Tech industry says barriers keep Canadian companies from selling to government

OTTAWA — Bureaucracy makes it too difficult for Canadian tech companies to sell to government, a new report from an industry group says — and all that red tape is keeping them from a bigger piece of the billions spent on procurement.

In some cases, companies find it easier to sell to foreign governments, says Laurent Carbonneau, director of policy and research at the Council of Canadian Innovators, which represents the Canadian tech sector.

Companies want to “sell a good product at a fair price to the government, and they find that it’s very, very hard to do that because there are lots of institutional barriers that prevent them,” he said in an interview.

Carbonneau said he’s spoken to companies in the cybersecurity and health tech space who are able to sell to other countries “without too much trouble.”

“In fact, they do so enthusiastically and they wish they could sell in Canada, but their own governments make it very hard for them to do so.”

In the cybersecurity sector, Canadian companies sell three times as much to other countries as they do to Canadian public-sector clients, says the report co-authored by Carbonneau. 

The report, released Wednesday, says procurement from various levels of government amounts to nearly 15 per cent of Canada’s GDP. 

The federal process has led to scandals such as the Phoenix pay system debacle, and is not serving the government’s own purposes, it said, citing a report by the auditor general that said a third of “mission-critical government digital applications” were in poor health.

The barriers companies face include the government being too specific about what it’s looking for, and a lack of dialogue that means the companies aren’t able to ask questions without risking giving up trade secrets, Carbonneau said.

“When you have a solved problem, it’s very easy to lay out the specifications for what you need and say, OK, now everyone compete on price for this and we need exactly this and no other thing,” he said.

“That’s actually a really, really bad way to buy software and any kind of innovative product where the parameters might shift during development.”

Having a very complicated system means that what ends up mattering is “your ability to navigate the system and not actually what you bring to the table.”

The process is also long and cumbersome, meaning companies can be left waiting for months or years, according to the report. 

“Layers of bureaucratic approvals, while individually justifiable, collectively stretch the process beyond timelines that are reasonable for commercial entities,” it reads.

Canada could learn from systems in other countries, such as the United States, the United Kingdom and Finland, the report outlines. 

It suggests the federal government could copy Finland by creating an agency or using an existing agency to act as a bridge between government and Canadian companies.

Government should also “consider a blunt instrument in the form of an ambitious procurement target for small- and medium-sized enterprises,” it says.

This report by The Canadian Press was first published April 3, 2024.

Anja Karadeglija, The Canadian Press