Topics Structure of Procurements Managed Services Contracts - - PowerPoint PPT Presentation

Shared Services Canada (SSC)

CABiNET Issues and Concerns

13 May 2016

Topics

• Structure of Procurements
• Managed Services Contracts
• Professional Services Market
• Corporate References
• SMEs as Subcontractors
• Response From SSC

2

Background

• CABiNet has raised important procurement

issues on a number of occasions.

• Written requests for response from SSC have

been ignored.

• No response received to date from SSC.
• Input to Industry Engagement Days have not

been helpful.

• We are now requesting a formal response to

the issues raised.

3

Structure of Procurements

• Avoid inappropriate bundling of products

and services.

• Avoid "monopoly" models.
• Structure procurements to promote

initial and ongoing competition.

4

Bundled Contracts vs PMO Model

• “Bundled" contracts involving hardware/software/telecom

services with project management and professional services is a bad idea.

• In particular, bundling products and services available from
• nly a small number of vendors along with professional

services is a bad practice.

• The main result is reduced competition and increased costs to

the taxpayers.

• The GC track record with large bundled projects is abysmal.

5

Bundled Contracts vs PMO Model (continued)

• The latest example is the ETI project, which is very late and

has been widely criticized.

• Shared Services has no ability to control the ETI project after

the contract was awarded.

• CABiNET has long advocated a model based on a "Project

Management Office" which would manage the project independently of the suppliers which implement the project.

• The PMO approach allows the project to proceed based on

"chewable chunks" in which Shared Services retains control

• ver the project.

6

"Managed Services" Contracts

• "Managed services" contracts are also a very bad

idea.

• It is impossible to write into a contract all of the

services that would be required over a period of five

• r more years.
• The vendor can easily take advantage of this by

taking the position that "new work" not specifically identified in the contract requires "new money" and a contract amendment.

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“Managed Services” Contracts (continued)

• This can defeat any potential benefits of "managed

services" contracts. For vendors they can be a license to print money.

• PWGSC had experience with a large "managed

service" contract when CGI was awarded the ETS contract worth up to $400 million in 2007.

• The PWGSC managers involved hated that contract,

and could not wait to terminate it as soon as they could.

8

Avoid the ‘Obamacare’ Procurement Approach

The Obamacare website model:

• Select a single large supplier based on "Corporate

References" and marketing claims.

• Watch helplessly as costs increase (from $93 million to

$196 million and then to $292 million).

• Watch helplessly as major functional components are not

provided on time.

• Face public embarrassment for a disaster.

9

Professional Services Market

• There is a large and highly competitive market

for professional services in Canada (200 companies in Ottawa alone).

• This market provides excellent value to the

taxpayers.

• Excluding these SME companies from

competing for SSC projects ensures far higher costs to the taxpayers.

10

Supply Chain

• The Professional Services marketplace represents an

important part of the Supply Chain of skilled resources which provide services to the GC.

• This Supply Chain includes SMEs and many of the most

skilled technical resources in the NCR.

• SMEs have traditionally provided about 70% of the IT

services required by the GC.

• There is no reason that the creation of SSC should have a

significant impact on market share for the SMEs.

11

Reasonable and Applicable Corporate References

• SSC should avoid arbitrary and unreasonably large

"corporate references" that eliminate most competition.

• Allow a transparent review of corporate references

for major procurements with this committee before the solicitations are issued.

• Experience working with current partner

departments would be far more valuable as a reference to SSC than just being "large".

• Select corporate references to maximize

competition.

12

Corporate References

• Corporate references used by SSC have had a negative impact
• n the marketplace for IT professional services.
• The corporate references are often arbitrary, random, and

demanding.

• The overall result has been to harm the competitive

marketplace and to give an unfair advantage to larger (often US-based) companies and disadvantage smaller Ottawa-based companies.

• Corporate references provided from outside Ottawa are very

difficult to validate.

• US-based companies never bring staff with them; they just

recruit resources already in Ottawa. What value do unreasonably large corporate references bring?

13

Allow SMEs to Combine Experience for References

• CABiNET is asking for a general policy to allow

SMEs to combine their experience to meet "corporate requirements".

• This is simple common sense to increase

competition and lower costs to the taxpayers.

• There would be no negative impact from such

a policy.

14

SMEs as Subcontractors

• The idea that encouraging larger companies to make

use of SMEs as an alternative to open procurements is very misguided.

• This approach would implement a process which is

not open and transparent for awarding SSC

• pportunities to SMEs.
• Any such commitments by large companies to award

business to SMEs are completely unenforceable.

• The only individual that could possibly enforce such a

commitment is the Minister, and it is not clear that the Minister would do so.

15

The Main Issues

• Is SSC going to structure procurements to

allow SMEs to compete directly?

• Will SSC provide a written response to the

issues raised in this presentation?

16