Twenty-two billion dollars: this is the value of goods and services that the Canadian federal government purchases each year from the private sector, including IT goods and services. It’s money that can be earned by IT companies willing to put in the time and effort to participate in the federal procurement process.
“The federal government has a strong, rules-based procurement system,” says Howard Mains, managing director of Tactix, a procurement consulting firm in Ottawa, Ontario.
“Under various trade agreements to which Canada is a party, the vast majority of procurement requirements are open to competition.
The downside: As in the United States, the federal sales cycle is slow, the gap between the government’s initial RFPs, submission and analysis of bids, award of contracts, and payment for work performed which can take up to two years or more. And it’s also complicated, with many hurdles that bidders must jump through to meet a wide range of government requirements.
Yet, for IT companies that have the resources and capacity to cultivate such long-term prospects, the Canadian government can be a valuable and lucrative client.
The big picture
Shared Services Canada (SSC) is the primary organization responsible for the procurement of IT goods and services for the Canadian government.
“SSC publishes tender opportunities on Buyandsell.gc.ca and uses a Procure-to-Pay (P2P) solution to electronically manage its procurement-to-payment processes,” says the SSC official who responded to questions via email. “Suppliers can register by visiting the Supplier Portal in the P2P solution and clicking on the New Supplier Button Sign Up Now.”
The general procurement process for working with SSC, and indeed with all federal departments, is managed by Buyandsell.gc.ca. Available in English and French, the site offers a step-by-step online approach to registering with the Canadian government as a potential supplier, searchable bidding opportunities (known as RFPs) for the sale of goods and services specific to Canada, and an explanation of how procurement works in plain language.
The Canadian government buys just about every type of good and service, from aircraft to paperclips, from training services to scientific research. These purchases are made either through a competitive bidding process or, where circumstances warrant, a non-competitive sole-source process.
It should be noted that because the federal government is ultimately run by elected officials under constant scrutiny and Canadian public servants adhere to policies, regulations and guidelines that ensure that the government procurement process is transparent and executed with integrity . This includes policies on employment equity, purchasing less harmful goods and services for the environment, etc.
What Canada wants to buy
As the organization responsible for operating and modernizing the Government of Canada’s IT infrastructure, Shared Services Canada has a very long list of IT purchases. According to SSC public officials, it includes products and services related to:
Network, security and infrastructure products and capacity, Ethernet, fiber optics, dark fiber rental, switches, routers, security threat technologies and satellite services.
Data center and cloud services such as infrastructure as a service (IaaS), software as a service (SaaS), platform as a service (PaaS) and everything as a service (XaaS).
Data center mainframe, servers, storage, converged infrastructure, power distribution units, software maintenance and support, collocation and workload migration services.
Telecommunications: access to the local telephone network, toll-free services, long distance, local Internet access services, audio and Web conferencing services, contact centers and cellular services.
IT Service Connectivity, Productivity & Security Software
Digital communication and collaboration tools, IT service management tool and services.
Information management/information technology professional services.
Note: Although SSC is the Government of Canada’s primary IT supplier, some departments and agencies purchase their own IT goods and services, either because they, or the technology in question, are not covered by the Shared Services Canada Act. Their tenders can be found on BuyandSell.ca
Some important hoops
Because IT is such an integral part of Canadian government operations, Canada’s approach to purchasing IT goods and services is product-based.
“As a result, they have source lists called ‘supply arrangements’ and contracts such as ‘standing offers’ – which are open to North American companies through the free trade agreement – where Suppliers can request to be included as potential suppliers for specific goods and services,” says John Seguin, procurement practice manager at Lumina IT, a procurement consulting firm based in Ottawa, Ontario.
“The government makes a distinction between hardware and software and services, each with its own list of sources or standing offer contracts. Meanwhile, if you sell IT professional services, these have a series of pre-made source listings organized by type, while most hardware and software have standing offer listings.
Regarding the age-old process of private industry lobbyists meeting with senior government officials to present their stories in a more personal and direct manner, “most of these interactions, particularly at the senior government official level, must be registered with the Commissioner of Canada. Lobbying,” explains Aliénor Peyrefitte, executive assistant to the president and CEO of Samuel Associates, a strategic consulting and government relations firm headquartered in Ottawa.
As governed by Canadian law Lobbying Actthe commissioner’s job is to ensure that all conversations between paid lobbyists and government officials are transparent to the canadian public.
The Reality of Winning Canadian Government Contracts
Whether an IT company has successfully registered with the Government of Canada procurement process, meets all necessary eligibility/security criteria, and is able to offer competitively priced goods/services that meet the requirements of specific tenders, it should have a reasonable chance of winning contracts.
“Contracts are awarded on the basis of best value to the government,” Mains said. “This is determined based on the evaluation of the point-rated technical criteria, price and compliance with the mandatory requirements. In the case of larger contracts, economic considerations may also be taken into account under the Industrial and Technological Benefits and/or Aboriginal Economic Development programs.
That being said, “if you are bidding on contracts that are fundamentally larger than your company’s existing capabilities and experience, these contracts may be very difficult to win due to a rigorous procurement evaluation process”, explains Seguin. “The key is to bid on contracts that your company has already executed and that are the right size to handle them.”
The biggest challenge for many otherwise suitable providers is time. Federal government sales cycles are much longer than those in the private sector. Therefore, companies should not sign federal procurement contracts in the expectation of prompt payment, because that simply won’t happen. Along the same lines, suppliers with low cash reserves should think twice before soliciting and fulfilling government orders, as the time required to do so can be very long.
While the policy is not meant to interfere with the Canadian federal procurement process, it sometimes does. The good news for IT companies is that this intrusion tends to focus on multi-billion dollar defense equipment contracts rather than IT.
For example, Stephen Harper’s Conservative government announced plans to source 65 Lockheed Martin F-35s for $9 billion in 2010. This procurement then became an issue in the election that saw the Conservatives be defeated by Justin Trudeau and his Liberals. Trudeau canceled the purchase of the F-35 jet fighter. His government then went through a lengthy procurement process, which ended in 2022 with the decision to purchase 88 F-35s for $19 billion.
Improve your odds
Unless your IT company is familiar with the Canadian procurement system, it makes sense to hire a procurement consultant to guide you through the process. “The insights and advice of a procurement consultancy firm can really help shape an IT company’s bidding strategy and ultimately its chances of winning a government contract,” says Peyrefitte.
“My number one tip for newcomers to the Canadian government procurement process is to have someone with extensive procurement experience guide you through the process,” says Seguin.
“They can educate your internal decision makers on the nuances of the process, and they also understand how to communicate effectively with the purchasing managers and the buyers they serve, as they are two very different audiences with different decision-making authorities. in the respective public procurement of hardware, software or services or any combination of the three, as the case may be”.
“PAC offers free webinars and seminars for companies who want to learn more about the procurement process and how to sell goods and services to the Government of Canada,” says Mains. “It also has self-service reference tools for vendors to help them navigate the federal procurement process.”