Published: May 1st, 2014

The federal government’s procurement reforms and consolidation of most IT service delivery and procurement under one department – Shared Services Canada – have been highly disruptive to government-focused solution providers, particularly Aboriginal solution providers.

A community of Aboriginal-owned solution providers has developed and thrived around the federal government’s Procurement Strategy for Aboriginal Business (PSAB), which sees each federal department required to set a goal for a percentage of their procurement which will go to Aboriginal-owned businesses, reflective of their percentage of the Canadian population. Most government departments have relied on their IT procurement to meet these goals and, consequently, a community of Aboriginal-owned solution providers has developed.

With the creation of Shared Services Canada (SSC), most departments no longer procure much in the way of IT services, leaving them to look to non-IT sources to meet their PSAB targets. Aboriginal Affairs and Northern Development Canada said it is working with departments to help them meet their PSAB targets in this new environment.

“Increasing the self-reliance and economic development of Aboriginal people across Canada is a priority for the Government of Canada,” said a department spokesperson, Michelle Perron. “PSAB is a coordinated effort across the federal government that aims to increase contracting opportunities and to provide access to the overall federal procurement process for Aboriginal business, while supporting greater access to business expertise and services.”

However, for Aboriginal IT solution providers, with departments turning to non-IT procurement to meet their PSAB goals all eyes are now on SSC. One such solution provider, Ottawa-based Mishkumi Technologies, commissioned public sector channel consulting firm MarketWorks to produce a report examining the impact of SSC and the federal government’s IT modernization on the PSAB program.

“We knew the transformation and cost-cutting measures would have some impact, and basically the report confirmed that. We wanted to identify exactly how,” said Mishkumi president Benoit Benson. “It started a dialogue with SSC and the government, and it made sure they weren’t forgetting about PSAB. Our preliminary indication had been that they were.”

Transformation of the magnitude undertaken by SSC is purposely disruptive and widespread, and it would be difficult for anyone to forecast all the variables it impacts said Kelly Hutchinson, president of Ottawa-based MarketWorks. And as they produced the report, it became clear that PSAB was one of those unforecasted variables.

“Good stuff came out of this: SSC established PSAB targets. In a perfect world they would have been set at creation, but you’ve got to give people time to adjust,” said Hutchinson.

SSC has now set what Hutchinson calls an “aggressive” target of 3.8 per cent of non-telecom spending going to Aboriginal businesses.

“My only hope in this is that they see the value of setting aside those targets to Aboriginal IT companies, as they won’t be growing within the departments anymore,” said Hutchinson. “Aboriginal companies in the IT community are now mostly reliant on SSC from a federal market perspective.”

PSAB has been essential to Mishkumi’s success – Benson said he probably would not have started the company had the program not existed. While they do have other clients, they are pretty reliant on federal government business.

“They have set targets, and this is a good thing. Targets are always dynamic. There is room for improvement on their part,” said Benson. “They have improved, but only a step up. We can definitely with work SSC to help them meet their PSAB targets and accomplish their savings.”

Mishkumi will also be looking to diversify its business so it’s less reliant on federal government business while continuing to develop its relationship with SSC. Partnering with non-Aboriginal solution providers to help win SSC business is also a possibility.

Hutchinson said it’s unclear at this point whether the shift of most IT procurement to SSC will mean the spending going to Aboriginal IT solution providers under PSAB will net-out or decline. The SSC business under PSAB is estimated at about $23 million. She said it will be important for solution providers to diversify their businesses.

“The only thing left for departments for IT is applications and related services, so if an Aboriginal IT company doesn’t support that space, their only chance to grow is with SSC or in other markets,” said Hutchinson.