Getting a handle on federal government purchasing can be challenging at the best of time, but this year is especially difficult. According to IDC Canada research director, public sector, Alison Brooks, the current political climate is wreaking havoc with the planning process.
“The planning window for government is currently about three weeks, and this has taken its toll both on long term strategic initiatives and on morale, so a lot of spend is reactive by nature and only addressing small, manageable sub processes as opposed to addressing larger transformative initiatives.” she said. And she doesn’t see this changing soon. “This will only change when majority government leadership and vision can take hold, and I’m not certain that will happen this year” she explained.
To complicate matters each government department has different initiatives and priorities, according to McEvoy Galbreath, executive director, Canadian Public Procurement Council. “It’s difficult to consider the federal government as one entity,” she noted, in her experience.
Yet, said Rick Reid, president of Tech Data Canada, on the whole products being sold to the government aren’t much different than they’ve been for the past ten years. Notebooks, desktop computers, networking products, printers, and so forth compose the bulk of the business Tech Data does with resellers supplying the federal government. But, he adds, there are always new twists.
Kelly Bizeau, president of MarketWorks Ltd., a firm specializing in helping IT solution providers develop business inside Canada’s public sector organizations, adds, “The federal government is transforming, current focus is data centres, networks and IT security. These are not new priorities, but a renewed focus has been placed on them in the last two years.”
There’s a good reason for this, says Bizeau. “Government estimates that they are impacted $300 – $500 million per year as a result of the stovepipe duplication within departments today, and as a result they have a modernization agenda in place that extends beyond the data centre and networks to also include telecommunications and distributed computing solutions.”
And, what about the cloud? Bizeau says she’s seen more discussions than action on this front. “They have enough on their plate at the moment,” she noted.
They do indeed, says Brooks. “Governments constantly toggle between competing needs to modernize services, to remain citizen-centred in their service delivery and to contain costs,” she noted. “The former is reaching a critical tipping point with mission critical apps and infrastructure underpinning business process in jeopardy.”
Infrastructure renewal is extremely expensive, she points out; governments increasingly look to IT vendors as utility providers and long-term value partners.
But not just any IT vendor. The key, says Reid, is in relationships. Resellers need to have relationships within different ministries so they’re familiar with the existing infrastructure, and know its age, warranty status, software licensing status and other minutia, which allows them to better bid on projects. Sometimes, Reid suggests, a well-connected reseller can even give a ministry the heads-up that a license or service agreement is about to expire; since most federal procurement is done by a separate department, Public Works and Government Services Canada (PWGSC), the reseller may actually be better positioned than the ministry to track that information.
Galbreath added that many of the same marketing tools resellers use in the private sector work equally well in the public sector. She pointed out that resellers have to keep their names top-of-mind among potential customers from any sector.
Well-connected resellers can keep their eyes open for opportunities, Bizeau notes. “From a commodity perspective, the players inside government today know the landscape and the business that’s coming out of it,” she said. “Many spend their extra time sniffing out big deals and attempt to change them from going RVD (large volume deals that can be won at one low price) to an Elevated Call Up (a procurement method that can be used to avoid RVDs and process an order faster if the vendor agrees to the required discount).”
With government year-end rapidly approaching, Brooks sees opportunities, but not big ones. She says the projects at this time of year tend to be manageable research initiatives, small projects, and hardware.
But, she adds, there’s one other item to note that could be lucrative as the year progresses. “A huge chunk of spend in IT services contracting is rolling over this year, so there’s a lot at stake,” she said.
Bizeau doesn’t focus on last minute business any more – she says it’s not worth the effort – but adds, “If they really feel like they need to invest in last minute stuff, we recommend going after small and medium sized government (agencies, crown corporations), or SMG as we like to call it. These accounts aren’t cannibalized by IT sales reps like the bigger ones, and have budgets and dollars to spend. In some cases they can buy on and off the federal standing offers and are more likely to buy a vendor-centric solution to fit their entire requirement.”
However, she went on, while SMG is the best option, it’s not her recommended one.
“This time of year those working at the top of the IT stack inside departments are working on their plans and priorities for the next fiscal year,” she explained. “Getting inside those departments and supporting their new solution requirements is more strategic and focused on doing business long term.”
Bizeau notes that the government is currently renewing its procurement systems in order to improve the value of its purchases, and that offers both opportunities and challenges for resellers. “It will be imperative that providers understand the changes ahead, spend more time at the top of the IT stack and learn their customers’ plans and priorities in the years ahead,” she said. “They need to operate more efficiently and IT solution providers are the ones that need to help them do that.”
Resellers hoping to get a toe in the door with the federal government need to be familiar with the various vehicles through which they can provide goods and services, and how they can submit a tender. It’s not exactly straightforward.
Public Works and Government Services Canada (PWGSC – http://www.tpsgc-pwgsc.gc.ca/services/ntrprss-bsnsss-eng.html), the government’s main purchasing arm, helps departments define their requirements or scope of work, then assists in obtaining the goods or services. Along the way there are many hurdles for resellers to leap. The first is actually finding what’s up for tender, and that’s relatively easy in many cases: follow the link on PWGSC’s Web site to MERX Canadian Public Tenders, which has approximately 1,700-2,000 opportunities from federal, provincial and municipal government agencies, as well as other public institutions, open at any given time. Most contracts over $25,000 are posted on MERX; for those under that amount, the buyer is permitted to contact vendors directly. Each tender document contains instructions for completing it and how it will be evaluated, as well as the terms and conditions attached to the contract. Sidebar: PWGSC uses three methods in its acquisition activities: 1. Contracts 2. Standing offers 3. Supply arrangements A standing offer, according to PWGSC, is “not a contract.” It is an offer from a potential supplier to provide goods and/or services at pre-arranged prices, under set terms and conditions, when and if required. No contract exists until the government issues an order or “call-up” against the standing offer and there is no actual obligation, by the government, to purchase until that time.” Supply arrangements, on the other hand, are “non-binding agreements between PWGSC and suppliers to provide a range of goods or, more commonly, services on an “as required” basis. They are lists of qualified suppliers identified as potential sources from which departments can obtain firm price quotations on specific requirements.” Supply arrangements contain a set of predetermined terms and conditions that will apply to any subsequent contracts and many include ceiling prices from which departments can negotiate. Departments can get bids based on their specific scope of work. However, departments can contract directly for goods under $5,000, and for most services. There’s one more method of contracting that can be especially attractive to well-connected resellers: An Advance Contract Award Notice (ACAN). It is, says the PWGSC site, “a public notice indicating to the supplier community that a department or agency intends to award a good, service or construction contract to a pre-identified supplier believed to be the only one capable of performing the work.” Other suppliers can then show their interest in bidding by submitting a statement of capabilities. If no other supplier’s statement of capabilities meets the requirements in the ACAN, the contracting officer may then proceed to award the contract to the pre-identified supplier.