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.
© File photo
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