Software, telecom contracts with government to become larger, government-wide

The size of federal government contracts for software, network and information technology services are expected to grow under a new plan to consolidate more procurement under the Department of Shared Services. The federal Conservative government’s budget plan, released Thursday, said the government will build on the work of Shared Services and consolidate procurement under that department for single purchases and better economies of scale. The budget document said each federal department is currently responsible for procuring end-user products, such as computers, software, mobile phones, and printers, resulting in duplication and “the Government spending significantly more than the private sector.” Making those procurement agreements government-wide is expected to lead to larger, single business contracts with the federal government, the country’s single largest employer with more than 260,000 employees. “There’s always benefits and negatives,” Ian Lee, a professor at Carleton University’s school of business, said in an interview, adding that larger-scale services mean many smaller companies can’t participate in bids. “The negative is that you’re going to a much bigger scale system, so it generally kicks out the smaller companies.” The government wants to “drive economies of scale” and “achieve savings for taxpayers and improve service,” leading to annual government savings of $8.7 million starting in 2014-2015, the budget plan said. The Tory government will “shift from 63 email systems managed by separate departments and agencies into a single, secure, reliable and cost-effective email platform,” the budget document said, adding that it will also look at consolidating network services. “This work builds on Shared Services Canada’s efforts to consolidate the number of data centres from over 300 to less than 20 and to streamline electronic networks,” the budget said. The Department of Shared Services has started tendering single contracts for services, including a process underway for a single, government-wide email system, and will soon look at software, government officials said on a background basis Thursday. Mobile devices and network services could be next on the agenda for Shared Services, which was created in 2011 with a mandate to consolidate and standardize services across government departments. The 2013 federal budget plan, which announced new tax compliance measures, skills training and investments in infrastructure projects, aims to return Canada to balanced budgets by the 2015-2016 fiscal year. The government released further details about how it will spend $400 million for venture capital that it announced in last year’s federal budget. That $400 million will be spent over the next seven to 10 years, the budget plan said, “which is expected to attract close to $1 billion in new private sector investments in funds of .” Of the $400 million, $250 million will go to establishing private sector-led national funds in partnership with institutional and corporate investors, the government said. Another $100 million will be spent on recapitalizing existing portfolios of venture capital funds, and $50 million will be divided to support three to five existing venture capital funds, the government said. The budget also announced investments of $100 million, allocated through the Business Development Bank of Canada, for startups completing accelerator programs, as well as $60 million over five years to support incubator and accelerator programs, which help startups and entrepreneurs develop business plans, commercialize them, and bring them to market. Among a number of federal tax changes, the federal government said it will phase out the Labour-Sponsored Venture Capital Corporations tax credit by 2017. Canada’s economic environment and venture capital market has changed since the fund was created in the 1980s, the budget document said, with critics saying it was an ineffective way to stimulate venture capital. The government did not make announcements about a digital economy strategy it has been working on since 2009. The government’s 2011 federal budget, released in March 2011, introduced measures to help the adoption of new technologies and said it set “the stage for the release of Canada’s Digital Economy Strategy later this spring,” though no strategy was announced. Industry Minister Christian Paradis said in the fall of 2011 that the digital strategy remains a high priority. In support of research, the government said it will provide $121 million over two years for the National Research Council (NRC) to focus more on growing innovative businesses by providing them with technical services, support for applied research, and access to labs and testing facilities. The government will also provide $20 million over three years for startups and small- and medium-sized businesses to commercialize their products or services through access to research, technology and business development through universities and other research institutions. The funding will be provided through a pilot project under the NRC’s Industrial Research Assistance Program, the budget plan said. The government also announced new “Young Entrepreneur of the Year” awards, supported by the Business Development Bank of Canada, with further details to be released. The Conservative government’s 2012 budget announced cuts to all government portfolios with annual savings of $5.2 billion, or 6.9 per cent of about $75 billion in program spending that was reviewed. Under that plan, CBC/Radio-Canada’s annual public funding of $1.1 billion is being reduced by $115 million, or 10.4 per cent, starting in 2014-2015. —With reporting by Simon Doyle at sdoyle@thewireport.ca, and files from and copy editing by Danika Grenier at dgrenier@thewirereport.ca

Software, telecom contracts with government to become larger, government-wide

News | 03/21/2013 8:07 pm EDT

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