Government Procurement is Stagnating Canadian Innovation

What are we striving for?

As Canadians, we all want to see our country as one that is helping to shape the future. We value innovation, and do actually have lots of programs investing in it. As Justin Trudeau said at the World Economic Forum in 2016,

“Diversity fosters new ideas. New ideas generate the experimentation needed to make the most of the fourth industrial revolution.”

Unfortunately, the largest lever that the government is actually working against innovation. In almost all sectors of the economy, the largest single purchaser will be government. Outdated practices, make it next to impossible for small, innovative businesses to win contracts.

The purchasing practices have built some pretty big incumbents as demonstrated by this analysis of Government of Canada expenditures. These practices aren’t building an ecosystem of innovative companies looking to take on the world, but rather supporting the status quo.

Maybe that is what we want. Perhaps government support of companies like Corel, Nortel and BlackBerry is as good as we can get. There are only so many companies producing products in that category, but maybe that’s all we should expect. The realities of global capitalism show some big problems with that approach. We know historically that eventually a bigger company, likely American, is going to buy them out.

These days, there are a lot of folks looking for the unicorn companies that will become the next globally recognized brands. The Zebra Manifesto paints a sustainable vision for entrepreneurship that would be more applicable to a country like ours. We know that the bulk of the Canadian economy is driven by small businesses that have no hope of ever becoming globally recognized brand names.

Every politician talks a good game about wanting to support small business. Unfortunately, none of them have done a particularly good job delivering on it. If we want to actually support small business, we have to re-think how governments buy goods and services.

This will be a series of articles focusing on elements of the Government of Canada’s procurement. They will address intellectual property, processes, scale, accessibility, transparency and accountability.

For the rest of this article I will talk about existing procurement vehicles and assumptions about the type of skills needed.

The Procurement Vehicles

The Government of Canada has a few common vehicles. The small sole-source contracts, Task-Based Informatics Professional Services (TBIPS) & Solutions-Based Informatics Professional Services Overview (SBIPS). There is also ProServices and there are ongoing rumors of Standing Offers. It is worth noting there has been some experimentation with alternatives, most recently the Canadian Digital Service has announced that they will be building an accelerator to test incremental investment. This is a very encouraging model which follows successful efforts in other jurisdictions.

The big problem with these procurement vehicles is that they are geared for big businesses or human resource “body shops”. The assumption seems to be that most government challenges are really about being able to hire the right person, for a short period of time. Everyone knows that hiring (and firing) are difficult in government, and this is the workaround which departments are allowed. This assumes that the problem has been correctly framed by the department looking for the service. In working with a few government departments over the years, it is rare to find our point-of-contact to technologically savvy enough to properly explore the problem space. If the work is divided up between a range of independent consultants often subcontracting the work, this is next to impossible. We need to have more teams that are invested in working together and who can chart a path together to a successful delivery. We need more than just a temporary “bum in seat”.

Yes, there are sole-source contracts which for services can now go as high as $40k. Historically, both goods and services were limited to $25k. However, for many technology projects, this just isn’t enough. Do anything larger and you’ll be accused of contract splitting. These contracts take a huge investment of time by the vendor to get, and can be difficult to manage if they are successful. They are also a very small portion of the government’s spending.

Never doubt that a small group…

Simon Sinek may have been channeling Margaret Mead when he said:

“The ability for a group of people to do remarkable things hinges on how well those people can pull together as a team.”

We know we need these small diverse teams working together to produce innovative solutions we need, but what mechanisms does the public sector have to hire them? Things on the internet are changing at a rapid speed, we simply cannot hope to keep up without teams tracking different aspects and learning from each other. The Jack-of-all-trades in technology is simply becoming an unreachable goal.

Small teams working together can have the combined skills that meet the needs of government. Diverse skill sets are required, as are opportunities for leadership and development. Money is a motivator for sure, but we are also driven by autonomy, mastery and purpose. This needs to be integrated into any attempt to inspire and keep innovators.

Small teams innovate by working together on a series of projects that allows for experimentation and learning. Small teams at least have a chance to keep abreast of trends, and look for opportunities to leverage them to benefit their clients. Even in big organizations innovation usually happens within small teams.

Now it is possible to do this with a series of sole-source contracts, but it is a huge amount of work to even get one with most departments. More importantly, these can’t be stacked. People have negotiated TBIPS & SBIPS contracts after they have been won, but this is always up to the discretion of the government. Most government managers still seem to believe in “management by walking around” so really prefer to have a staff-equivalent that they can see.

A team-based approach would allow small businesses to build expertise allowing them to scale the adoption. It is understandable that the government wants to hire “the experts” to deliver their requirements. Unfortunately, this often happens by poaching skilled developers who are presently leading teams. If governments aren’t willing to invest in the next generation of developers, who will? How will we see an innovative ecosystem emerge if the largest consumer isn’t willing to invest in it?

Most small businesses that work for the government are worried about losing their best staff. It is hard for most to offer competitive salaries or benefits. Focusing on hiring effective teams would take a lot of pressure off of small business owners. Yes, we can still be more flexible and can offer an environment that is a better fit for many. The present procurement rat-race is a distraction from the work of innovating how to deliver better quality products and services.

There is a lot of evidence of the advantages of having diverse teams. Far too often innovation has been dominated by white guys. If we want to have Canadian innovation reflect the needs of our country, it has to better represent our country. There is simply no way to open up innovation to the diversity of race, gender, orientation, cultures, languages and abilities if we don’t find better ways to support teams.

This proverb sums it up nicely, “If you want to go quickly, go alone. If you want to go far, go together.” — delivery of innovation simply isn’t something that can be done alone.

Procurement is difficult for everyone. If you have information to share or think this is an issue please reach out. We want to know what you think about this series.

If you liked this, watch this space to links to upcoming articles.

• Proprietary Procurement is Stopping Open Innovation in Canada
• Micro Procurement and Incremental Innovations
• Innovation, Procurement and Sustainability

Additional reading:

• Outdated procurement rules hindering digital government — Luke DeCoste
• When Smaller Is Better: A New Way to Modernize IT (Contributed) — Jesse Taggert
• 18F wants you to buy IT faster and cheaper — Chase Gunter