Local IT firms struggle to adjust to Shared Services’ new procurement strategy

Courtney
Courtney Symons
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Consolidation means fewer contracts

Officials at several firms in Ottawa’s IT sector say they’re becoming nervous as the consolidation of Shared Services Canada is yielding fewer federal IT contracts.

Jeff Lynt, chair, CABiNET.

There was a large drop in contract opportunities from SSC this fiscal year, according to Larry Poirier, president of TUC Managed IT Solutions and the former CEO of Nitro IT Business Solutions, which was purchased by TUC last year. This, he said, has left many local businesses scrambling.

“Many government sales-focused firms will cut costs/staff and maintain themselves in a survival mode,” Mr. Poirier said in an e-mail. “Some firms will simply shut their doors if the government year-end doesn’t provide them with enough revenues to keep their doors open until corporate business picks up in the fall.”

Mr. Poirier said TUC’s adjustment has involved focusing more heavily on companies and smaller government departments. However, he added that many companies with whom he’s spoken are struggling to find other sources of revenue.

“The change in procurement philosophy has had a dramatic impact so far,” he said. “This change will have severe ramifications for many SME technology providers in Ottawa.”

SSC’s total budget for 2012-13 is $1.7 billion, which is set to decrease to $1.4 billion for the following fiscal year. Of those funds, $1.1 billion is set aside for annual procurement, according to the department.

“It is expected that the number of contracts awarded will decrease gradually over time,” SSC said in a statement e-mailed to OBJ.

Despite the changes, opportunities still exist for local businesses, said Jeff Lynt, chair of the Canadian Business Information Technology Network, or CABiNET, which represents independent IT consultants in the National Capital Region.

“This is just the way of the beast,” he said. “(Businesses) have to be quick and nimble enough to adjust. If you’re not adjusting, there can be some dire consequences.”

 

Shared Services Canada profile:

Established in 2011, SSC was given a mandate to consolidate the federal government’s IT portfolio, including e-mail services, data centres and IT networks.

The department’s first priority is to consolidate the 43 federal departments and agencies to one e-mail system.

 

Non-cumulutive savings – and subsequent reductions in SSC spending – expected from “efficient and effective IT infrastructure services:”

2012-13: $49.7 million

2013-14: $79.5 million

2014-15: $123.5 million

 

Amount spent on “professional and special services:”

Q1 2012-2013 (ended June 30 2012): $16,062,000

Q2 2012-2013 (ended Sept. 30 2012): $43,035,000

Total planned expenditures for year end: $503,500,000

Source: Shared Services Canada

Organizations: Shared Services Canada, TUC Managed IT Solutions, Nitro IT Business Solutions Canadian Business Information Technology Network

Geographic location: Ottawa, National Capital Region, Canada

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Recent comments

  • Jack
    January 18, 2013 - 22:43

    I am not sure why this is a surprise to people. The department was created to save the government money and hence the tax payers money. This Government does not exist to simply keep high price consultants employed. If those business go broke it is not SSC's fault as this article implies. It just shows those businesses were not sustainable business models without essentially government subsidies. They should have started looking for other income streams as soon as SSC was announced, in summer 2011 There is plenty of wasteful spending by individual departments that waste money on contractors when they have employees who should be doing the work. We will also see an end to "empire building" and building of little fiefdoms withing each department. SSC only controls 1.7 billion out of a total of 4.1 billion spent on IT in GoC. Their mandate needs to be expanded to cover the rest of IT and start saving us taxpayers some money. SSC needs to take control of that other 2.4 billion.

    • Grant Steele
      January 21, 2013 - 18:29

      Mr Jack has a couple of good points regarding the behaviour of individual departments: each has a full IT infrastructure organization that duplicates effort and costs. For example, why have each department stand up HR and Financial systems. Why not have only ONE for the government? Despite SSC, you still see HRSDC struggling like amateurs to stand up incompatible HR and Finance systems, while they continue to run the business with Excel spreadsheets and a mainframe platform that they have, for over 15 years, stated that they will migrate away from...lol. By the same token, why have different mail systems in each department. Why not have one! Duhhh, let's see, what mail system should we choose? given that 80 percent of the staff use Exchange already, would not that make sense...have one instance for everyone and declare surplus all those techies that manage mail accounts across the government?