Government Operations Committee on Nov. 7th, 2017

[Colin Salter]

It's 12. Thank you, Bertha.

From my experience, we've rarely been able to tap into PSAB. I think there's a bit of a disconnect going on. PSAB as a design, as a program, is a very good idea, but because of the way in which it's operationalized, it doesn't result in enough of the significant business opportunities available in the Tlicho area to actually fall within the ambit of PSAB. In fact, very few opportunities ever get to touch PSAB. There are certain rules inside the PSAB policy itself around when “mandatory” applies. I would encourage this committee to really look at those rules. The policy is mandatory, but then there are numerous interpretations and opportunities for it not to apply. Is the indigenous party the primarily affected group? Will they feel the direct benefit?

In the Tlicho region, the biggest opportunities are reclamation opportunities. The Tlicho Government has created the Tlicho Investment Corporation, a business of over $100 million. It's been servicing the diamond mining industry primarily. Reclamation is a huge part of what we do. It would be wonderful if those reclamation opportunities could fall within the ambit of PSAB. Unfortunately, the issue we run into with regard to the application of PSAB in those kinds of opportunities is that with reclamation, it's hard to prove that the primarily affected people are the indigenous people. A reclamation opportunity, of course, is for the benefit of all Canadians as well. Some of these messes are quite unbelievable; Giant Mine is coming up.

I think if PSAB is going to be an effective tool to live up to the treaty commitments, then really it needs to find a way where we're not relying on a departmental interpretation to exclude its application. It's worth noting that in the Tlicho treaty, there's a treaty right that for all federal procurement, you will in fact follow your policies. Those are the policies that would explain to us.... The on-the-ground implementation of this is that the policies are followed, but then the interpretations take the contracts out of the preferred approach, out of PSAB.

Ultimately we had a grand bargain about how we would attain self-sufficiency and bake that into the treaty, but in the application of the policy itself, which, of course, is of far lower importance than is the constitutional promise of chapter 26, it's not playing out as we would like.

We have a couple of ideas on how to fix it, and we would be happy to share those with the committee.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

[Bertha Rabesca Zoe]

Good afternoon.

Colin gave a good outline of the Tlicho. The Tlicho are located north of Great Slave Lake just 100 kilometres north of Yellowknife. We have a huge track of land. We own 39,000 square kilometres, which is about half the size of Nova Scotia. Our traditional territory is called Mowhi Gogha De Niitlee—and I was hoping to circulate a map for the committee members. They are going to do that once they translate that into French. The traditional territory of the Tlicho is huge. It takes into account the borders of the partnering first nations that have land claims.

When you look at the map, you will see that there is what I call patchwork where the Inuvialuit, Gwich’in, and Sahtu have land claims, and they have surface and subsurface rights in certain blocks of land, but the Tlicho is a single block of land that they own outright.

We're very interested in the PSAB, because, as Colin said, we have 100 million dollars' worth of a company that has done a lot of work. What has PSAB done for the Tlicho in the last 12 years of the land claims? Nothing. We have not been able to use PSAB for any of our procurement work, especially in the remediation work. There are lots of abandoned mine sites in our traditional territory. Giant Mine is the major one right now. It needs over $300 million to $400 million worth of mine cleanup.

We can honestly say that PSAB has not been applied in our claim area, in our settlement area, in our Mowhi area through our agreement. I know this because I've been heavily involved in the implementation of the land claims prior to effective date, which is over 12 years, and I've worked with our companies to try to secure contracts using PSAB, but we have not been able to.

At one point I was told that PSAB doesn't apply to land claim areas. I said, “No, I don't think so. You need to read our agreement and what PSAB says.”

I think the committee needs to understand that even though it exists out there, some of us haven't been able to use PSAB because its application has been very discretionary in our region, as far as we're concerned.

I don't know if my time is up, but as Colin said, we do have some suggestions for fixing that. One is to not have discretionary application. As well, there are too many rules as it is right now. The interpretation of PSAB is also something this committee needs to consider.

Basically, I think overall it's a sound policy, but it hasn't been applied. As I said, it was very discretionary, in our region anyway.

Mahsi.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Now we'll have our final intervention from Mr. Skudra, for 10 minutes, please.

[Max Skudra, Director, Research and Government Relations, Canadian Council for Aboriginal Business]

Thank you for having us. My name is Max Skudra. I'm from the Canadian Council for Aboriginal Business. I'm the director of government relations and research. I'd like to recognize that we're on the traditional territories of the Algonquin people. It's great to be here. It's colder than where I'm from in Toronto, but I guess it's Canada, so why complain. Sorry, I should say, don't hold it against me that I'm from Toronto, please. I'm shooting myself in the foot with that one.

CCAB has been around for over 30 years. We're an aboriginal business council representing over 500 members, 70% of whom are indigenous companies. We have a number of programs and policies, which I don't have time in the 10 minutes to talk about, so I'm going to get right into what we think about procurements and some of the work we've done.

We've been doing research on this issue for over five years now. As was mentioned in the previous presentation, we put out our “Promise and Prosperity” report. I did this, so I'm very proud of it actually, if we're being honest. We have it in French, as well as English, if anyone on the committee would like it. We interviewed over 1,100 aboriginal businesses. We've done this twice in five-year segments, so we have very good longitudinal data on aboriginal businesses and what they're doing. The inside joke is that I harass more aboriginal companies and business people than anyone else in the country with phone calls and interviews.

To build on a point she made earlier, the real high level is that aboriginal business is booming in Canada. In the last five years, we've seen a 15% increase in the number of profitable companies coast to coast to coast. Those companies have also increased in their actual profitability, so both more profitable firms and more-profitable firms. We think that this is a dynamic and a momentum that is just building. You're seeing increased innovation, increased optimism, and increased trade in almost every sector and in every province and territory.

This kind of renaissance that you're seeing right now is creating an indigenous economy in Canada worth over $30 billion, with $12 billion in the businesses alone. That's both privately owned firms, as well as community-owned corporations. These companies are doing everything from graphic design to major energy plays in Alberta. Some research we've done with TD Bank estimates that there are roughly 43,000 indigenous companies in Canada and I think that we are going to revise that upward, based on the most recent census data.

These are all really positive overall trends and I think you've seen some really progressive work on the government-side around PSAB trying to support that growth. I should just say that PSAB is something that generally we support. We think it's a great idea. There has been some great work done to support indigenous businesses. You'll see single years where there's $60 million or $80 million or $100 million being done between the Government of Canada and indigenous businesses. Stand alone, that's great. I think it's when you look at it in context that it becomes a little less stellar.

If you look at some of our partners in the oil sands, for example, Imperial Oil is doing $220 million-plus with indigenous suppliers, Syncrude is doing $300 million-plus a year, and Suncor is doing over $400 million a year with aboriginal companies. Among them, they're doing almost $1 billion of work a year and that's three companies in one region of Canada. Contrast that to what's being done nationally by PSAB, keeping in mind that the federal government is the largest single purchaser of goods and services in the country, and I think there's obviously room for improvement.

I think that this really plays into renewing the fiscal relationship discussion, as procuring goods and services from aboriginal companies gets directly to small business owners and SME business owners from coast to coast to coast.

I would agree with the comments made earlier that, among the biggest hurdles are some of the definitional issues, where companies won't have access to PSAB. I recognize that obviously, Canada's federal procurement has to stay within international trade agreements, but I would say that the application of the set-asides is probably a little more conservative than it could be and I think it could be used a bit more widely. That alone, I think, would see a significant increase.

The other points that I think CCAB has seen—and we work with all sorts of firms, aboriginal and non—is that while PSAB directly targets aboriginal companies, what I think is really critical is that we start to have larger contracts, for example, the shipbuilding with Seaspan, that have explicit language that ensures that throughout the supply chain, there's a focus on engaging aboriginal companies.

I can tell you what Suncor has done with Sivio to its supply chain. That's the best practice in corporate Canada today. It's to ensure that tier-one suppliers, the first purchasers, are looking not only at who they're buying from but who those people are purchasing from, and making sure that there's a real and sincere effort, and a trackable and measurable effort, that's accountable, that ensures throughout the supply chain there are aboriginal businesses present.

As we've heard earlier, and I agree 100%, the majority of aboriginal companies are relatively quite small. To think that the federal government, on a major contract, is going to be able to directly hire, for a $30-billion shipping contract, an indigenous business is unrealistic. We've been in a number of conversations with senior leadership in the defence sector, and many of them will say they'd be happy to but these contracts are so competitive that unless there's explicit language saying they need to or they'll be incentivized to, they won't because doing so would put them at a competitive disadvantage on a very lucrative contract.

The one thing CCAB would like to recommend is a focus on supply chain and ensuring that large purchases and large contracts that go to non-indigenous businesses have language that ensures that aboriginal businesses are included throughout the supply chain. That's the first thing.

The second thing is absolutely opening up the procurement to small businesses directly, specifically at around the $100,000 mark. That's where the majority of small aboriginal companies are looking for contracts. At that data point, roughly—and, plug, we're doing more research so we'll have more information for you on this shortly—that would really open things up.

The third is facilitating joint ventures and ensuring that aboriginal companies are incentivized to work with corporate Canada and that those structures see some support from government.

Now that I've eaten up all the time....

[The Chair, Conservative, Tom Lukiwski]

You have two minutes.

[Josh Riley, Manager, Innovation and Entrepreneurship, Canadian Council for Aboriginal Business]

Two minutes, thank you very much, Chair.

My name is Josh Riley. As you might have picked up from my accent, I'm from Australia. I'm an Australian aboriginal. It's definitely a lot warmer there than it is in Ottawa. It's much colder here, as Max said. As a Wiradjuri person, I'd just like to acknowledge that we're on Algonquin territory, and also acknowledge all the indigenous people here today, and thank you for inviting us to share our perspectives as well.

Following on from what Max said, we've also been doing some work with INAC and our members to increase our procurement in the private sector. I think there are learnings that we've taken from our research and our approach that might be of benefit to add to this conversation here as well.

At the start of the year, as Max said, where it's all coming from, there are some great things happening in aboriginal procurement in the private sector as there are also in the public sector, but there's opportunity to do a lot more. We did some research at the start of the year to look at what are some of the challenges and needs between aboriginal businesses and our corporate members and non-members as well to make more aboriginal procurement happen. Twenty-five per cent of the respondents said they would like to see stronger procurement commitments from aboriginal corporations, and 22%, interestingly, said they're looking for direct connections to procurement officers in industry and government.

We've recently, as of last week, received some funding from INAC to be able to develop a strategy that is looking at getting corporates to collectively make more and stronger procurement outcomes for aboriginal businesses, creating a marketplace where corporations can find aboriginal businesses to integrate into their supply chains. But it's then also for those $100,000 and less procurement opportunities that aren't often publicly available in portals, making those available and visible to aboriginal businesses as well, and sharing best practices also.

We developed this approach from looking at some successful models from around the world, particularly ones I've had the privilege of being involved with in Australia, such as Supply Nation. Off the back of the success of the Supply Nation model in Australia, I just wanted to share a little bit about the Australian government's procurement policy, which has resulted in $594 million in aboriginal procurement over the last two years.

I think that's my time there, so I'll be happy to answer any more questions, and thank you very much.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much. I appreciate the fact that we're under some time constraints here, but we'll go directly to questions with a seven-minute round starting with Monsieur Drouin.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Great. Thank you, and thanks to all the witnesses for being here. I really appreciate it.

I'll go from left to right, but I want to hear your comments on the successes of PSAB, some of the failures that you've seen, and how we could improve PSAB. I'm curious to find out about the Australian model, so if you want to finish your statement on the Australian model, that could be useful to this committee.

[Josh Riley]

Absolutely. Thank you very much for throwing me a bit more time on that one there as well.

The Australian government procurement, indigenous procurement policy, started July 2015. It has three main parts.

A targeted number of contracts need to be awarded to indigenous businesses. By the Australian government financial year from 2019-20, the target is to hit 3% of all domestic Commonwealth procurement going to aboriginal businesses.

There's also a mandatory set-aside where departments must first look to indigenous businesses for all remote area contracts and all other domestic contracts between the value of $80,000 and $200,000.

There's a minimum indigenous participation requirement for contracts that are valued above $7.5 million, which means that there's either a contract-based requirement where the contract needs to achieve at least 4% of indigenous employment or supplier use, or it's an organizational-based requirement, where the organization delivering the contract has to achieve 3% indigenous employment or supplier use.

That's an overview of that strategy.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thanks.

Mr. LeClair, I'm curious to find out, you mentioned there was a 50-kilometre radius for....

[Marc LeClair]

For the project management for precinct number two, yes, the employees have to come from this area. The contract is wired—

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Does the contractor have to come from this area?

[Marc LeClair]

The contractor has to have some of his lead resources, project management resources, within the national capital region, so it basically takes any company that's not situated in the capital out of the race.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

From your experience—you've done other federal procurements—let's say in Manitoba, for instance, with federal procurement for a construction project, would the same 50-kilometre radius apply in Manitoba?

[Marc LeClair]

No. Those clauses, I've never seen them. I bid with a lot of bid groups, and they've never seen them either.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay. That's obviously one of the barriers that—

[Marc LeClair]

The biggest recommendation I have is for the government to start applying the minimum indigenous content requirement, or supply chain, as he refers to it, to these larger contracts. We've done it in the past, and we've had push-back on it sometimes for the non-insured health claims: “We can't do that, because there's no native business that can do it.” Let's have an RFI so we have a request for information, and everybody comes, and all these claims companies from the U.S. and Canada say they'll do it. What's the number, 15%, 20%? It's the same thing in all the construction stuff. It can be done. That's what is being done in oil and gas. It's being done with the big crowns.

In fact, these guys have a program called the progressive aboriginal relations program. It's a self-directed program. These companies go there, and they get measured: how many natives you have working; how many contracts you have with them; what is the structure of the employees as to where they fit in the organization; and what's their community involvement? If you put PSAB and the Government of Canada through that program, they'd be hard-pressed to even get bronze status, and you can go all the way up to platinum.

What this committee is doing is the same thing. How are you measuring it? We said the same thing. We encouraged Indigenous and Northern Affairs 10 years ago to take the same sort of thing with PSAB and apply it to the federally regulated companies, the Fortune 500, in Canada. All of them are required, under the Employment Equity Act, to ensure that they're paying attention to natives. Some of them do it well and some don't, but it's the same thing that these guys are advocating.

Another group I'd urge you to meet with is the Canadian Aboriginal and Minority Supplier Council. All it does is advocate for procurement for minorities and for indigenous people. It has lots of experience coming out of the United States, and we help support them.

We need to get corporate Canada, as these guys are saying, to pay attention to their contracting practices, just like the Government of Canada, but you guys can do something about the Government of Canada now, and all I'm recommending is this. Why don't you apply that minimum indigenous content? Why can't we have natives working on the Hill across the street? And everyone goes, “Yeah, yeah, yeah.”

I went to the ministerial advisory board, the National Aboriginal Economic Development Board. I go to them, and they say, “Yes, we should do that“, then everybody leaves the room, and then you get contracts, RFPs come out, like on precinct two, and it's like the word “indigenous” doesn't work. “Just give them that building right in the middle, but don't talk to them.”

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I heard you guys speak about some of the recommendations for PSAB. I heard one, but are there more that you wanted to share with this committee?

[Colin Salter]

I think one of the things that PSAB is missing and that is caught in the Australian experience is to set some measurable goal about what impact it's going to have. It's a good program, but each question comes in independently, and ultimately you end up with no success or little success.

I think if you said that you were going to have a mandatory requirement that you would reach 3% of federal procurement, you would really be able to measure PSAB and the people who are responsible. It's a difficult job to try to allocate when contracts fit and when they don't and what kinds of things they could do. You'd really have a way to get them there, because they'd be shooting for the goal.

You could set, as the government of this country, what that goal is. I think that creativity would really drive—

[The Chair, Conservative, Tom Lukiwski]

You have 30 seconds.

[Colin Salter]

I've had the experience of working on some of the largest indigenous-owned hydroelectric and transmission projects and we do the same thing there in those private arrangements.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Chair, I know I'm going to run out of time, but if we can provide some questioning around military procurement and the ITBs, I'd like to hear from the witnesses.

[The Chair, Conservative, Tom Lukiwski]

Perhaps we can get to that with our future questioners or interventions, because we are out of time.

What I will tell all witnesses, however—and I can say this now because we're only a few minutes into this round of questioning—is that I know there will be many other questions from the committee members. I would assume that all of you would encourage questions to come forward, and I would also suggest that after the interventions are over and this committee starts its deliberations, for any additional information and recommendations that you have, please, submit them to the clerk of this committee so that can help form part of our final report.

Mr. McCauley.

[Kelly McCauley, Conservative, Edmonton West, AB]

That was wonderful information. Thanks very much. I wish we could have you here for another couple of hours.

Mr. LeClair, thank you very much for your comments about the oil sands and the oil companies. In Alberta, we're very proud that they are the largest employer of indigenous people across Canada, so it's wonderful to hear that affirmation of all the great work they're doing.

I have a question for you. You talked about the procurement in the area. There's that 50-kilometre exclusion, which I find quite odd, but what is the issue? Is it a matter of how we don't have the supplier stream written into the contracts? Do we have the capacity within indigenous businesses to bid on this?