Appearance before the Standing Committee on Government Operations and Estimates (OGGO), October 24, 2024

Logistics

Date: Wednesday, October 24, 2024

Time: 11:30 a.m. – 1:00 p.m.

Location: Room 035-B West Block

Subject: Indigenous Procurement

Appearing

Committee Membership

• Majid Jowhari (LIB – ON) (Vice-Chair)
• Jenica Atwin (LIB – NB)
• Parm Bains (LIB – BC)
• Irek Kusmierczyk (LIB – ON)
• Charles Sousa (LIB – ON)
• 
  Kelly McCauley (CPC – AB) (Chair)
• Kelly Block (CPC – SK)
• Garnett Genuis (CPC – AB)
• Stephanie Kusie (CPC – AB)
• 
  Julie Vignola (BQ – QC) (Vice-Chair)
• 
  Taylor Bachrach (NDP – BC)

Parliamentary Analysis

• MP Majid Jowhari (LIB) (Vice-Chair) may ask about training within Indigenous businesses and efforts that have been made to improve the capacity of Indigenous businesses. He may also ask about the work that is being done to strengthen procurement practices within the Government, likely with a focus on practices relating to Indigenous procurement.
• MP Jenica Atwin (LIB) may ask about systemic racism that is rooted in the procurement process and how the Indigenous procurement strategy addresses these systemic issues. She may also address concerns that the impact that scrutinizing the Indigenous status of an individual and their workforce may have on Indigenous communities and how this risk could be mitigated going forward. During a recent meeting on Indigenous Procurement she asked about the current barriers to First Nations, Inuit, and Métis economic development. She has also previously asked what changes can be made to improve Indigenous procurement.
• MP Parm Bains (LIB) will likely ask questions about the Indigenous procurement consultation process and collaboration between the Government and Indigenous organizations that advocate for and promote Indigenous businesses. He may also ask about the process for Indigenous groups to be registered as an Indigenous business and whether it aligns with private sector practices. In previous meetings on this topic he has also asked about the management of sub-contractors in procurement and how this affects Indigenous participation. He has also asked about the impacts of transferring the Indigenous Business Directory away from the government could have on Indigenous businesses.
• MP Irek Kusmierczyk (LIB) will likely ask questions that highlight the successes of the Indigenous procurement program, focusing on Indigenous businesses that have benefitted from the federal procurement process. He may also ask about efforts to improve the program and how this is being done in collaboration with Indigenous organizations.
• MP Charles Sousa (LIB) may ask questions on how the Government is ensuring that all Indigenous groups, First Nations, Inuit, and Métis, are equally benefitting from the strategy and that it is not only benefitting one group. He may also ask questions about consultation processes in improving the Indigenous procurement strategy and whether the Government as received input and recommendations from Indigenous partners.
• MP Kelly McCauley (CPC) (Chair) may ask questions about the barriers that Indigenous businesses face during the procurement process, including a lack of capacity in comparison to large private sector companies. May also ask if the government is seeking to recover funds previously awarded and who within the department will be held accountable for awarding those funds.
• MP Kelly Block (CPC) will likely ask questions about the issue of companies subcontracting the work to other businesses, yet taking a significant amount of the pay, causing significant levels of fraud within Indigenous procurement. She may also ask questions about the possible lack of competition in the procurement process and how this blocks Indigenous businesses from stronger participation. In previous meetings she has asked about how departments are tracking sub-contractors and ensuring that procurement contracts are compliant with Indigenous procurement rules.
• MP Garnett Genuis (CPC) may ask questions about the practice of subcontracts within Indigenous procurement and how this is managed to ensure Government integrity and practices that are in line with the 5% floor for Indigenous contracts. He may also ask questions on whether there are a small number of Indigenous business that are getting an outsized number of overall contracts and how this affects that fairness of Indigenous procurement strategies. During a recent meeting on Indigenous Procurement he asked about inconsistencies between organization's Indigenous business lists and the Federal Indigenous Business Director.
• MP Stephanie Kusie (CPC) will likely ask questions on fraud within the procurement process and what steps the Government is taking to prevent wrongful procurement processes. May also ask questions regarding if and how benefits to the community are determined in the awarding of contracts.
• MP Julie Vignola (BQ) (Vice-Chair) may ask about the established criteria for determining if a business qualifies to be registered as an Indigenous business and whether it should instead be determined by Indigenous organizations instead of the Federal Government. During a recent meeting on Indigenous Procurement she asked witnesses what criteria is used in determining if businesses are truly Indigenous-led. She has also asked about whether lengthy certification processes are deterring Indigenous businesses from participating in the federal procurement process and what measures are being taken to improve participation.
• MP Taylor Bachrach (NDP) may ask about the transparency and integrity of the Indigenous procurement process. He may focus on how the 5% procurement target has caused problematic procurement for Indigenous businesses and reduced benefits for legitimate Indigenous businesses. During a recent committee meeting on this topic he asked about the barriers that verification/certification processes create for Indigenous peoples seeking to participate in procurement. He also questioned the integrity of the Indigenous procurement process and has asked about departments' auditing practices to ensure that there is no fraud in the Indigenous procurement process.

Recent OGGO studies, reports and government responses

• Indigenous Procurement (last meeting October 17, 2024)
• Postal Service in Canada's Rural and Remote Communities (last meeting October 22, 2024)
• Federal Grants and Contribution Process (last meeting October 8, 2024)
• Purchase of the Official Residence of the Consul General in New York (last meeting October 3, 2024)
• Federal Regulatory Modernization Initiatives (last meeting September 26, 2024)
• Report 19: Main Estimates 2024-25 (presented to the House May 31, 2024)
• Report 18: Request for a Privacy Commissioner investigation of the ArriveCAN Application (presented to the House May 6, 2024)
• Report 17: Question of Privilege Concerning the Refusal to Respond to Questions by Mr. Kristian Firth (presented to the House March 20, 2024)

OGGO Production of Papers Motion

On Wednesday, April 10, 2024, a request for documents was agreed to at OGGO:

"That, in accordance with Standing Order 108 (1), the committee order the production, in both official languages and by Monday, May 20, 2024, of the government list of qualified Aboriginal businesses, provided that the list includes: (i) a summary of the key details about each company in the database of the Public Sector Accounting Board, (ii) the number and value of contracts received by each enterprise, (iii) the list of subcontractors used for each contract; committee members will conduct an analysis of the list and decide whether it is necessary to conduct a longitudinal study of the matter, in committee or subcommittee, as long as this decision is made before Thursday, June 20, 2024."

On April 29, 2024, the Department sought clarification from Chair, by letter, regarding the inclusion of the Public Sector Accounting Board in the request, as it appeared in the evidence of the meeting that MP Vignola (BQ) was referring to PSAB – Procurement Strategy for Aboriginal Business.

On May 1, 2024, the Clerk of the Committee provided the Chair's response, that the Committee intended for PSAB = Procurement Strategy for Aboriginal Business (now Procurement Strategy for Indigenous Business, PSIB).

On Friday, May 17, 2024, responses were provided to OGGO:

• ISC – Partial
• CIRNAC – Complete

ISC was tasked with all parts (Parts (i), (ii) and (iii)). The ISC response will be provided in 2 tranches.

• Tranche (i) was submitted on May 17:
  • Part (i) Information regarding companies registered under the Indigenous Business Directory was provided (names/emails/ph#s/partial addresses for approx. 2700 businesses).
  • Given that ISB business information is generally provided by the businesses in the language of their choice, over 2,700 business records have been submitted for translation by the department. Due to the volume of translation, a Tranche 2 response will follow once translation of company street addresses and company descriptions is complete and quality review is conducted
    • Full submission to the committee is expected soon

Part (ii) Approx. 125 contracts

Part (iii) Nil/unable to reply

Tranche 2 response (company street addresses/descriptions) is being completed. Final translation is ongoing (as at October 9, 2024).

CIRNAC was tasked with Parts (ii) and (iii) only and provided: Part (ii) (approx. 40 contracts) and Part (iii) (Nil/unable to reply). The CIRNAC response is complete and no further action is required.

Recent Correspondence

N/A

Recent OPQs

• Kelly McCauley (CPC): April 9, 2024 – Reports, studies, assessments, and evaluations prepared for the government, including any department, agency, Crown corporation or other government entity by Deloitte, PricewaterhouseCoopers, Accenture, and KPMG since December 1, 2020. Response tabled May 27, 2024.
• Garnett Genuis (CPC): June 6, 2024 – Expenditures on coaching since January 1, 2017. Response tabled September 16, 2024.
• Garnett Genuis (CPC): June 13, 2024 – Information shared between CSE and the House of Commons Administration. Response tabled September 16, 2024.
• Stephanie Kusie (CPC): December 7, 2023 – Expenditures made under Treasury Board Object Code 3259 (Miscellaneous expenditures not Elsewhere Classified), since January 1, 2020. Response tabled January 29, 2024.
• Stephanie Kusie (CPC): September 12, 2024 – Federal infrastructure funding being provided to cities or provinces, where municipality has a population of more than 50,000 people. Response not yet tabled.
• Julie Vignola (BQ): February 15, 2024 – Federal contracts awarded between 2019 and 2023 to suppliers of the federal government, reporting departments, organizations and agencies, federal offices and any other federal entity that received funds from the Public Accounts of Canada. Response tabled April 10, 2024.
• Taylor Bachrach (NDP): October 25, 2023 – Federally owned lands in British Columbia. Response tabled December 12, 2024.
• Taylor Bachrach (NDP): February 28, 2024 – Funding in the federal electoral district of Skeena-Bulkley Valley, broken down by fiscal year since 2006-07. Response tabled April 15, 2024.

In the Media

• Auditor general considering probe into Indigenous procurement program - National | Globalnews.ca
• Indigenous business leader calls federal study 'a witch hunt' against Indigenous procurement | CBC News
• Indigenous business verification for procurement 'just not working,' MPs hear - The Hill Times
• Indigenous contracting program went years with no 'after-the-fact' audits despite calls for more oversight - The Globe and Mail
• Feds reviewing Indigenous procurement policies as they grapple with ArriveCan revelations | CBC News
• 'It's not right': Indigenous leaders call on Ottawa to clean up procurement system - National | Globalnews.ca
• Indigenous procurement program vulnerable to abuses, CEO warns - The Globe and Mail

Meeting Proceedings

This meeting is scheduled for: Wednesday, October 24th, from 11:00 a.m. – 1:00 p.m. ISC officials will be appearing as the lone witnesses, for two hours.

The Chair will call the meeting to order and provide instructions for the meeting proceedings. They will then introduce the witnesses and invite the witnesses to deliver opening remarks (limit of 5 minutes). This will be followed by a Q&A period (details below).

It is recommended that all speakers speak slowly and at an appropriate volume to ensure they are heard by the interpreters. All witnesses are asked to mute their microphones unless they are speaking. A new practice that was recently instituted as a measure to protect interpreters from injury, is that when earpieces are not in use by witnesses that they be placed on the designated white circles installed on the table.

Following the opening remarks, there will be rounds of questions from Committee members (as listed below). The rounds of questioning will repeat when the second panel commences in the second hour.

Committee members will pose their questions in the following order:

• First round (6 minutes for each Party)
  • Conservative Party of Canada
  • Liberal Party of Canada
  • Bloc Québécois
  • New Democratic Party of Canada
• Second round
  • Conservative Party of Canada (5 minutes)
  • Liberal Party of Canada (5 minutes)
  • Bloc Québécois (2,5 minutes)
  • New Democratic Party of Canada (2,5 minutes)
  • Conservative Party of Canada (5 minutes)
  • Liberal Party of Canada (5 minutes)

Other Information for Appearing In-Person

Witnesses should arrive early to allow time for security screening. Screening could take 30 minutes or more for those without a Hill pass. The committee meeting will be streamed Parlvu.parl.gc.ca. Please note that this stream can lag roughly a minute behind the live proceedings.

Indigenous Business Directory (IBD)

• As of October 22, 2024, there are 2972 businesses registered in the Indigenous Business Director. This includes 111 Joint Ventures.
• Ownership:
  • First Nation: 1966
  • Metis: 811
  • Inuit: 162
• Note that this includes some overlap where a business is owned by more than one Indigenous owner.

The following table shows the businesses by type/structure (data as of September 11, 2024)

• Corporation: 57.5%
• Sole proprietor: 26.2%
• Partnership: 9.5%
• Joint Venture: 3.8%
• Not-for-profit: 1.4%
• Band-owned: 0.5%
• Cooperative: 0.4%
• Not specified: 0.7%

IBD Audits and Verifications

In fiscal year 2023-24, 798 verifications of new businesses were completed (ISC reviewing registration information including Indigenous ownership and control documents).

Since December 2023, ISC has completed 19 pre-award audits, to confirm businesses are, in fact, Indigenous-owned and controlled.

An additional 12 post-award audits by 3rd party auditors are currently underway.

Mandatory Minimum 5% Indigenous Procurement Target

• In fiscal year 2022-2023, the Government of Canada awarded over $1.6 billion ($1,632,326,114) in contracts to Indigenous businesses. This represents 6.27% of the value of all federal contracts awarded in fiscal-year 2022-23.
• Given specific departments operational requirements, some deputy heads removed some activities from their total contracts for the year (e.g. national security, overseas operations, emergencies etc.), when submitting their target calculation. In fiscal year 2022-2023 $7.5 billion in deputy head-approved exceptions were applied. 17 out of 95 organizations (17.7%) used deputy head-approved exceptions
• In fiscal year 2022-23 ISC awarded 17.68% of the value of its contracts to Indigenous businesses.
• ISC is currently collecting Deputy Minister approved Indigenous procurement reporting data for 2023-24, from 96 departments and agencies. The 2023-24 performance report will be published by March 31, 2025.

Grants and Contributions funding

Between 2021 and 2026, ISC is investing G&C funding to support First Nation, Inuit and Metis organizations in engagement, consultation and capacity development related to Indigenous procurement. $14.9M has been invested with to date in funding agreements with 18 First Nations, Métis and Inuit and Indigenous economic organizations.

Key Messages

• At the time of registration on the Indigenous Business Directory (IBD), the applying business provides Indigenous Services Canada with documents that demonstrate eligibility as per the criteria outlined in the Procurement Strategy for Indigenous Business (at least 51% owned and controlled by Indigenous people).
• To be eligible for the Procurement Strategy for Indigenous Business businesses must be at least 51% Indigenous owned and controlled, and when contracts are set-aside for only Indigenous businesses to bid on, at least 33% of the value of the work must be done by the Indigenous contractor, and/or a combination of the prime and Indigenous subcontractors.

Background

In order to be registered on the IBD, business owners must be First Nations, Inuit or Métis and ordinarily resident in Canada. At the time of registration on the IBD, the applying business provides Indigenous Services Canada (ISC) with documents that demonstrate eligibility as per the criteria outlined in the Procurement Strategy for Indigenous Business (PSIB) (at least 51% owned and controlled by Indigenous people).

Evidence considered for registration on the IBD of being an Indigenous person includes, but is not limited to:

• Indian registration in Canada
• Citizenship with the Manitoba Métis Federation, the Northwest Territory Métis Nation, the Métis Nation Saskatchewan; or a Governing Member of the Métis National Council, including: the Métis Nation Saskatchewan; the Métis Nation of Alberta; the Métis Nation British Columbia and the Métis Nation of Ontario
• Membership in an affiliate of the Congress of Aboriginal Peoples, or other recognized Indigenous organization in Canada
• Acceptance as an Indigenous person by an established Indigenous community in Canada
• Enrolment or entitlement to be enrolled pursuant to a comprehensive land claim agreement, or membership or entitlement to membership in a group with an accepted comprehensive claim

Ownership of an Indigenous business refers to "beneficial ownership" meaning who is the real owner of the business. ISC may consider a variety of factors to satisfy whether Indigenous persons have true and effective control of an Indigenous business. The business must also provide other information related to the business, including corporate structure and governance.

Evidence of being resident in Canada includes a provincial or territorial driver's license, a lease or other appropriate document.

To be eligible for the Procurement Strategy for Indigenous Business businesses must be at least 51% Indigenous owned and controlled, and when contracts are set-aside for only Indigenous businesses to bid on, at least 33% of the value of the work must be done by the Indigenous contractor, and/or a combination of the prime and Indigenous subcontractors.

Current Status

• Businesses listed on a modern treaty beneficiary business list are confirmed to be Indigenous by the Indigenous group that Canada has signed the modern treaty with.
• In addition to verifying eligibility prior to registering a business on the IBD, ISC verifies businesses have maintained their eligibility on an ongoing basis.
• ISC ensures the integrity of PSIB and the IBD multiple ways, including verifying that businesses meet the criteria when registering, as well as regularly revalidating eligibility.

Key Messages

• The Government of Canada takes the issue of non-Indigenous businesses posing as Indigenous businesses very seriously.
• While the inclusion of businesses that don't meet the eligibility criteria for Indigenous-ownership and control on the IBD are rare, diligent work to verify all businesses and remove those that don't meet the criteria is ongoing.
• At the time of registration on the IBD, the applying business provides ISC with documents that demonstrate eligibility as per the criteria outlined in the Procurement Strategy for Indigenous Business (at least 51% owned and controlled by Indigenous people).

Background

Current Status

ISC continues to actively engage Indigenous partners to co-develop a new Transformative Indigenous Procurement Strategy that will improve procurement policies, safeguards, and processes for Indigenous businesses.

A key piece of this collaborative work is determining a path forward to transferring the administration of the IBD to Indigenous partners, so Indigenous Peoples are determining who qualifies as an Indigenous business.

Key Messages

• The Procurement Strategy for Indigenous Business sets aside (or limits) bidding to Indigenous businesses in federal procurement processes. Contracts set-aside under the Procurement Strategy for Indigenous Business are one way that departments and agencies support Indigenous businesses to grow. Procurement has a direct positive impact on the Indigenous person or people who own the business and an indirect positive socio-economic impact on broader communities.
• To be eligible for the Procurement Strategy for Indigenous Business businesses must be at least 51% Indigenous owned and controlled, and when contracts are set-aside for only Indigenous businesses to bid on, at least 33% of the value of the work must be done by the Indigenous contractor, and/or a combination of the prime and Indigenous subcontractors.

Background

The Procurement Strategy for Indigenous Business (PSIB) sets aside (or limits) bidding to Indigenous businesses, as defined by PSIB eligibility criteria. It is mandatory to use a set-aside in procurements that are destined for an area where Indigenous peoples make up at least 51% of the population and/or where the Indigenous population will be the recipient of the good, service or construction, and when there is no conflict with modern treaty procurement obligations. It is voluntary to use a set-aside otherwise.

Indigenous content criterion dictates that at least 33% of the total value of work performed under a PSIB contract is performed by the Indigenous business awarded the contract or by a combination of that business and other businesses (such as subcontractors) that also meet the 51% Indigenous ownership and control criterion.

Further, contracts set aside under PSIB are one category of government contracts that are counted towards the governments minimum mandatory 5% target.

Current Status

Since 2021, significant engagements have been underway on possible transformation of the program, and these changes are expected to seek approval as early as 2024-25 *See section on reforms for latest information.

Key Messages

• In 2021, ISC established a five-year process to engage partners and co-develop a Transformative Indigenous Procurement Strategy to improve existing Indigenous procurement policies and programs.
• This five-year process is currently underway. ISC is actively listening to the advice and experience of Indigenous partners.
• A key piece of this collaborative work is determining a path forward to transferring the administration of the IBD to Indigenous partners, so Indigenous Peoples are determining who qualifies as an Indigenous business.

Background

ISC continues to actively work with Indigenous partners to co-develop a new Transformative Indigenous Procurement Strategy (TIPS) that will improve procurement policies, safeguards, and processes for Indigenous businesses. A key piece of this collaborative work is determining a path forward to transferring the administration of the IBD to Indigenous partners, so Indigenous Peoples are determining who qualifies as an Indigenous business.

ISC's work on a TIPS is in line with principles of self-determination committed to under the UN Declaration on the Rights of Indigenous Peoples Act.

Current Status

ISC continues to engage with Indigenous organizations and businesses through meetings of its co-development table, permanent bilateral mechanisms, and regular meetings with National Indigenous Organizations and National Indigenous Economic Organizations. ISC is pursuing consideration for proposals for reform and further co-development work as part of its Economic Reconciliation strategy through Fall 2024.

Key Messages

• In August 2021, the Government announced the implementation of a mandatory requirement for federal departments and agencies to ensure a minimum of 5% of the total value of contracts are held by Indigenous businesses annually.
• This commitment was included in PSPC, TBS and ISC's ministerial mandate letters.
• In fiscal year 2022-2023, the Government of Canada awarded over $1.6 billion in contracts to Indigenous businesses. This represents 6.27% of the value of all federal contracts awarded in fiscal-year 2022-23.
• It is important to note that 5% is the floor and not the ceiling. Departments are encouraged to exceed 5%, as ISC has done for fiscal year 2022-2023. ISC awarded 17.68% of the value of contracts to Indigenous businesses.

Background

The Government of Canada's mandatory minimum 5% Indigenous procurement target requires all federal departments and agencies to ensure that by 2024-2025 fiscal year-end, a minimum of 5% of the total value of contracts are held by Indigenous businesses.

Indigenous Peoples in Canada comprise approximately 5% of the overall Canadian population; however, they were consistently awarded a lower percentage of federal contracts. The 5% target was set to align with that population and seeks to leverage government spending to help grow Indigenous businesses and improve the socio-economic conditions of Indigenous communities.

Current Status

• Data for fiscal year 2022-2023 (the first year that departments were required to report data to ISC as part of the mandatory minimum 5% Indigenous procurement target) is publicly available on the Open Government portal in the online report on the mandatory minimum 5% target fiscal year 2022-2023. In fiscal year 2022-2023, $1,632,326,114 was awarded to Indigenous businesses. This represents 6.27% of the value of all federal contracts awarded in fiscal-year 2022-23.
• As fiscal year 2022-23 was the first year that departments were required to report data to ISC as part of the mandatory minimum 5% Indigenous procurement target, ISC does not have data for total contract values awarded to Indigenous businesses for other fiscal years.
• ISC is currently collecting departments DM approved procurement reporting data for 2023-24, from 96 departments and agencies. That information is due by November 2024. In line with Treasury Board Directive on the Management of Procurement, ISC will publish government-wide data on the mandatory minimum 5% Indigenous procurement target within 12 months after fiscal-year end.

Key Messages

• Indigenous Services Canada plays an advisory and administrative role in the operations of the Procurement Strategy for Indigenous Business.
• Each department and agency is responsible for the contracts they award, including ensuring that the contractor complies with the requirements of the Procurement Strategy for Indigenous Business.

Background

Key Messages

• Compliance audits are one way that ISC ensures businesses delivering contracts awarded under the Procurement Strategy for Indigenous Business meet the policy's criteria.
• There are three main types of audits performed as part of the Procurement Strategy for Indigenous Business.
  1. 1. Pre-Award audits
  2. 2. Post-Award audits
  3. 3. Discretionary audits
• Audit activity is often led by third party corporate auditors who review business information against program eligibility criteria.

Background

ISC conducts pre-award audits to verify that the business meets the ownership and control criteria when contracts are valued at, or greater than, $2 million; however, pre-award audits may be conducted for requirements below the value of $2 million when a need is identified by the requisitioning department, the contracting authority, or ISC.

A business that wins a contract set aside under the PSIB will certify in its bid that it will meet the 33% Indigenous content requirement. This requirement is incorporated into the contract terms and conditions. The requisitioning department is responsible for monitoring compliance with contract terms and conditions that include ongoing Indigenous ownership, control and participation as per the terms of the contract.

Post-award audits can be conducted once a contract has been completed. They verify that the contractor met PSIB criteria throughout the duration of the contract, including the 33% content criteria. Post-award audits are an additional layer of compliance monitoring and should be requested by the requisitioning department when it is suspected that PSIB requirements have not been met throughout the delivery period.

An audit for compliance can also be performed on a discretionary basis. It is not related to any pre- or post-awarded requirement. The purpose of the audit for compliance is to ensure the integrity of the IBD by guaranteeing that businesses registered under the IBD are compliant with PSIB requirements.

Current Status

In fiscal year 2023-24,

• 798 verifications of new businesses were completed.
• 5 pre-award audits were completed

So far in 2024-25,

• 9 pre-award audits were completed by 3rd party auditors
• 12 post-award audits by 3rd party auditors are underway

Key Messages

• The Government of Canada takes allegations of wrongdoing and fraudulent activity seriously and is committed to taking action against improper, unethical, and illegal business practices and holding individuals and companies accountable for their misconduct while protecting federal expenditures.

Background

Current Status

Compliance monitoring is always ongoing.

The Government of Canada takes allegations of wrongdoing and fraudulent activity seriously and is committed to taking action against improper, unethical, and illegal business practices and holding individuals and companies accountable for their misconduct while protecting federal expenditures.

If ISC or the requisitioning department suspect that the business has committed fraud, ISC and the requisitioning department will report it to law enforcement. Further questions about criminal investigations should be directed to law enforcement.

Key Messages

• Subcontracting can be an important part of the supply chain - it can support the achievement of broader policy priorities including subcontracting work to Indigenous businesses. Subcontracting is also a way to increase diversity within procurements by providing opportunities for Indigenous firms to develop capacity.

Background/Context

Current Status

• Engagement via the TIPS will continue. Feedback received will be used to shape future policy decisions.

Key Messages

• Should the Office of the Auditor General of Canada audit Indigenous Services Canada's work to support Indigenous procurement, the department would fully comply with the audit.
• The department accepts the Indigenous Services Canada Evaluation Report's key findings and has begun implementing recommendations as outlined in its management response action plan.

Background

In September 2024, media reported that the Assembly of First Nations, the Algonquin Anishinabeg Nation Tribal Council, and the Assembly of First Nations Québec and Labrador asked the Auditor General of Canada to audit PSIB and the IBD. The media report quotes an Auditor General of Canada spokesperson as saying the office is "currently assessing" the request.

On October 22, 2024, media reported that the Auditor General of Canada confirmed to the House of Commons that her office will conduct a full audit of all government contracts awarded to GC Strategies. GC Strategies is not an Indigenous business. It has never been listed on the IBD and it has never received a contract that was set aside under PSIB. It has been registered on the IBD in the past as part of a joint venture with Dalian Inc, but was removed from the IBD in December 2023.

From 2021-2023 ISC Evaluation undertook an evaluation of the Indigenous Entrepreneurship and Business Development Program, covering the five-year period from 2015-16 to 2020-21. This Indigenous Entrepreneurship and Business Development Program consists of three complementary sub-programs that support Indigenous entrepreneurs in Canada: Access to Capital, Access to Business Opportunities and Procurement Strategy for Indigenous Business programs. The evaluation assessed the programs' relevance, effectiveness and efficiency. The evaluation made five recommendations. The evaluation recommended that ISC engage First Nation, Inuit and Métis partners to explore options to transfer the full Indigenous Entrepreneurship and Business Development program, including the Indigenous Business Directory.

The evaluation also recommended that ISC standardize the PSIB Coordinator role and provide ongoing centralized support to the PSIB Coordinator Network.

Current Status

• As of October 22, 2024, the Office of the Auditor General of Canada has not contacted ISC about a potential audit of the IBD, the PSIB, or the reporting of data for the 5% mandatory minimum Indigenous procurement target.
• The department accepts the ISC Evaluation report's key findings and has begun implementing recommendations as outlined in its management response action plan. The recommendations have been partially implemented and this work continues. These actions are detailed in the management response action plan.
• Crown-Indigenous Relations and Northern Affairs Audit and Assurance Services is undertaking an audit of the Procurement Strategy for Indigenous Business covering the period from April 1st, 2022 to March 31st, 2024. This is expected to be completed by May 2025.

Key Messages

• Respecting Modern Treaty procurement obligations is one way that the Government of Canada supports Indigenous procurement.
• Modern Treaty business lists consist of Indigenous businesses in the Modern Treaty area, as verified by the Modern Treaty signatory.

Background

Modern Treaties often detail procurement obligations that the Crown must respect. Respecting these obligations is one way that the Government of Canada supports Indigenous procurement. For example, these can include a right of first refusal for businesses owned by Modern Treaty beneficiaries, or requirements to limit bidding to businesses owned by a Modern Treaty beneficiary.

Modern Treaty rights holders may develop and maintain lists of Indigenous businesses in the area covered by that Modern Treaty. A business listed on a Modern Treaty list is eligible to receive contracts set aside under PSIB, and is therefore eligible to be counted toward the 5% target.

Current Status

Whenever conducting procurements subject to modern treaty obligations, Canada will ensure that any strategy applied does not infringe upon the constitutionally-protected rights of beneficiaries.

Key Messages

• The PSIB benefits a variety of companies. As per data publicly available on the Open Government portal, in the fiscal year 2022-2023, over 300 different Indigenous business were awarded contracts valued over $10,000 that were set-aside under the Procurement Strategy for Indigenous Business.
• The PSIB provides Indigenous businesses with a competitive edge, enabling them to compete in a more limited pool of bidders. This allows them opportunities to grow and helps Indigenous businesses expand nationally.
• The PSIB can support Indigenous business owners in generating sustainable revenues, stimulating local development and employment opportunities for Indigenous people which can advance economic independence.

Background/Current Status

Through various engagements, panels, and training sessions, ISC has had the privilege to hear success stories from Indigenous businesses that can be attributed to the PSIB. A sample is provided below.

Key Messages

• Federal support for Indigenous businesses does not come from only one program. Instead programming is accessed via numerous programs, initiatives, and supports that are delivered by many departments, agencies and Indigenous partners who deliver supports that the Government of Canada has devolved.
• Indigenous Services Canada delivers various economic development programs.

Background

In addition to the PSIB, ISC delivers the following economic development programs.

The Aboriginal Entrepreneurship Program – Access to Capital stream (AEP-ATC) provides annual, ongoing funding via the network of Indigenous Financial Institutions (IFIs) and Métis Capital Corporations (MCCs) to support Indigenous business development. The program provides support to Indigenous small and medium-sized businesses with a non-repayable equity contribution and businesses services to start, expand or acquire a business.

The Aboriginal Entrepreneurship Program – Access to Business Opportunities (AEP-ABO) stream provides national level funding to promote a culture of entrepreneurship through national Indigenous organizations to improve access to business opportunities and to enhance the capacity of Indigenous businesses.

The Strategic Partnerships Initiative (SPI) is a horizontal program that promotes collaboration, stimulates economic partnerships and supports holistic investment strategies in addressing program gaps. The Initiative involves 22 federal partners, to identify complex Indigenous economic development opportunities.

The Lands and Economic Development Support Program (LEDSP) enables First Nation and Inuit communities to deliver economic development services, such as community economic development planning, capacity development initiatives and proposal development.

The Community Opportunity Readiness Program (CORP) provides project-based funding for First Nation and Inuit communities located in the provinces for a range of activities to support their pursuit of economic opportunities, including development of community-owned businesses.

Current Status

ISC strives for service excellence in support of service transfer in the delivery of all programming.

Key Messages

• Advancing economic reconciliation and Indigenous economic self-determination is critical to advancing Canada's commitments to the United Nations Declaration on the Rights of Indigenous peoples (UNDRIP), and the UNDA Action Plan.
• Indigenous Services Canada is working with First Nations, Métis and Inuit partners to develop an Economic Reconciliation Framework to guide the actions Canada will take to advance economic reconciliation.
• Procurement is an important tool government can use to advance economic reconciliation.

Background

Economic reconciliation is a concept that is used to advocate for more meaningful inclusion of Indigenous Peoples in the economy, the ability for Indigenous groups to determine their own priorities (self-determination), and means of achieving greater economic prosperity.

In line with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), economic reconciliation contributes to Canada's obligation to acknowledge and repair the ongoing effects of damaging and discriminatory colonial economic policies and clear a path for Indigenous peoples to pursue economic self-determination.

Current Status

Canada is working with Indigenous partners to develop an Economic Reconciliation Framework (Framework), which will affirm Canada's commitment to economic reconciliation and set a vision where Indigenous economic self-determination is the means of realizing improved economic outcomes. In this spirit, Canada will need to focus on removing regulatory, legislative and administrative barriers, supporting Indigenous visions, and prioritize inclusion of Indigenous peoples in the Canadian economy.

The Framework is being developed through a co-development process where First Nations, Inuit, and Métis policy leads are developing medium-term visions for economic reconciliation and advancing a set of priority proposals for action. These economic priorities build on leading publications like the National Indigenous Economic Strategy and First Nations Financial Management Board's Roadmap Project.

Key Messages

• Indigenous Services Canada is committed to fostering economic reconciliation leading to opportunities for Indigenous businesses through the mandatory minimum target of 5% of the dollar value of federal contracts awarded to Indigenous businesses. The Department achieved an overall result of 13.5% in 2023/2024 representing $53.5M in contract value.
• The following are the main business lines where contracts for Indigenous businesses were awarded:
  • IT Services – 30%
  • General Management /Ops – 15%
  • Professional Designations – 16%
  • Indigenous Learning – 23%
  • Management Consultants – 16%
• Indigenous Services Canada has set a target of 15% for 2024-2025

Background

• On April 1, 2022, the Mandatory Procedures for Contracts Awarded to Indigenous Businesses took effect. The Procedures set out the Government of Canada's requirements to ensure that a mandatory minimum target of five percent of the total value of contracts is awarded to Indigenous businesses annually. It also refers to the requirements for public disclosure of contracts awarded to Indigenous businesses, as well as the reporting requirement on procurement planning and performance against the 5% target.
• The Chief Finances, Results and Delivery Officer is the Senior Designated Official for the management of procurement within ISC.
• The total value of contracts awarded to Indigenous businesses annually:
  • must include the total value of contracts awarded to Indigenous businesses during the fiscal year, and must include contracts entered into by acquisition cards, which are over $10,000;
  • may include the total value of subcontracting opportunities, which the contractor committed to include participation of Indigenous businesses, at the time of contract award to non-Indigenous businesses, during the fiscal year; and
  • may include the total value of contracts awarded during the fiscal year, entered into by acquisition cards valued at $10,000 or less.

Current Status

• ISC has identified certain areas where barriers exist in contracting with Indigenous businesses, mainly in IT services, Indigenous Learning, Management Consultants and Professional Designations.
• The barriers stem mostly from the reluctance of Indigenous business willing to be added to the Indigenous Business Directory, and to the lack of Indigenous capacity in specific areas.
• Programs should consider requesting exemptions in areas where the capacity simply does not exist.