Summary of Discussions SSC ICT Sector Engagement Process
Summary of Discussions: SSC ICT Sector Engagement ProcessContextThe following is a summary of the major points made during Shared Services Canada’s(SSC) engagement exercise with various information and communications technologyprivate sector associations. Associations were asked eight questions divided into threecategories. In general, there was significant agreement among the associations oneach of the issues discussed. Possible differences are noted. Questions posed toassociations are in bold. Association responses follow the questions.A) Establishing a Sustainable, Substantive Relationship1) Both the Government of Canada (GOC) and the private sector must be satisfiedthat they are in a “win-win” IT relationship. Do you believe this win/winrelationship has existed in the past? How do we ensure it exists in the future?In general, both the government and the private sector have enjoyed a “win-win” ITrelationship. However, this relationship is not without its challenges:• Many managers in the GOC continue to build their own IT processes as the procurement process makes it onerous to buy something. This produces the unintended but critical consequence of the government hiring good employees away from the private sector.• The procurement process makes it costly to do business with the GOC. The process has become focused on process rather than on outcomes. Very detailed and prescriptive contracting makes it difficult to provide added value or be innovative in terms of people, process and/or technology. The evaluation process is typically lowest cost as opposed to value-for-money.• One way communication with industry contributes to the perception that specifications are wired to achieve a specific outcome (supplier).• Buying behaviour is sporadic, leading to periods of feast or famine.• As a result, many small businesses won’t sell to the GOC given the complexity and cost. SMEs must spend a lot of time understanding the rules of the game. This represents a large investment for a small firm.In terms of maintaining good relationships between the GOC and the private sector,several points were made:• Procurement must shift from its focus on process to one based on achieving outcomes. This does not preclude adherence to mandatory policies and processes, but the culture must be driven by a focus on successful outcomes.
2• Early, open and ongoing consultation between industry and government is key for a “win-win” relationship. Government tends to engage industry after decisions have been made, with a view to providing information about those decisions. Relationships with industry can be more effective if meaningful consultation occurs early enough in the process to affect the outcome. Reporting back on the outcome, and/or decisions taken based on industry input, is essential.• One specific idea put forward was to create an advisory body of current CEOs and entrepreneurs to offer industry perspective on how to best maintain an effective private sector-government relationship.• Many existing government-wide procurement vehicles are effective and should be maintained.• The government can promote innovation within the sector. This will benefit not only the government but individual firms as they compete globally.• SMEs often want to maintain and/or build their own relationships with the GOC, rather than being forced to deal “through the big guys.”B) Building a Lower Cost, More Effective Technology Platform2) How can SSC balance reducing costs and ending waste and duplication withthe objective of spurring innovation in the sector, as suggested in the Jenkinsreport? Should government strive to be both a first-user and a model-user? Ifso, what measures could SSC take to achieve these goals?It will be important to identify when it is appropriate to promote innovation as part ofindividual procurements. There will be procurements where measures to spurinnovation will produce benefits, and others where a standardized approach, consistentwith current industry practices, will be more cost effective.The government should partner with industry advisors to identify areas where SSC canbe a first-user and a model-user to spur innovation while reducing overall costs. Inaddition to technology solutions, SSC has the opportunity to be innovative in how itdelivers services (process efficiencies), how it steers the transformation, how it isgoverned, how it leverages its resources, and how it procures.Government being a first-user is critical to companies attempting to sell products inother countries. Unfortunately, Canada does not have a good record in this regard.The government should be finding companies that are doing innovative things andsupport them. Outlook conferences would allow SSC management to exchangeknowledge of best practices and current needs. It could also hold industry technologydays where companies could share their new innovations.
3Support and promotion of innovative technologies also can be done in a number ofother ways:• Set asides for early innovators;• Rated points for primes who demonstrate that they have used (Canadian) innovation;• Accepting unsolicited bids from companies with new and innovative offerings;• Using pilot projects to contain risk by allowing for calibration and ongoing assessment, before scaling to the enterprise environment (see the Canadian Innovation and Commercialization Fund administered by OSME in PWGSC);• Taking advantage of the networks offered by community organizations (e.g. Communitech, OCRI) in order to make meaningful connections with Canadian technology companies; and• Encouraging the use of small scale, innovative solutions in regions and then applying some of these on a national basis.3) Various models have been identified regarding SSC’s sourcing of products andservices. These include out-sourcing arrangements such as strategicpartnerships, co-sourcing alliances and transactional relationships. SSC couldalso in-source, whereby SSC would design, buy components/services ascommodities, integrate and deploy. What is your opinion of these models?Generally, industry favours models where government focuses on its core competency,leaving industry to do what it does best. The use of various models should largely bedriven by business strategy (i.e. keep what is core to the business of government, thenlook to partner with industry in areas that are not core but essential).Industry has a bottom-line imperative that drives efficiency. As well, it can spread therisks and costs for design, implementation and support of products and services over awide customer base. It is, therefore, ideally suited to develop expertise, innovate andensure the ever greening of solutions.Data centres, networks and email services are stable, lower risk services. In an era ofpublic sector restraint, shrinking access to technology talent, and a renewed focus onprogram delivery rather than program support, it makes little sense for the governmentto allocate precious resources to these low value-add activities. Rather, thegovernment should focus on maintaining control of the procurement and businesstransformation strategy.
4SMEs believe that significant outsourcing has several drawbacks, including:• Limiting rather than fostering innovation;• Reducing competition through long term contracts;• Making exit strategies difficult / expensive;• Accelerating the loss of experienced employees, which among other things may hinder future project management; and• Lowering morale of GOC employees.But conversely, significant in-sourcing can result in government soaking up availabletalent. At times, promising internal IT projects could be taken out of the governmentand given to companies for further development.Overall, SSC should partner with industry advisors to:• Identify the different options open to SSC for “right-sourcing”;• Consider forming teams of public servants and “best of breed” consulting resources where appropriate;• Ensure a clear separation of responsibilities between the client and sourcing suppliers; and• Identify effective governance mechanisms.4) Limiting technology diversity across the government will be essential. Whatbest practices can guide this consolidation of platforms, technologies andprocesses?Developing a reference architecture is a best practice to limit diversity. But there willalways be exceptions. A second best practice is to develop a realistic business case foreach exception to examine the benefits versus costs of not following the referencearchitecture.The Government of Ontario is a good case study of limiting technology diversity throughthe adoption of a product-based reference architecture for its clients. Ontario also isnow modernizing key applications, and has established an Application ModernizationOffice to help get applications onto shared platforms and clusters. There also is a pushtowards the adoption of “enterprise” applications that can be used across ministries.Unsuccessful cases, such as the experience in the State of Texas, are also instructive.In this instance, the lack of a standard reference architecture for use across all clientsled to the proliferation of different solutions and a decrease in standardization. Athorough analysis of common requirements and standards is a key best practice.SSC could benefit from engaging industry advisors who have relevant global experiencewith other public and private organizations to assess and recommend provenapproaches.
5Other ideas put forward include:• Creating detailed long term costing models before commencing specific consolidation projects;• Allowing for alternate and backup technologies or performance-tuned technologies in some situations; and• Avoid relying too heavily on any one provider.5) What are the advantages / disadvantages of moving towards more open andinteroperable platforms?The use of open and interoperable platforms will be essential in the evolution towardsgreater consolidation and the achievement of cost savings.The use of these platforms:• Promotes competition by providing a level playing field for suppliers;• Could help promote participation by SMEs;• Allows for lifecycle management based on needs, not service contracts;• Ensures the best technology can be selected at all times; and• Creates an interoperability standard recognized by industry.Platform continuity, performance and firewall security are critical. Products adoptedshould meet thresholds established by SSC based on proven standards.Some might suggest that the adoption of open and interoperable platforms might limitinnovation. However, the market has shown that this environment leads competitors todevelop more innovative solutions that work within the system.C) Getting Procurement Right6) The government procures IT products and services through two primarymeans: open tendering for non-security sensitive requirements; and the use ofpre-qualified suppliers for national security requirements. What works well withthese approaches and what can be improved? How can we ensure the principlesof fairness, transparency, security and value for money are being achieved?Procurement processes could be improved in order to achieve multiple benefits,including lower costs, fulfillment of requirements, sustained competitiveness and accessto best of breed technologies. But this is not a question of throwing out the currentprocess and starting all over.
6A distinction may be required between strategic level procurement and tactical levelprocurement. With regard to the latter, there is a perception that public servicemanagers can’t make good IT decisions. This is wrong. They can make gooddecisions if given the authority and a workable process. Procurement at this level couldbe relaxed to allow for individual managers to buy the lower cost products they need.More generally, the principles of fairness, transparency, security and value for moneyare achievable without writing overly prescriptive requirements or limiting collaborationwith industry. RFPs need to state the “what” and not the “how”, and allow industry tofocus on the “how.” Open tendering for non-security sensitive requirements needs anincreased focus on outcome-based procurement, consultation and consideration forshared risk, investment and reward.Procurements for national security requirements, by their very nature, need to beclosed. Opportunities for industry to provide overall capability presentations prior togoing to market for national security requirements would allow SSC to determine marketcapabilities and identify who to invite to the procurement process. It is important toclearly communicate how suppliers can become pre-qualified.Other suggestions put forward include:• Naming fairness monitors for larger RFPs;• Offering face-to-face debriefings for unsuccessful vendors who qualified based on technical requirements; and• Interviewing the top three bidders to ensure that vendor proposals are viable.7) The government is interested in supporting the development of innovativeCanadian SMEs. How can SSC assist in this regard?There are a number of ways that this can be done. But first, it is important to note thatmany SMEs want to have their own relationship with government. They do not wanttheir relationship to be routed through larger firms.This can be accomplished by breaking down some procurement projects into chewablechunks (i.e. not everything needs to be bundled together). SMEs would also benefitfrom having somewhere to showcase innovative products (PWGSC noted that theyhave such a program). While the Office of Small and Medium Enterprises (OSME) isconsidered to be very helpful to those new to government procurement, it is viewed asless relevant to established firms.It was also noted that SMEs provide a high percentage of professional IT services.These SMEs are worried about being relegated “to the bottom” of the procurementprocess.
7Having said this, partnerships between larger firms and SMEs can be helpful. SSCshould encourage highly-skilled, experienced firms and innovative Canadian SMEs todevelop the business and relationship models that support innovation.Outcomes-based procurement would provide greater latitude for large firms to partnerwith innovative SMEs. In addition, large organizations acting as the prime supplier on acomplex procurement could be required to use SMEs by, for example, committing that acertain percentage of the overall contract value be delivered through Canadian SMEs.Another option would be to provide rated points for bidders that propose to use SMEs inthe performance of the contract.Other suggestions include:• Identifying “test bed” and “first-user” opportunities;• Making use of small business set asides;• Organizing local trade shows that could help SMEs/Canadian firms “show their stuff” and identify possible partnerships with larger firms;• Encouraging the use of SMEs by assigning rates and reductions if they are included on RVDs and RFPs as either a fulfillment agent or prime contractor; and• Taking advantage of the broad experience of SMEs in assisting a broad range of clients by engaging them as consultants on systemic issues.In general there was agreement that the government needs to be as aggressive insupporting Canadian SMEs, as many other countries are supporting their SMEs.8) The Jenkins report recommended that RFPs should, where appropriate, definethe needs to be met or the problems to be solved, rather than being overlyprescriptive of the solution. Do you agree? Do you have suggestions as to howthis could be implemented?There was general agreement among associations with this suggestion, with twocaveats:• At times the client may be challenged to identify precise needs, with the result that bidders may not offer ideal solutions (of course this is also a problem with very prescriptive RFPs); and• Caution should be exercised in accepting claimed results on corporate projects conducted outside of Canada as conditions may differ in Canada.But overall, it was agreed that RFPs should be specific and defined while focussed onoutcomes and solutions. SSC should seek to define the desired outcome of aprocurement and allow industries of all sizes to respond with solutions, supported byrecommended performance measures and benefits realization criteria. Moreover, theevaluation of bids should be based on overall value, and not necessarily the lowestcost.
8Industry advisors can help in areas such as:• Developing the service specifications which set out the outcomes to be achieved and how these will be measured;• Ensuring timelines and targets in the specifications are challenging, yet realistic;• Identifying specific risks associated with the goods or services to be provided; and• Identifying the wider social, economic and environmental benefits that could be gained through the process.The National Shipbuilding Procurement Strategy was often cited as an example of aprocurement model which to-date has demonstrated positive results.