents of Canadians.
The group also questions PWGSC’s ability to audit the changes, and wonders if PWGSC’s left hand knows what its right hand is up to.
The release says CATA asked some IT vendors “to contact a random group of contracting authorities at PWGSC for further details and background on these matters. Contracting authorities were unable to provide constructive advice, and some were unaware of the changes.”
