Mr. Bell.
Debates of March 10th, 2003
This is page numbers 611 - 644 of the Hansard for the 14th Assembly, 6th Session. The original version can be accessed on the Legislative Assembly's website or by contacting the Legislative Assembly Library. The word of the day was communities.
Topics
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Brendan Bell Yellowknife South
I would like to ask the Minister about the recent award of somewhere in the neighbourhood of $1 million of computer equipment on a sole-source basis to a southern company, Hewlett Packard, I believe, in the South despite the fact that there are local venders who supply Hewlett Packard products. I am sure this issue is on the Minister's radar, so I am wondering if you can give me a blow-by-blow or a synopsis of how the contract ended up coming to be sole-sourced and maybe he can start with indicating on which department's behalf PW&S was conducting this work and then give me a summary of events. Thank you, Mr. Chairman.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Vince Steen Nunakput
Thank you, Mr. Chairman. I thank the Member for giving us the opportunity to clarify this issue. I will ask the deputy minister to respond to the questions raised.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Rattray
Mr. Chairman, that particular purchase was done on behalf of a number of departments. The largest component was for Health and Social Services for computer equipment to support some new systems that they are currently developing and installing. A very small portion was for the technology service centre which has been established by the chief information office of the government and it is intended to be for use of management of the government's desktop systems. Then, related to the Health and Social Services project, but also related to Public Works and Services computer data centre operations, there's a component that was used for enlarging the storage area network that the department has in place for storage of data on behalf of a number of departments. That whole project was approximately, when we initially priced it out, it was in the range of about $1.4 million. The majority of equipment that was purchased is available only directly from Hewlett Packard and is not available through northern suppliers. There is a small portion of the order which is available through northern companies, however it was deemed to be financially beneficial for the government to include that equipment as part of the overall order in order to obtain some additional volume discounts.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Brendan Bell Yellowknife South
Thank you, Mr. Chairman. Can the deputy give an indication then as to which proportion of the contract he believes northern firms could have supplied?
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Rattray
Mr. Chairman, approximately 19 percent of the order could have been supplied by northern firms or northern firms were certified to be able to provide that equipment by Hewlett Packard.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Brendan Bell Yellowknife South
I would just like him to confirm that that 19 percent number was arrived at by contacting Hewlett Packard to ask them which pieces of equipment northern firms would have been certified to provide. Is that how we arrived at the 19 percent? Thank you.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Rattray
Mr. Chairman, that's correct. We contacted a Hewlett Packard representative and they advised us who was certified to provide that equipment.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 634
Brendan Bell Yellowknife South
Thank you. I guess I am a little bit confused and maybe the Minister or the deputy could speak to the urgency of sole-sourcing with a southern company. Was there some sort of imminent time pressure here that would have made it not feasible to not go out to local tender to determine what parts of this contract could have been provided by northern firms? I have had occasion to meet with most of the computer contractors in town and they vehemently dispute this 81/19 split, the 81 percent Hewlett Packard indicates it had the sole ability to distribute and the 19 percent that could have come from northern firms. They question those numbers and would suggest that the northern component could have been much higher.
Furthermore, and I guess I was curious to know what incentive Hewlett Packard would have to indicate that so little of it could come from the North and they may be aware of the reality that really Hewlett Packard guarantees, by indicating so much of it had to come from them, they assure themselves of getting the sale on that equipment. If this had gone to tender, it's quite possible that some of the northern bidders would have specked equipment that was Hewlett Packard compatible, other brands, and wouldn't have necessitated Hewlett Packard getting all the work. It certainly seems Hewlett Packard would have an incentive to downplay the amount of the content that could have come from northern supplies and, if we are taking Hewlett Packard's word for the 19 percent as the number, does the Minister not have some concerns? So I guess I question the urgency for going sole-source and the numbers, the 19 percent, and whether or not Hewlett Packard might not have had an incentive to suggest that so little of it would be available in the North. Thank you.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 635
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 635
Rattray
Mr. Chairman, first off I will speak to the incentive part of it. Approximately 25 years ago, we standardized on HP equipment at the data centre. We have been operating almost exclusively with their equipment since then. This purchase was specifying Hewlett Packard equipment only. So there was no incentive on the part of HP to avoid going to public tender because we wouldn't have accepted anything other than HP equipment.
With respect to the timing, timing was less than an issue here than the Member was indicating. The real rationale for us going sole-source was again the fact that Hewlett Packard was the only supplier of 80 percent of this equipment. So under the contract regulations, that was justification for a sole-source contract. There is no other supplier.
Probably from an operational review, there is a great deal of advantage to us in having one supplier for this equipment, having the order placed with one group that is then responsible for supply, installation, troubleshooting, warranty, configuring of all of these individual pieces of equipment to work together as a total system. It was important for us that even the small pieces of equipment that were part of the order were installed by the same people who were installing the large pieces that we had to get from HP. This is a highly complex system and it will take Hewlett Packard factory-trained software engineers and hardware engineers to install it and get it functioning in our environment. So that was a primary consideration for us.
There is a time pressure with respect to the Health and Social Services project. They do have scheduled, for the consultants that are working to develop their system, for the end of this month and the system has to be delivered and installed in time for them to do that, but that was less of an issue at the time the tender was put out than the other points that I have raised.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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Brendan Bell Yellowknife South
Okay. Thank you. I wonder why the department wouldn't go out to the business community in order to determine what capacity there was to, first of all, sell the equipment to Public Works and then do some of the services and warranty work to install these other pieces that the deputy has spoken to. I wonder why we wouldn't go and talk to the business community in order to have them enter into this discussion of capacity. I think the department would have recognized that by sole-sourcing this, they were going to ruffle some feathers. There are a lot of businesses who have made significant investments in the North, based their business model on the policies of this government and feel that the due process was short-circuited here and I think what they are really asking for is, if they indicate that they couldn't provide 80 percent of this equipment, why not give them the chance and have that discussion, so that we collaboratively arrive at that conclusion, if that is the real conclusion. Why just go to Hewlett Packard in the South and ask for their take on this? I wonder why we wouldn't get into this consultation with the business community. It doesn't seem like it would take long to assess capacity in the situation like this.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 635
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
Page 635
Rattray
Mr. Chairman, in retrospect, given the feathers that were ruffled, that probably would have been a good idea. We did know who could supply the equipment because we did contact Hewlett Packard and we found out from them who was qualified to supply the equipment. The companies that are established in the North will probably never be in a position to provide that same type of equipment. It requires a level of expertise that Hewlett Packard is able to afford to maintain, but typically small businesses would not be able to because there isn't a large enough volume of business here to ever support that. So it seems to us to be fairly straightforward that, with the input we had from Hewlett Packard, there was a strong case for the sole-source and we did not anticipate that others wouldn't understand that. The next time, perhaps we will anticipate that.
Bill 3: Appropriation Act, 2003-2004
Item 19: Consideration In Committee Of The Whole Of Bills And Other Matters
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