Canadian technology providers and vendors are celebrating following a decision by the Public Works department to scrap its planned use of reverse auctions as a vehicle for procurement reform
“The government is finally listening,” said Herman Yeh, president of Canadian Information Technology Providers Association, a group of VARs that sell to the government and several vendors.
But there was also a sign that the government’s plans for procurement reform are not merely changing but in chaos.
On Sept. 11 the Vancouver-based department within Public Works overseeing the controversial proposed master standing offer for printers issued a notice that it was going to issue a new proposal which will expand the number of possible approved suppliers from two to four in a complicated formula.
The next day the department issued a notice saying that proposal was inadvertently released and should be ignored.
The retreat on reverse auctions came in a statement released by Public Works Minister Michael Fortier, who said the government’s change of heart was an effort to understand the concerns of industry. As part of its “The Way Forward” strategy, the department wants to create a list of ‘active’ and ‘inactive’ approved suppliers. Inactive suppliers would be given a chance to undercut the active suppliers’ prices through reverse auctions.
“After further consideration, I have asked my officials to take off the table the use of reverse auctions as part of our procurement strategy for all categories of commonly purchased goods and services. This procurement reform can be achieved without the use of reverse auctions,” Fortier’s statement said.
Instead, Public Works has asked the Conference Board of Canada to act as a go-between with industry groups, who will be consulted prior to issuing requests for standing offers.
Procurement reform has attracted furious lobbying from IT industry associations and resellers, who worry the Public Works plan will severely limit the opportunity for small businesses to compete on government contracts.
Bernard Courtois, president of the Information Technology Association of Canada, agreed that Fortier is doing the right thing, but he warned that the issue is much broader than simply the use of reverse electronic auctions.
“As a technology industry, it’s pretty hard for us to be against using technology for procurement, but there was a communications issue, and how they would use the auctions,” he said.
“Every time a buyer tries to do something to save money, if you’re a supplier it’s a change, it’s a disruption.”
Public Works is still obligated to save $2.5 billion in spending over the next five years, though it has not indicated what other methods it might use.
“They still want to reform procurement, they still want to save the money,” Coates said. “But now the message we’re offering is, work with us and we’ll get you there.”
Courtois said the government already enjoys deep volume discounts on many pieces of IT equipment, but fails to take into account the lifecycle management and cost of ownership issues.