A group of Ottawa VARs — including some of the nation’s largest solution providers with federal practices –- has formed a group to urge the government not to discriminate against the channel in any new procurement policy.
“The reseller community in Ottawa is very concerned,” said Herman Yeh, a member of the board of the fledgling Canadian Government Information Technology Providers Association. Yeh is also president of Northern Micro, an Ottawa-based systems integrator, which does $30 million worth of business with the federal government a year.
It wants to “express our concern make sure we are not blocked out from the reform,” he said.
The group held its first meeting Tuesday and will hold its initial board meeting Friday to establish its mission and long-term objectives.
Thirteen companies have so far expressed interest in the association, including Softchoice, NexInnovations and Xwave, three of the biggest VARs in the country, all of which have significant federal practices.
It has been suggested companies pay $1,000 for full membership, once the association has been legally set up.
Others who had representatives at the Tuesday meeting included Nitro Micro, IronGate Server Management and Consulting, Integra Networks and Itex Inc.
Their concerns are directed towards efforts by Public Works and Government Services to overhaul the procurement of IT hardware, software and services.
Typically, Yeh said, major vendors bid on contracts and win a National Master Standing Offer (NMSO). Often resellers are designated by the manufacturer to fill the orders. However, the industry hears talk about the government wanting to limit the number of resellers it deals with, including proposals that services contracts of a certain size only go to national consulting firms.
“We feel the reseller channel will be squeezed out sometimes,” Yeh said.
Mark Jones, director of business development at IronGate, said the channel worries the government will scrap the NMSOs in favour of what is called single-source bidding, where one large company will win a bid, or bidding is limited to the top three manufacturers in a product category.
In any scenario Yeh and Jones said there’s concern the government is leaning towards buying direct from manufacturers and cutting out resellers to save money.
“We think they’re overlooking the value of the channel in assisting government IT people in recognizing products available for their business needs, and enabling them to integrate products properly,” said Jones.
His company is an Apple VAR which has an NMSO for audio visual products. While the government is “an emerging market for us,” it fears being shut out.
While Ottawa has consulted with large manufacturers and the Canadian Advanced Technology Alliance (CATA) on IT procurement strategies, Jones said resellers feel their voice has not been heard.
“That’s what we’re trying to do with this association, is allow them (Ottawa) to understand what the channel does.”
Should federal spending be slanted against resellers “there will be dramatic layoffs here,” he predicted. “There would be closure of several resellers in the Ottawa area.”
At press time Pierre Teotonio, a senior Public Works communications advisor, could not say if the government’s procurement policies are being reviewed. However, he did point out that under government regulations single sourcing of purchases is restricted to emergency expenditures and purchases of less than $25,000.
The government has been sensitive to concerns by small businesses that they are being squeezed out by bureaucrats.
In April, Public Works Minister Michael Fortier said that a series of regional offices and the creation of a procurement auditor will mean increased support for small businesses selling to the government.
The department has promised to legislate openness, fairness and transparency in procurement, aided by the creation of offices across the country to promote Ottawa as a potential client for smaller firms.
However, rules under which the procurement officer will work have yet to be set.