GENS project sparks IT procurement debate

The IT industry has two weeks remaining to comment on the federal government’s procurement approach to GENS, which could result in the most significant IT contract the Government of Canada has seen in years.

Government Enterprise Network Services (GENS), which aims to consolidate telecommunications services and over 124 government networks, is the first of four projects in the federal government’s larger IT Shared Services initiative. The three projects scheduled to follow GENS focus on the consolidation of data centre services, desktop computer services and IT security.

The draft Solicitation of Interest and Qualification (SOIQ) for GENS, published by Public Works and Government Services Canada (PWGSC), is accessible through MERX until August 17, 2009. PWGSC’s Information Technology Services Branch (ITSB) is implementing the GENS project. Human Resources and Skills Development Canada (HRDSC) stands as the lead government client.

GENS takes a new approach to government procurement and in its currently proposed state, involves two contracts responsible for providing bandwidth and services at various government departments and agencies for up to the next 15 years. The vendor of record process doesn’t apply.

Earlier reports place a value of $80 billion on the Shared Services initiative, which includes four pillars each worth $1 billion annually for a duration of up to 20 years. But recent changes to the proposed procurement for GENS reduce the maximum contract duration from 20 to 15 years. If this duration is reflected across all pillars, the overall value of Shared Services would adjust to $60 billion.

But the true value of the contracts remains unclear. PWGSC has yet to release any figures directly related to GENS, Shared Services or the contracts involved. “PWGSC cannot clarify the $80B number because we have no idea where it originated,” stated a PWGSC spokesperson in an e-mail interview.

Three of the four pillars – telecommunications, data centres and distributed computers – are valued at approximately $1 billion annually, according to a March 2008 presentation by Steven Poole, CEO of ITSB, to the Ottawa Centre for Research and Innovation (OCRI). The fourth pillar, IT security, is valued at approx. $100 million annually.

“Steven Pool’s estimate is consistent with our own analysis and we consider it to be accurate. However, this element alone does not represent the overall value of IT shared services,” said PWGSC.

Similar numbers are reflected in the Government of Canada’s annual IT spending, but PWGSC pointed out that the figures include internal costs and are not representative of the contracts’ worth.

“According to the Treasury Board of Canada’s IT Expenditure Analysis, the overall GC IT expenditure for 2006-07 is $4.8B (including GC salary and overhead costs; contracted personnel and IT goods and services). The estimated current annual amount spent by the Government of Canada in each of the four infrastructure domains – distributed computing, data centres, IT security and telecommunications – is approximately $1B, which includes all internal government costs. These internal costs are not to be included in contracts. The government has never had plans to award a single $80B contract over 20 years,” said PWGSC.

Because Shared Services are an option for departments, they “do not negate the requirement for internal department capacity to manage potential service. Therefore, it is not possible to convert the annual GOC spend in these areas to the potential value of Shared Services,” said PWGSC.

“GENS is totally optional and is for departments that express requirements to renew their network service by taking advantage of converged telecommunication services,” said PWGSC.

PWGSC does, however, estimate between 15 to 20 per cent cost savings as a result of the initiative and a 50 per cent savings on mobile wireless products and services. The goal of Shared Services, according to PWGSC’s Web site, is better management of IT resources, eliminating duplication and providing services more efficiently and cost-effectively.

“The Government of Canada has over 120 data centres, with numerous mainframes. As well, it has over 7,000 servers, with each department having its own telecommunications network and unique desktop services. PWGSC uses seven different financial and material applications and 14 different human resource systems – all of these are run from individual data centre with different standards,” states PWGSC’s site.

While potential candidates aren’t yet known, they would likely include companies such as IBM, CSC, HP, CGI, Bell and Rogers.

Departments, bureaucrats, politicians, industry groups and SMEs have engaged in numerous debates over the past year on the GENS service delivery and procurement approach.

SMEs worry a large-scale contract will lead to job loss and less business, while large enterprises feel they are the only ones equipped to properly handle the work. Industry groups say the issues are getting confused with each other and belong in separate discussions.

Consultations on GENS between federal government and industry – which included representatives from associations, SMEs and large firms – began in late 2008 and PWGSC made adjustments to the initial GENS procurement approach based on the feedback. The results were presented in May.

Adjustments include reducing the contract from eight plus 12 option years to eight plus seven years, taking a two-contract approach (as opposed to the original proposal of one contract for the entire project) and “requiring contractors to include a SME business sub-contracting plan as part of their proposal.”

During the course of the consultations with PWGSC, difficulties SMEs were having with the federal government’s overall procurement approach were brought to light and the House of Commons Standing Committee on Government Operations and Estimates initiated a series of five hearings on SME’s ability to access procurement contracts.

“What began as a study on the bundling of information technology contracts became a study on the circumstances of SMEs as they try to do business with the federal government,” states the committee in a June 2009 news release that coincided with the release of the Parliamentary report.

In the release, Derek Lee, M.P. and chair of the committee, states, “’I see the benefits of ‘bundling,’ but the government also has to find ways to make room for small and medium-sized businesses. Tell me when your department designs its procurement you will resist the urge to turn everything into a Wal-Mart globalized supply chain.”

Four sides to the story will be presented tomorrow in part two: ITAC, CABiNET, CATA and PPI weigh in on GENS, Shared Services and the federal procurement process debate.

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Jim Love, Chief Content Officer, IT World Canada

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