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The Politics of Doing Business with GovernmentThe Politics of Doing Business with Government

Ottawa Business Journal, April 12, 2004
By: Scott Foster & Ellen Tsapralis

It was a short conversation nearly 20 years ago, but it resonates with Donald Savoie to this day.

In 1987, the professor and author of Breaking the Bargain: Public Servants, Ministers, and Parliament submitted a report to the Prime Minister's Office in which he quoted a businessman frustrated with the government's procurement process.

One of the hardest things to do is to get on the supply and services list, said the man, who had tried and failed to be included on the inventory of suppliers to the federal government. Eventually, he gave up, recalled Savoie.

"He had obviously experienced a great deal of frustration."

Fast-forward to today and that frustration is still there for many small and medium-sized enterprises, according to one Ottawa businessperson.

In fact, Nahum Goldmann suggests the procurement system is becoming increasingly "hostile in implementation" for SMEs.

"Overall, my advice would be not to (supply to government)," said the president of Array Development and lecturer at the University of Ottawa's school of management.

For a SME, bidding on contracts can be a waste of time and money, he said, adding the "biased" procurement system is stacked against small business.

It's set up in such a way that it's easier for overworked procurement officers to maximize their purchasing by choosing the bigger companies they usually deal with than their smaller competitors, he said.

As a result, the system actually precludes smaller organizations when it's supposed to encourage their participation, said Goldmann.

"The procurement system doesn't take into account at all that we're a country of small and medium-sized enterprises," said Goldmann, who favours the American way of supporting SMEs. He points to America's Small Business Administration, which has a number of programs that require the successful corporate bidder to bring smaller businesses into the fold, he said.

Meanwhile, the situation in Canada is only getting worse as opposition parties become increasingly effective in their criticism of the government's sponsorship scandal involving questionable contract dealings with Liberal-friendly ad firms in Quebec, said Goldmann.

"I would have no problem if they skipped me and asked me not to bid altogether, because, in reality, they need a fictional (roster of bidders) to cover their behinds," he said. "My time is money. Some IT companies know this is all for show, so they don't bid at all."

Goldmann's comments come at a time when many small businesses are being hard hit by tightening purse strings at many levels of government. Small companies in Ottawa have reported decreases in yearly revenues of as much as 50 to 70 per cent.

At the same time, a major review of the government's procurement system is ongoing. The Government-Wide Review of Procurement is being headed up by Walt Lastewka, parliamentary secretary to the minister of Public Works and Government Services Canada. The review team is collecting information that will become "the basis of formal consultations with stakeholders", according to the department's web site. Based on these consultations, Lastewka plans to "develop recommendations on how to improve federal procurement government-wide".

Public Works Deputy Minister David Marshall told the Ottawa Business Journal in February he is conducting a massive review of that department that will likely change the way it does business with the city. Marshall is one of two advisers to Lastewka's government-wide initiative that includes the review of procurement policies and legislation.

According to one Ottawa tech executive, "the (procurement) rules are starting to change as we speak".

"Literally, over the last few weeks and months, there are changes being contemplated that will really change the way government acquires (products) such as software ... from small Canadian companies," said Bruce Lazenby, chief executive of FreeBalance Software.

"I would hope in this review that the Canadian government takes the best route ... and that they also provide an opportunity for Canadian small business to participate as they have done in the past."

A champion of the federal government's procurement record, Lazenby said the feds have been instrumental in creating "extraordinarily successful companies" by choosing to be the first customer of many of these SMEs. "The importance of that is huge," he said.

Statistics on MERX, Canada's official public sector electronic tendering service, would seem to bolster Lazenby's optimism. The stats show more than 80 per cent of MERX subscribers are in the SME category, companies with fewer than 50 employees.

SMEs that are new to the system need to get to know the government as a client, said Lazenby, adding government is much different than other sectors of the economy.

For example, small businesses should not rely solely on MERX to become involved, according to government relations consultant Michael Teeter.

"Depending on the kind of business you're in, just responding to MERX can be the kiss of death for small business, frankly," said Teeter, principal of Hillwatch Inc.

The real key to getting in the door is to make personal contact with decision-makers in government departments, Teeter said.

"You have to identify the individuals and managers in the government that buy the goods and services that you perform and you have to go and see them, make connections."

Approaching government departments should be viewed in the same manner as making sales calls to private companies, Teeter said. Companies need to be creative to catch their client's interest and inform the departments how they can offer more value than competitors.

Once a department knows what a company can deliver, it will take that into consideration when writing out the statement of work and qualifications in the next request for proposal, thus making sure that company is "compliant", Teeter said.

"If you just sit back and the RFP comes out and say, 'We're not eligible,' or, 'We can do it better and cheaper,' well, you missed a step. You didn't get in there," said Teeter.

"If the proper information is communicated at the right time (to) the right people, then the government will go out of its way to ensure there's a competitive bidding situation."

The ability to write proper proposals that fulfill all the information requested is another huge step companies must take to find success in the procurement process, experts agree.

Vicky Webb, senior business adviser at the Ottawa Centre for Research and Innovation's Entrepreneurship Centre, said the top three proposals answering an RFP are invited for an interview before the winning company is selected. Since the process is highly competitive, companies must do their homework and make sure little things are not overlooked that could affect their success, Webb said.

Meeting the individuals who make the decisions before a proposal comes out is necessary to understanding what they want, Webb said. Since every request for proposal is different, each one must be read carefully to ensure the company completely understands what is being asked of it, she said.

"I find a lot of people do not do that and do not understand certain components and they don't ask questions."

Something as simple as the due date and time is extremely important. Webb has seen people turned away for bringing in the proposal 10 minutes late.

"A huge issue is people do not follow instructions. If you don't meet mandatory requirements, then your proposal won't be read."

Providing supporting documentation to prove the company's abilities, as well as offering good references that are easily available at the time the proposal is being read are other must-haves, Webb said.

A lot of companies don't realize the time involved in writing a good proposal or it causes them to shy away from the process, Webb said.

"Sometimes I've spent 80 hours writing an RFP," said Webb. "I think that deters a lot of people because it's very time-consuming to write them and it's a huge commitment."

If a company is not successful in its bid, a free debriefing process is available where an officer will explain what went right and what went wrong.

"Not enough people take advantage of this," said Webb. "You're entitled to it and people will learn so much from it."


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