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Canadian Federal Government IT Procurement

Over the last few weeks the rhetoric has heated up and various groups have been stepping up their lobbying of government about what they perceive should be happening in IT procurement in Ottawa.

All of this has a backdrop that includes, but is not limited to:

Ø Accusations of bid-rigging against seven local companies, and fourteen individuals related to those companies and others.
Ø Polar opposite opinions, and strong lobbying efforts by protagonists about the correct approach to the outsourcing of major contracts
Ø Lawsuits by losing contractors
Ø Political intervention in the process
Ø A procurement arm of the government that is under more scrutiny than most of us would care to live with … and trying to do the right thing.
Ø Accusations by “the big guys” that the smaller staff augmentation companies bring no value to the equation
Ø Accusations by the “little guys” that jobs will be lost in droves

The supercharged atmosphere puts increased pressure on everyone to “protect their turf” and on the procurement guys have to operate under a microscope … not fun for anyone!

Is there substance to all this rhetoric … or is it a reaction to the fact that competing factions are getting more and more heated? Are the different group protecting their own positions … or is there some truth here?

Like most situations there are many sides to this argument and there is some truth, and some myth in all of it. At the end of the day what has to prevail is common sense and what is good for the Canadian tax payer.

Here is Kevin’s take on the questions of the day!

Question 1. Should the government award mega-contracts to one winner in each of the four “pillar” contracts of the Shared Services initiative?

NO … for several reasons:

Ø I have yet to see an impact analysis by the government that would show the affect of awarding these contracts … they have had ten years to understand this, and it would be just plain wrong to proceed with no understanding of the impact.
Ø The Canadian government and the very large companies have not got a great track record of success with mega projects. The list of “failures” is long … and I am not pointing fingers, I think by their nature these projects are doomed to failure. (That could be the subject of its own blog entry).
Ø The award of one mega project that puts all the eggs in one basket is just too risky … even IF the companies involved had a great track record. Why would you do that? Spread the risk!
Ø The lack of competition WILL mean that the government will NOT reap financial reward from these mega projects.
Ø Even the “big guys” have to realize they will also be losers in a winner takes all scenario … if Bell Canada wins the network contract what happens to Telus , Allstream, Rogersetal?

My solution would be to take each of these “pillars” and award several large contracts under each “pillar” … spread the wealth and the risk. The contracts would be large enough to provide the “big guys” with some meaty projects, the Crown would get competition and if one failed there would be other successes to point at.

Question 2. What about the SMEs? Will there be a mass loss of jobs?

NO … there will be some loss of jobs and an impact on those companies that only operate in this market, which will be a hard loss to the local economy. Those people who do the work through the small guys today may well end up working for the “big guys” … or we may see some jobs lost to offshore solutions, which would be a worst case for Canada scenario. An impact analysis would give us clearer answers on this impact and there may also be ways that the government can provide some protection to the SMEs.

Question 3. Do the staff augmentation companies bring no value to the Canadian economy?


Staff augmentation companies have a value proposition that is a huge part of the economic success of our nation. There is not a single large entity that doesn’t take advantage of the flexible workforce associated with staff augmentation. Whether it is armies of “muscle” to tackle peaks in demand, or teams of IT specialists to fill out project teams the value is clear.
We provide fast access to a skilled workforce that is larger than any single entity in Canada … and at very competitive pricing.
We manage the administrative burden of the large flexible workforce and offer our clients protection from the risks associated with co-employment.
Many of the large successful companies started from humble beginning as a staff augmentation company or independent contractor company.
The intellectual property created by many companies was delivered with input from contract resources.
The staff augmentation companies provide profits and taxes into the Canadian tax coffers, not some far away headquarters in another country.
Staff augmentation companies support our own staff, the communities in which we operate and are huge contributors to charities and non-profits.
Some of the largest companies in the world are staff augmentation companies … Manpower, Adecco and Randstadare successful multinational giants.

How will we get the right answer?

The right answer comes from a collaborative approach with all stakeholders bringing something to the table. Those stakeholders who feel they are threatened will protect themselves and that has led to the rhetoric … we need all parties to have input, and hopefully that is what is happening now.