Regulatory Update: Gov’t listens to small firms worried about being shut out of public contracts

Last month, Public Works and Government Services Canada (PWGSC) released new guidelines regarding the multi-year, multi-billion dollar Government Enterprise Network Services (GENS) contract for shared network services. Those rules make it easier, according to the government, for small and medium enterprises (SMEs) to be part of the lucrative contracts. “Canada’s small- and medium-sized businesses are the backbone of our economy,” PWGSC minister Christain Paradis said in a statement. “This government is committed to working with them to ensure they continue to be key providers to the federal government.” The government has decided that it will not combine all aspects of several contracts into a single large job. Professional services, for example, won’t be included as part of the GENS contact. GENS is a project that aims to consolidate the disparate government networks, estimated to be about 125, into a single network. The decision comes after months of consultations with some organizations criticizing the government’s previous plan. In April, the House of Commons Standing Committee on Government Operations and Estimates heard from several organizations that argued the Conservative Party’s plans to “bundle” a number of smaller contracts into larger ones would make it increasingly difficult for smaller firms to land lucrative government contracts. (Bundling, in government contract parlance, means putting a number of tasks into a single contract rather than having multiple contracts. The government said this was easier and more efficient.) Charles Duffett, senior vice-president and chief information officer at the Canadian Advanced Technology Alliance (CATA), summed up the difficulty for an SME to bid on a government contract that has bundled elements. “From an SME’s point of view, it could cost them tens of thousands of dollars just to respond to a large RFP. They simply don’t have the money for that. And if they lose that one, they certainly don’t have the money for the next one. What that really does is lessen the amount of Canadian companies that can deal with the federal government,” he told committee members. Duffett also relayed the story of Liquid Computing, a maker of high-end, very power-efficient computers that could serve the federal government, which has been advised by its board of directors to not even try to bid on Canadian government contracts. “In view, it’s a waste of time. It takes up too much energy, and nothing goes anywhere. I think they’ve been in talks for two to three years. But they’ve successfully sold four units to the US government.” The Information Technology Association of Canada (ITAC) also came under fire on the first day of hearings in April for being flanked by two large members CGI and Bell Canada. MPs wondered how the association could present itself as working in the interest of its small IT members when it came armed with two of its largest members at its side. Linda Oliver, a vice-president with ITAC, explained that since the committee hearing was on the GENS contract, which does require a large service provider, it only made sense to appear with two of them at her side. Government faces tough choice in Cabinet appeals The federal government now has all the information it needs to make a decision on three appeals to Cabinet on access to incumbent telcos’ facilities. It was served with appeals from MTS Allstream, Bell Canada and Telus Corp in March, and last month comments on the appeals were filed. The three appeals are on two distinct and separate topics, but do share a common denominator. While one is focused on the business market and the other two on the residential segment, the government really only has one question to answer. Should the incumbent telephone companies be required to give competitors access to their ubiquitous local high-speed access networks at cost-based rates? Of course, Bell and Telus say no and MTS Allstream says yes. This isn’t an easy question to answer and the government is faced with some difficult choices here. Does it believe that Bell and Telus will actually stop investing in next-generation networks outside of the largest cities in their home operating territory if competitors get access to their high-speed facilities at cost-based rates? Does it believe that MTS Allstream will pull back from the business market because it sees no viable way to serve the enterprise market without access to ILECs facilities at inexpensive rates? If either of these scenarios come true as a result of a Cabinet decision, the impact on competition in Canadian telecommunications will be disastrous. The cable versus DSL duopoly in the residential market will only proliferate to the detriment of customer pricing. The enterprise market will be dominated by the country’s two largest phone companies, and again to the detriment of customer pricing. But then again, in the political realm, there are always winners and losers.

Regulatory Update: Gov’t listens to small firms worried about being shut out of public contracts

News | 05/25/2009 2:57 pm EDT

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