Assembly of First Nations Regional Chief Joanna Bernard attends the AFN's annual general assembly in Montreal, on July 9.Christinne Muschi/The Canadian Press
The Assembly of First Nations says it believes most of the contract spending Ottawa says it is awarding to Indigenous businesses only has loose ties to Indigenous people and is calling for new rules that ensure the program leads to community benefits.
The federal government has reported that 6.27 per cent of all federal contract spending in 2022-23 was awarded to Indigenous businesses, meaning it has met a self-imposed target to ensure that Indigenous businesses receive at least 5 per cent of all federal government work.
However, Assembly of First Nations (AFN) Regional Chief Joanna Bernard told MPs Tuesday that she estimates the true percentage is closer to 1 per cent.
“They’re not looking into the details,” she said. “The majority of them, I hate to say this, they are shell companies.”
The AFN advocates on behalf of more than 600 First Nation communities across Canada.
The comments were made on the first day of a new study by the House of Commons committee on government operations into the topic of Indigenous procurement. The committee has previously studied a range of issues related to how the government spends billions of dollars each year on contracts for goods and services, including months of hearings into the federal ArriveCan app for cross-border travellers.
The federal government’s 5-per-cent target builds on the goals of a long-standing program called the Procurement Strategy for Indigenous Business (PSIB) which encourages federal departments to hire Indigenous companies.
The program has faced scrutiny over the fact that it allows non-Indigenous companies to qualify, provided they partner in a joint venture with an Indigenous company.
The Globe and Mail reported that two of the main companies that worked on ArriveCan, Dalian Enterprises and Coradix Technology Consulting Ltd., were hired through the PSIB as a joint venture. The two companies’ use of the PSIB is currently being audited and they have been suspended from federal contracting. Coradix is challenging that decision in Federal Court.
Speaking generally, Chief Bernard said joint ventures could allow situations in which an Indigenous person is brought in as a partner in a way that fails to create genuine benefits to an Indigenous business or an Indigenous community.
Opinion: McKinsey, ArriveCan are just the tip of a rotten iceberg of government outsourcing
Chief Bernard said the program’s rules currently do not require Indigenous companies to ensure that benefits also go back to communities, suggesting funding programs for student scholarships as an example of something that could be required of companies that win contracts under the set-aside program for Indigenous business.
“We need to look at ways that we can benefit the communities,” she said.
The committee also heard Tuesday from Philip Ducharme, vice-president, entrepreneurship and procurement, with the Canadian Council for Indigenous Business (CCIB), which operates its own registry of Indigenous businesses that is separate from the federal government’s Indigenous Business Directory.
Mr. Ducharme told MPs that the many positive success stories tied to the procurement strategy for Indigenous businesses should not be overshadowed by cases of abuse.
“In any policy, there is a potential for individuals to take advantage. Recently, attention has focused too much on those individuals and the negative outcomes they have created,” he said. “We cannot allow a few bad actors to cause us to move backwards on crucial support mechanisms designed to uplift indigenous communities.”
Opinion: Behind the ArriveCan saga is a widespread scourge of the startup world
Conservative MP Garnett Genuis, who requested the study, said the government is doing a poor job of managing procurement issues.
“We are here celebrating Indigenous successes and also holding the federal government accountable for failures of engagement, of consultation, of responsiveness, of verification,” he said.
Liberal MP Charles Sousa, the parliamentary secretary to Procurement Minister Jean-Yves Duclos, said the government is currently consulting Indigenous leaders about ways to improve the program.
“The government and the ministry is undergoing a review of this very issue, and the very issue of identifying who’s Indigenous and who is not,” he said.