Expanding Access to BC Government Procurement
BC tech companies need to be better positioned to access global export markets and customers to succeed. While there has been 37% growth in tech exports over the last 5 years, growing at 6.5% annually, the BC tech sector continues to lag in comparison to the national average in terms of exports and R&D. Tech accounts for only 5% of BC’s total exports and in the Canadian ICT sector two-thirds of SMEs do not export. As the BC tech sector is predominantly comprised of small companies, there is a need to further boost market access and exports.
Small companies typically lack the scale and capability to successfully access markets and customers abroad. Ironically, BC tech companies have found it easier to access and sell to global markets than to customers and governments in Canada. Creating opportunities for small tech companies to sell to local customers is critical – especially in establishing reference customers that are essential when approaching new customer and market opportunities abroad.
Successfully improving the situation for BC tech companies requires more deliberate focus on fostering a home team advantage by the BC Government. Government procurement (including departments, agencies and crown corporations) represents a significant opportunity for technology companies and to grow and to expedite broader commercialization and exports to global markets.
The #BCTECH Strategy has started to outline steps to make it easier for tech companies to sell to the government and provincial agencies, by continuing to simplify and automate procurement processes via electronic and 2 page short-form RFP submissions for under $250,000; and providing information and resources to vendors. However, there is always room to do more to build procurement as a core competency and the following sections highlight some opportunities for further improvement.
As outlined in the BC Tech Association’s 4-Point Plan, the key to success for every tech company is to establish a strong base of reference customers to propel their early growth. Often this starts with local customers and in the case of BC, would necessarily include government and crown agency customers. Most BC tech companies, particularly small and mid-sized companies, have encountered significant challenges in trying to sell to the BC government. The challenges tend to arise from several key factors:
- Practices geared to larger vendors.Government procurements typically demand a level of sophistication on the part of vendors and suppliers in order to participate in the procurement process. This often involves experienced account teams, proposal development expertise, legal and administrative support – all of which represent time-intensive, complex and costly resources. While the short form RFP is a useful first step, participation even in small bids, is a significant undertaking for most companies. This challenge is further exacerbated by the reality that procurements tend to favour larger awards for reasons of economies of scale and scope, which further disadvantages small and mid- sized companies from participating in the bid opportunity.
- Process favours incumbents.In many cases, it is easier to renew and/or extend existing vendor arrangements than it is to engage in a competitive process. While there is a formal Notice of Intent provision for such instances, the timeliness and the limited duration of such notices (10 days) make it challenging for potential new vendors to respond. Incumbent vendors also have a distinct advantage on new opportunities, given their detailed understanding of the needs/ requirements and therefore are better positioned to influence the specifications that favour their position.
- Overlooks Benefits to BC.The current procurement process is based solely on the principle of value for money. It does not explicitly recognize other value drivers such as economic benefits to the province, local impact or job creation. As a consequence, there is virtually no differentiation between an international vendor and one that has a substantial BC presence.
The government has already recognized the importance of procurement in its #BCTECH Strategy which states:
“Equally important is selling here at home, so we are improving access to government’s procurement system… We understand that there are many new, creative products and services being developed in the province, and we want to ensure increased access to government for these companies.”
To achieve this, we propose the following recommendations to improve access to government procurement for BC tech companies:
- Introduce value-proposition to the procurement process.A value proposition, as defined in the Canadian Defense Procurement Strategy recognizes the importance of economic benefit, supplier development, R&D investment, IP development and export potential. This is in contrast with the currently stated objective in the BC Policy and Procedures Manual on Procurement (“Procurement Policy”) of “value for money”.We recommend changing the policy objective in Section 6.1 from “value” to “value proposition” specifically as it pertains to enhancing the #BCTECH Strategy. Doing so, would support the government’s stated goal in paragraph 6.3.5.a.11 of the Procurement Policy “to ensure that alliances with large firms provide opportunities for smaller companies.” A value proposition would provide a more fulsome assessment of procurements and should be applied to all procurements of technology products and services across all ministries and public sector agencies.A value-proposition based procurement can be designed in compliance with existing trade agreements. The weighting framework of a value proposition score relative to other attributes such as cost and performance a can also be flexible and be determined on a procurement-by-procurement basis. For major procurements, the value proposition determinants should be established in partnership with the Major Projects Office or a similar strategic oversight committee. We would recommend higher weightings for value proposition being appropriate in situations where there is:
- Higher potential for BC-developed content
- Opportunity to incorporate smaller BC tech companies as part of the proposed solution
- Activity that supports sectors that align with BC’s economic priorities
- Intention to expand operations in BC
- Limit modifications or expansions of previously awarded procurements.The current Procurement Policy paragraph 6.3.2.d.9 provides existing vendors with continuing agreements to modify and/or expand the scope of the agreement. The benefits and the value proposition to BC should be considered throughout the life cycle of the contract. We recommend a defined limit on the extent to which existing agreements can be modified or expanded before requiring a new competitive bid process. We further recommend against the use of a Notice of Intent in such situations where the scope exceeds the defined limit and require a call for a new bid be issued that would incorporate a value proposition as part of the evaluation.
- Simplify the process and costs associated with procurement.Current procurement processes can be a considerable cost to both the government and companies. We recommend leveraging modern platform technologies and industry advisory teams to enable smaller companies to provide proposals/solutions for less, to make purchasing easier and save businesses time and money. Pilot processes to solve needs/problems differently by allowing companies to submit proposals, without the government spending early on to develop business plans and predetermine specifications in the solicitation documents.There is also a need to lower barriers to information exchange to help companies gain better awareness of eligibility and available bids. This may also include simplifying the eligibility and application process to become a pre-qualified vendor and (re) posting of ongoing vendor lists for all bids to keep access open for new suppliers.
- Improve the transparency and accessibility of procurements.
- Extend the period for Notices of Intent.Notices of Intent are posted for only 10 days, meaning that small and mid-sized companies who lack the resources to constantly monitor such Notices often miss the opportunity to contest the awarded procurement. We would recommend extending the notice period to 30 days.
- Support procurement officials with enhanced training.We recommend further investment in training and professional development in the areas of value proposition assessments, tech sector engagement and cross-government opportunities. Industry engagement should begin early in the procurement process, with discovery sessions with the broader tech community rather than just existing vendors, as well as in training and conference curriculum development.
- Introduce a pilot program to measure procurement of local tech.In order to execute on the #BCTECH Strategy and procurement visions for BC, it is crucial to have a benchmark from which to start. We recommend creating an industry-led advisory group to pilot a framework to measure annual procurement spends with BC tech companies and baseline improvements. This benchmark will provide more transparency and insight across levels of government and industry and serve as a starting point for policy deliberations.
- Mandate BC Bid for all public sector procurements.We recommend that all government agencies including health authorities, crown corporations (e.g. BC Hydro, ICBC, BCLC) and other public agencies be required to use BC Bid to provide one-stop access to procurement opportunities and to make consistent all risk management policies and procedures in procurements across all of government, crown corporations and public agencies.
- Expand access to co-developed solutions.Currently, the government allows for co-developed solutions through instruments like a Negotiated RFP. Generally, these are more complex and undertaken only for large scale bids. We would recommend the introduction of a new instrument to allow for co-developed solutions for smaller bid opportunities and the allowance for companies that co-develop such solutions to be eligible to bid for the procurement.
Expanding Access to BC Government Procurement Report