Government Operations Committee on Jan. 30th, 2018

[The Chair, Conservative, Tom Lukiwski]

I'd like to commence. We're running a bit behind. Welcome to our new committee, the members who are with us after the membership change. I'm not sure if it's going to be a permanent change or not, but if it is, welcome to the committee. I look forward to working with all of you.

With that, I think we'll commence.

We have with us in person Mr. Patrick Cheechoo, representing the Native Women's Association of Canada. Via teleconference we have Mr. Howard McIntyre from Suncor Energy Inc.

We'll ask Mr. McIntyre to introduce the witness who is with him. I believe it is Madam Virginia Flood.

Of course, we are still discussing procurement matters. This study was initiated a couple of months ago. We'll talk with committee members a little later about how we wish to proceed.

Colleagues, at about 12:45, I'll see if we can suspend and go to an in camera discussion on future business. We have a number of calendar items we have to discuss and some future business that I'd like to consult all of you about. If I have your concurrence on that, we'll see if we can get through this section by approximately 12:45.

With that, colleagues, we will commence. We will start with Mr. Cheechoo, since we have him with us. Then we'll go to Mr. McIntyre and Madam Flood.

Mr. Cheechoo, do you have an opening statement?

The floor is yours, sir. You have 10 minutes.

[Patrick Cheechoo, Director of Operations, Native Women's Association of Canada]

This is my 10 minutes?

[The Chair, Conservative, Tom Lukiwski]

It's your 10 minutes.

[Patrick Cheechoo]

I was told they were going to go first, but I'm fine.

I would like to begin by acknowledging that the land are gathered on is the traditional unceded territory of the Algonquin Anishinaabe. I am honoured to stand before the standing committee, along with colleagues committed to the empowerment of indigenous peoples, promoting self-sufficiency and advancing economic opportunities.

Thank you for this opportunity to speak to the committee about indigenous women's business experiences and the procurement strategy for aboriginal business. As you can guess, I'm not an indigenous woman, but our executive director was unable to make it and sends her regrets.

I am Patrick Cheechoo, I'm the director of operations for the Native Women's Association of Canada. The organization is affectionately known as NWAC. NWAC is the long-standing national voice for indigenous women on urgent issues, including missing and murdered indigenous women and girls, truth and reconciliation, and more recently, building a nation-to-nation relationship with Canada.

As a primary organization representing indigenous women, we have a long history of successful projects, programs, and partnerships with government and industry from across Canada. In Canada the number of indigenous women who work for or are developing their own businesses is growing. Our nation's indigenous population is booming, and we want to ensure that our women will share in any prosperity that may result from increased business with government through the procurement process.

NWAC is founded on the collective goal to enhance, promote, and foster the social, economic, cultural, and political well-being of the women we represent within first nation, Métis, Inuit, and Canadian societies. As part of our mandate we support indigenous women's labour market participation and economic development opportunities. NWAC is committed to enhancing and strengthening the economic reality of aboriginal women, their families and communities across Canada.

It is important that the federal government aims to increase the number of aboriginal firms participating within the procurement process, including those owned and operated by indigenous women. As such, we welcome the opportunity to speak about the procurement strategy for aboriginal business.

The Native Women's Association of Canada's research, partnerships, and networking have revealed that indigenous women's businesses experience significant barriers to development and expansion. These barriers are relevant for indigenous women who wish to access procurement contracts with government departments. In order for indigenous women's business suppliers to access the benefits of the procurement strategy for aboriginal business and submit proposals, a larger strategic approach is needed to support their businesses from the ground up, from conception to implementation. For instance, barriers to financing and credit mean that indigenous women cannot leverage existing infrastructure to implement their concepts. Many live in poor socio-economic situations and isolated communities. Without first addressing the social determinants of their health, they cannot even begin to access the intended benefits of the federal procurement strategy.

As for the procurement strategy for aboriginal business, the process itself, indigenous women would benefit from training on how to structure their bids for government contracts to fit smoothly into the federal procurement strategy, not only as it is now but also in the new iteration. In addition, some departments only accept electronic bids, which can limit participation by smaller businesses owned by indigenous women and located in smaller or remote communities without the needed technological infrastructure. It should not be mandatory for an indigenous woman to move her business from her community and culture to do business with the wider world.

If you think there are no business solutions or innovative service delivery options to be found out there, we suggest you enhance the virtual highway to discover all those amazing concepts you've been missing out on.

Concerning the mandatory and voluntary set-asides within the procurement strategy, NWAC recommends that indigenous women-owned set-asides be established in order to help our women sustain their markets. It would also be beneficial for the federal government to establish a multi-year, longer-term commitment to purchase their goods and services. This would provide additional stability and support for indigenous women seeking to develop their businesses.

As part of the procurement strategy, the federal government promotes sub-contracting through aboriginal firms and encourages joint ventures between aboriginal and non-aboriginal businesses. It would be beneficial if the bidding evaluation process could be enhanced to recognize and reward the presence of indigenous women amongst those joint ventures as employees and entrepreneurs. Furthermore, all procurements over $5,000 for which aboriginal populations are primary recipients are restricted exclusively to qualified aboriginal suppliers. These are mandatory set-asides.

There also exist voluntary set-asides at the discretion of the federal departments where aboriginal capacity exists, but how often does this occur? How often do aboriginal businesses succeed in securing federal contracts in open competition with non-aboriginal businesses? It would be helpful to see the statistics. We are concerned that the voluntary set-aside policies may leave the process open to interpretation; therefore, we'd like to be assured the federal departments and agencies are adhering to the mandatory set-aside requirements. We would also like to see the establishment of an evaluation process that monitors and measures the particular success of indigenous women with the federal procurement system. Such an evaluation process would provide ongoing performance measurement data that tracks how indigenous women attempt to secure government contracts versus how often they actually succeed in the process.

It would also be helpful to understand the criteria the government uses to judge an aboriginal business, and in the opinion of federal departments and agencies, what is hindering a successful application among aboriginal business owners in general and indigenous women in particular.

Please note that many indigenous women are not aware of the procurement strategy for aboriginal business. As such it would be beneficial for the government to consider targeted promotion and marketing specifically for indigenous women. It would be beneficial to establish a formal government mechanism to implement and monitor this outreach towards indigenous women, and NWAC would be happy to sit on an associated advisory body that would be supported with online and print materials on how to submit a solid application and on understanding the registration process, where to submit it, and who to contact. The federal government encourages aboriginal firms to get to know the people within the departments who may wish to buy their goods and services, yet for many indigenous women the federal government appears as a large, faceless, inaccessible bureaucracy that is very difficult to reach.

NWAC can assist with this by spreading awareness through our social media platforms. We also publish quarterly reports to our stakeholders and clients regarding the labour market information and entrepreneurship for indigenous women. We could highlight the procurement strategy for aboriginal business in our next bulletin and welcome comments about the strategy from indigenous women concerning their awareness and personal experience while trying to bid for federal contracts. We could then share their experiences and comments with you, if this is something that interests the standing committee.

Please recognize that we appreciate your ongoing dialogue with NWAC and our counterparts to find productive, beneficial ways to increase the presence of indigenous business in the federal procurement process. The conversation we are having today will not just have a significant impact on the economic viability of businesses owned by indigenous women, it will have a positive impact on their whole community. Through dialogue, indigenous women can work with you as business leaders in indigenous communities to identify and demolish barriers that exist in the procurement process. Development of that process occurring in consultation and co-operation with indigenous women cannot help but ensure it becomes more equitable and able to help our sisters across Canada play a strong leadership role as partners in the development of their businesses and their communities.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Colleagues, as I mentioned earlier, we have, via video conference from Calgary, representatives from Suncor Energy, Ms. Virginia Flood, and Mr. Howard McIntyre. I trust that both of you can hear us all right.

[Howard McIntyre, Vice-President, Supply Chain and Field Logistics, Suncor Energy Inc.]

Yes.

[Virginia Flood, Vice-President, Government Relations, Suncor Energy Inc.]

Yes.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much. You have 10 minutes, I believe, as an opening statement.

Madam Flood, or Mr. McIntyre, the floor is yours.

[Howard McIntyre]

I'll introduce Ginny Flood, who will give the opening remarks.

[Virginia Flood]

Thank you for inviting us here to speak to your standing committee today on your study on how the federal government can improve access to federal procurement opportunities.

My name is Ginny Flood, and I'm the vice-president for government relations. Howard McIntyre is our vice-president for supply chain and field logistics.

My remarks will provide an overview of how Suncor is working with aboriginal peoples, whereas Howard will focus on the procurement approaches and the relationships.

We would like to begin by acknowledging that the land on which we gather here in Calgary is home to many aboriginal peoples and is the traditional territory of Treaty 7, which includes the Stoney Nakoda, Tsuu T'ina, and Blackfoot, including the Siksika, the Kainai, and the Piikani.

Suncor is Canada's largest integrated energy company, contributing significantly to Canada's economy and jobs. We are best known for our oil sands production, but we also operate three refineries in Canada, in Edmonton, Sarnia, and Montreal. We have 1,800 Petro-Canada retail and wholesale locations. We have four wind farm power projects, and we have Canada's largest ethanol production facility. Many of our operations are located right across Canada. We operate on the traditional territories of 140 aboriginal communities across Canada, so we hope we can share some of our experiences.

Suncor strives to be a leader with respect to environmental, social, and governance matters, and it is with this concept in mind that we recently created the position of chief sustainability officer, who has a strong accountability for our relationships with aboriginal people. That's where we'll focus today's conversation.

While our company has worked with aboriginal communities for more than 40 years, we recognize that sometimes our approach has been colonial rather than collaborative—we wanted to “do” or “fix” things rather than seeking to understand the interests and the needs of the communities.

This has been a journey and a learning experience. As you can see from the slide that we provided with the text, this has been a work in progress from 1999.

In 2016, we launched our first social goal within our company, declaring our intent to do things differently. We're choosing a new path that focuses on strengthening relationships so that aboriginal peoples can play a larger role in how energy is developed from project conception through to reclamation. It reflects our commitment to change the way we think and act as an organization.

Howard will speak specifically about procurement, but I first want to highlight a number of ways that Suncor is working with aboriginal people.

An important learning is that if you listen and if you are maybe creative, you can probably find other mutually beneficial arrangements that go beyond just procurement. We'd encourage you to put procurement within that broader context. I'll just give you a few examples of where our journey has taken us.

We have 26 Petro-Canada stations that are first nations owned. Fort McKay First Nation and Mikisew Cree First Nation purchased 49% equity position in a billion-dollar oil sands infrastructure project. The Aamjiwnaang First Nation, whose reserve is adjacent to our refinery in Sarnia, holds a 25% interest in the Adelaide wind power project near Strathroy, Ontario. As well, Suncor purchased a 41% stake in Petronor, which is operated and owned by the James Bay Cree.

I'm going to turn the presentation over to Howard so he can give you a few examples of our procurement.

Howard.

[Howard McIntyre]

Good morning, everyone. Thanks for taking the time, and thanks for the opportunity to speak to you. I commend you for learning more about this area. It's a very important part of our business.

I understand that you had a number of sessions this year, and from them I think you should be in a position to agree that the capability and diversity of aboriginal businesses is quite outstanding and that they in a position to grow going forward.

In 2017, I'm proud to say that Suncor spent $521 million on goods and services from 197 aboriginal businesses and suppliers. This brings us over the $4-billion mark since we started in 1999. We're aiming to build on these successful relationships and see a lot of growth opportunity going forward. We want to apply what we've learned more consistently in our economic envelope and broaden it across business lines so that more aboriginal entrepreneurs and communities have the opportunity to participate in and benefit from our operations.

I thought I'd share with you six lessons that we've learned and applied that enable us to be successful in this area.

First, we ingrain aboriginal commerce in our culture. The most important aspect of continuously being able to seek to develop these opportunities is to embed this attitude within our staff and our vendor community. We do this by ensuring that our staff have aboriginal awareness training as a baseline. In my group of approximately 792 people, 75% of the organization has completed basic web training on this. We expect to get close to 100% by the end of the first quarter. Many more employees have participated in advanced training and learning opportunities and associated themselves with aboriginal groups. We're trying to incorporate this understanding so it's part of our mindset and comes instinctually in what we do. In many ways, it's very similar to the safety journey that we've ingrained in our staff at our contractor program.

We've developed processes, policies, and metrics. We hold ourselves accountable. We measure ourselves. This is supported by governance structure where both Ginny and I sit on Suncor's Aboriginal Relations Vice-President Committee. We believe that leading from the top is important. We have complementary governance structures in other areas of our organization. Mel Benson, from Beaver Lake Cree Nation, has been on our Suncor board of directors since 2000.

The second thing we do is to develop joint business development plans. We have a long history of working with aboriginal suppliers, particularly Wood Buffalo. We're working with some communities in Wood Buffalo to generate these joint business development plans, which aren't short-term focused. They can look well into the future. We co-create these plans, and they provide structure for how we work together and collectively focus on the same objectives. These annual work plans have helped aboriginal communities to direct their efforts where there is a possibility to increase their business and help Suncor to track our suppliers' capabilities and to identify new opportunities.

Together, we're building increased capacity. I can't express enough how important it is to recognize that this requires a long-term investment, a lot of effort, and investment in relationships. We grow together with patience and hard work in looking for opportunity, giving opportunity and accepting it; in listening and discussing; in getting creative and working together to navigate through growing pains; and in keeping communication open. It's much more than simply posting opportunities on Merx and hoping for good things to come.

The third thing that we do is to diversify aboriginal procurement. Internally, we're working with each of our supply chain categories and looking for opportunities where there's a natural fit for aboriginal entrepreneurs and communities to participate. We're finding ways to broaden and diversify the scope of our overall spending available to these aboriginal groups. We're working directly with them to select the businesses to help build their capabilities.

We're also investing resources to develop our business line. Just recently, as an example, we added new resources to take a look at what we could do with our downstream operations. Specifically, we're investing in people to look at how we can marry up in our refining operations contracted work and aboriginal opportunities there. I think Suncor will be spending money in this area in a very big way going forward. We always look at how we can support each other in launching a business that can grow and mature over time. It's an ongoing investment by both parties.

The next new initiative is a sustainable supply chain. We work with our contractors and our suppliers, who provide a lot of our commercial work, to promote shared values, such as increasing aboriginal participation in both the aboriginal and non-aboriginal companies. We take into account their aboriginal strategies when evaluating each contract. When they make a bid about their commitment to the community, and particularly to the aboriginal groups, that measure is weighted.

I've recently begun a new review of our sustainable supply chain. We believe there's a lot of opportunity here. It talks about community, it talks about the economy, and it talks about investment in the environment.

Frankly, some businesses might be majority aboriginal-owned in name, but have little role for aboriginal people, yet some non-aboriginal companies can be very good at employing aboriginal groups and getting them started and in developing strong relationships with these communities. It is complex and something that we will be taking a closer look at. We work with aboriginal organizations, the NAABA and the Canadian Council for Aboriginal Business, CCAB. We're very well connected, we sponsor events, we attend and we help them.

CCAB runs a certification standard for progressive aboriginal relations, which confirms corporate performance in this area. I'm happy to announce that last fall Suncor received gold-level certification, the highest level recognition, which we're very proud of. Our chief operating officer, Mark Little, has just agreed to be an inaugural co-chair procurement champion with CCAB.

Last but not least, we work with industry associations, such as the Canadian Association of Petroleum Producers, the Mining Association of Canada, and the Canadian Chamber of Commerce. We try to influence these people to do the right thing.

In conclusion, I can tell you that aboriginal businesses are a major opportunity across the country, for us, for you, and for other companies. They provide a broad diversity of products and services, excellent quality, with very good pricing, efficiency, and safety records. There is no way that Suncor would be as successful as we are today without these crucial business relationships. We know they'll be important going forward. Suncor continues on its journey to fully utilize aboriginal businesses and is pleased that this committee is looking into the procurement strategy as it relates to this area. I'm excited not only for the past accomplishments that we've had, but also the promise of tomorrow. Our $520 million last year is going to grow significantly in the years ahead.

We now look forward to answer any questions you might have of us.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much to all of our presenters.

Before we begin, I must apologize to Madam Flood. In the information I had, the last name was Ginny, but that would have meant I would be introducing you as Ginny Ginny, and I'm sure that's simply wrong.

[Voices]

Oh, oh!

[The Chair, Conservative, Tom Lukiwski]

My apologies for that.

We will now start with our seven-minute rounds of interventions. We'll start with Mr. Ayoub.

To our conference participants, if you have translation devices you may want to put them on now. I believe Mr. Ayoub may be speaking in French.

Mr. Ayoub.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

I want to thank all of you and welcome you to our committee.

Maybe, Mr. Cheechoo, I'm going to wait for you to be ready to hear me in French or English.

This is an important topic, and I am pleased to be able to hear the viewpoint of the Native Women's Association of Canada, and to learn about how to do business with enterprises that belong to indigenous women. I am also happy to hear the opinion of the private sector from the Suncor Energy representatives. As they indicated, it is a respected and renowned enterprise that is widely well-regarded, which is all to its credit.

I'd like to speak to the Suncor representatives and gain some understanding of the business integration.

You included a graph in appendix A entitled “Suncor's Aboriginal Annual Revenues Earned”. What can that income be compared to? We see that the company's overall income has grown. What is this due to? In percentage terms, what has that growth been in the past ten years? What guarantees are there that this growth in indigenous business income that is derived from Suncor will continue?

[Howard McIntyre]

I'd be happy to answer that.

If you look at the chart we supplied, you'll notice that we go from $32 million a year to $521 million, and we have a target that we think we can exceed for next year.

I should point out that the drop from 2015 to 2016 was driven by two things: the fires in the Wood Buffalo region and the suspension of our operations, and the dramatically lower price of oil. There was a lot of cost cutting and pulling back on things that we had done. We do feel quite confident that we have a ramp-up going forward. What do we think is possible? Can we get to a billion dollars at some point in the future? There's no reason why not. We see it ever-increasing going forward.

The percentage of our spending available to aboriginal groups in 2014 was about 4.7%. Last year we were up to 6.4%. That's a 50% improvement over a relatively short period of time. It's good to see the rise in that spending outpacing our overall spending growth. It's a very positive trend that aboriginal communities and companies are outpacing our overall spend.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

This approach and the need to deal with aboriginal businesses and make transactions is reinforced in the business culture. The fact that you've gone from 4.7% to 6.4% is excellent, but is that a one-off, or does it reflect a very clear objective to grow that percentage?

[Howard McIntyre]

I mentioned in my overview that there are two things we do.

We always make ourselves conscious of the capabilities of aboriginal companies and communities. We have dialogues, and when we do a bidding process we have a pretty good understanding of who is interested in the business and who is capable.

The second thing we do is that we make this a topic with major companies in Canada that do construction work for us. We ask them about the capability in areas where we operate, and we say, “You know what? There's a really good capacity and capability in the aboriginal area to do some of the work.” Many of them subcontract in the areas. The majority of the work that's done for us is in the construction area.

There's a third thing we do. We try to have dialogues with these organizations and with individual first nation groups to talk to them about where we see our business needs going forward and to help them with their development goals: to develop their own capacity, not necessarily for the needs of today but for tomorrow's. I'm personally very well vested and interested in growing the long-term capacity of the aboriginal community.

For example, we think there's a fantastic opportunity for them to play a role in the environmental monitoring of our facilities as we grow going forward. They have awareness. They have understanding. They have appreciation. They have capacity. That could be an example of a new business area that we could help co-develop with them to hit our target of $600 million plus over the next couple of years.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you for your answer.

From your perspective, do you think it costs more to do business with aboriginal enterprises than with non-aboriginal businesses?

[Howard McIntyre]

No, it does not. We're very keyed in to our shareholders and make sure that we hire the right companies to do the right work, and I can give many examples of where aboriginal businesses are extremely competitive in terms of price. They're very competitive in their safety records and in their effectiveness and quality of the work that needs to be done. It's equal competition, and they're winning many contracts.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Doing business with companies that are fully owned by aboriginal people may not always generate quite the same income as does dealing with businesses that are partially owned by aboriginal people, or not owned by them at all, but there are benefits for aboriginal peoples.

You say that this is a complex matter that deserves to be studied. What do you mean by “complex matter”? What sort of study do you have in mind?

[Howard McIntyre]

In terms of complexity, we have a very changing environment. In the aboriginal portfolio of economic opportunity, there are new entrepreneurs who identify themselves every quarter, I would say, and there are new partnerships between aboriginal communities and businesses and with large international and national contracting companies.

The first thing we have to keep abreast of is the amount of capacity, what the capability is, and who is partnering with whom. We manage this complexity by being very planful in the work that we need to have done many years out—three to ten years. Then we start lining up what our contracting and construction partners will look like three years in advance.

We're very planful. We're very aware. We're very plugged in. Opportunities are given to us and we bring opportunities to the business environment. That's how we try to manage complexity on the spot.

[Virginia Flood]

I would like to—

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, we're out of time in this particular intervention, but I'm sure you'll have opportunities as we continue to expand upon your answers.

We'll go now to Mr. McCauley, please, for seven minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. McIntyre and Ms. Flood, thanks for being with us.

Ms. Flood, did you want to finish what you were going to start?