Small contractors at mercy of the primes in large government IT contracts

Due to the proposed PWGSC procurement changes, many large and mid-sized contractors fear a situation which would lock many of them out of contracting directly with the Crown.

Well, guess what? There are – not only here in Ottawa but across Canada – many small advanced technology firms, selling both products and services, which have never been able to act as prime contractors, and are thus at the mercy of the primes. This is of concern to the public sector IT manager, particularly in the federal government, because subcontractors (if they are unhappy) are less creative – to say nothing of less productive – than those who are better treated. Those who are flat-out abused may simply quit the project and disappear. Let’s consider whether subcontracting is really still needed.

Getting registered
Many small firms struggled to go through many qualification hoops to obtain supply arrangements, only to get absolutely no business at all in return for their time, cost, effort and frustration. We can make registration instant, comprehensive and fair. It is called the Web.

Finding the business
While larger firms have substantial marketing/sales organizations, the unfortunate fact is that most of them do not actively create business opportunities the way many creative small business people do. The MERX procurement system has become a great leveller as a five-person firm can just as quickly pull down, assess and respond to a small or mid-sized requirement as a 500-person firm. Problem is, many things on MERX are pre-determined before they ever see the light of day.

As I said in an earlier article, playing silly matrix is just not the way to pick consultants. It favours large firms which become adept at silly matrix gamesmanship. The requirements should be written in such a way as to give equal weight to qualification and creativity, and a somewhat lower weighting to price. After all, what the Crown spends on consulting is trivial compared to what it spends on program delivery, and IT consultants can have massive good (or bad) impacts on huge systems and even larger administrative programs. Trying to save a few bucks a day on someone leading a $200 million system development project – or setting the IT strategy for your entire organization – is hardly a bargain if you don’t get the best person for the job. It is also a fact that pound for pound smaller firms tend to be more creative than much larger ones. Creativity benefits the Crown and hence the people of Canada. Our current system for buying consulting services rewards creativity only when it is applied to warping someone’s background (and resume) to re-cast it in the image of the skills matrix of the day.

Managing the contract
Small firms, or teams of them, can be just as adept at managing complex projects (and the contractual umbrellas set up over them) as can larger firms. There is much the Crown can do to make it easier for groups of individuals and small firms to work together to effectively see a project through. It could start with a standard team workspace – GoC-wide – for all projects.

Getting paid
As Victor Karas, the negotiator trainer and perennial airline magazine inhabitant, reminds us: “You don’t get what you deserve, you get what you negotiate.”

Many large firms are slow in paying their subcontractors and some are very manipulative in how they schedule payments. There are also many tales of subs who never got paid at all because the prime simply cheated them out of their last payment. There is a blindingly simple solution for how to pay small contractors. Have the project authority sign off on timesheets, reports or payment milestone deliverables electronically and the moment he or she does, the small supplies bank account automatically gets a deposit from PWGSC for that payment. Also, there is a simple solution to primes who cheat subs: have the Crown back the subs by publicly prosecuting them and sending the worst offenders to jail.

Again, as cited above, this truly is an area public sector IT managers should care about. Consultants who get paid on time are more likely to be not only happier in their work but also less bothered by anxiety attacks about things like feeding their families. This is distinctly in the public interest since public funds are being expended to pay for their work, and the quality of that work does matter.

Daniel R. Perley is an Ottawa-based advanced technology executive who has also worked as a senior bureaucrat. E-mail him at dperley@mtc-stm.ca.

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