Government Operations Committee on April 26th, 2018

[Marc LeClair]

Yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

How did the energy industry qualify “indigenous“? We talked about the need for accountability and auditing. How do they do it so that—?

[Marc LeClair]

There's a certain rigour that goes into it. For example, the big pipeline we just put on hold that's coming east—who's the proponent for that?

[Kelly McCauley, Conservative, Edmonton West, AB]

TransCanada.

[Marc LeClair]

In Alberta, they just finished a Métis business database. They paid for the whole thing. The Métis themselves policed how that database was built, so as to make sure they were all Métis companies or Métis-controlled companies. The energy industry is doing what government would normally have done by creating these databases, and so now we have those.

PSAB is supposed to have this definition of indigenous business and they're supposed to do the audits. They say it works, but I can't really tell. I know a bunch of companies that are shell companies for indigenous people, and they aren't really movers and players in it. They might be getting a percentage, I don't know. It's something that has to be policed. It's the same thing they do in the United States. They have minority set-asides there, and that's huge. That's tens of billions of dollars, and they have a policing mechanism there through their sector councils. We have one sector council, which is the Canadian Aboriginal and Minority Supplier Council.

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm almost out of time. I just have one quick question. We had a previous witness from PSPC who said that the exclusion zone has been taken off for the parliamentary district renovations. They said they took it off about six months to a year ago.

Have you seen any change? Do you know? Participation since—

[The Chair, Conservative, Tom Lukiwski]

Just very quickly. I'm sorry, Mr. McCauley.

[Marc LeClair]

I sit on the 100 Wellington thing. They pulled that back. They don't know what to do with it yet. They're looking for some guidance from the national indigenous organizations. To their credit, they pulled it back but they still don't have a plan yet. We're pushing them all the time to get going.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Blaikie, you have seven minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

For indigenous businesses that are bidding directly on government work, what are some of the principal barriers? Are there challenges that come with that? I know I've heard for some —particularly smaller companies—that this can be the case, including in Manitoba. The bonds that you have to put up, for instance, for certain government contracts are a barrier because they don't have the cash on hand for a bond; or they can't file multiple bids at the same time, not knowing which one they might get, because they have to put up everything they have for one bond.

Are there things like that within the general process that are barriers for indigenous business?

[Marc LeClair]

Bonds are a big issue because the size of the indigenous business base is growing but it's not there yet.

The complexity of the procurement instruments is a problem. Finding out about the opportunities on a timely basis so that you can prepare a bid or prepare a joint venture partner is a problem because a lot of the contracting will require indigenous companies to enter into a joint venture with an established player. The existing bidders don't have real knowledge of where you find an indigenous company.

Brian, do you want to add something?

[Brian Card]

I think that again it's the complexity of getting your foot in the door with the federal government. It's all the hoops that you have to go through. This is why I'm suggesting the portal. It's an educational process. It's very time-consuming and it's really complex. Dealing with government is voiceless and faceless. You have to be an expert on the computer in order to do all the thousands of clicks you have to make in order to get the proper information to move forward.

[Marc LeClair]

It's also the rated requirements of some of these procurements, especially on prior work. You get graded on the number of prior work contracts. If you have a Métis contractor that's done a couple of jobs and you're going up against a non-Métis contractor that's done 10 jobs, and if the rating system is structured to value the additional number, you're dead in the water. Then you have to go and find a joint venture partner and use their qualifications so that you can bring your number up to 10. That's a big thing.

[Brian Card]

There's no consistency in the rating systems and the mandatories and the points rated. Sometimes it's all based on the firm. Sometimes it's all based on the individuals. Mostly, which is discouraging for most Canadians, it's based on federal government experience. In other words, many times it will not accept the experience with the private sector, the provincial government. It has to be done basically through the federal government, which is the national capital region.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

What are the best ways to try to work around those challenges? Do you set aside to accomplish that in and of itself because there's a priority put on ensuring that those companies that otherwise might not make it through those hoops are part of the business, or is there a more general way of trying to do that? Those are barriers that can exist for other types of small businesses.

What's the best fix? Is it just set-asides, or do you have some recommendations on the general process?

[Marc LeClair]

I don't think it's just set-asides. Why would we take a contractor? If we set aside something, then there's one company that can do it, or two; we don't get a competitive bid on it. I think set-asides have their place but this is where I'm saying that in some of the larger contracts at least, let's use the minimum indigenous participation and let the private sector figure out how to find the natives, and they will. They have in every experience I've ever dealt with, whether it's VANOC, or the construction industry, or at least the pipelines and hydro, Mosaic mines. It's the same thing. If they're required to find indigenous contractors and subcontractors, they'll find them.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

When we talk about auditing companies and how well they're performing, and whether they're really performing in terms of hiring indigenous people, for that auditing process how do you see that working? Do you see each federal and provincial government setting up their own auditing process? Do you think it would be possible to have one auditing process? Is that something that government itself organizes? Is it an independent agency? Do you have some ideas about what a proper auditing process looks like?

[Marc LeClair]

I'll let Brian go on this one.

In terms of what's going on now, PSAB, which promotes the program, is trying to show the government how well it's doing. They're also doing the auditing and they're finding everything good, so you get a good-news story in every report they put out. I don't think so. I think the two need to be separated.

[Brian Card]

I'm from the private sector, so I find things quite simple. I don't think it's a matter of auditing; I think it's a matter of monitoring. To me, if you have 26 procurement vehicles, you just have a little code on there that says, “Was the aboriginal set-aside there? Was it awarded to an aboriginal company?” It would be very simple just to roll it up by those 26 companies. That would be a quick fix. It would measure and audit.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

That would be something that the company...?

[Brian Card]

That is something the federal government should implement in the procurement world.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Okay.

When we talk about auditing, who's checking up on whether that actually cashes out?

[Brian Card]

PSPC could do that themselves, internally.

[Marc LeClair]

Our point is that whoever is promoting that program shouldn't be the one who's also doing the audit. It should be a separate function.

In this procurement space, the Government of Canada had a good idea. It wasn't Diane Marleau. To go even further back than that, it was Ron Irwin who brought this in in 1996. It was a good idea. We stuck it in some corner, and we reported how well it was going. It's good to the extent that it goes, but it's not fully functional. It's not working.

We have a million and a half indigenous people. This program is supposed to service all of them. How much do we have devoted to PSAB? Six people? Look at our regional development agencies. They're serving a bigger population, but there really is no bench strength there to go to each of the procurements that are coming. Is INAC just going to run over to public works or to the department of defence, and say, “Maybe you guys should make sure there's some indigenous stuff there", even while they're talking about the six people promoting...going to this conference and that conference? Forget it. We don't have the resources behind something that could really make a difference for indigenous people by getting them the work, getting the contracts, and building the business base. Everybody wants to see that. Industry's doing it. Do you know who's not doing it? The Government of Canada.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Welcome to our committee, Mr. Longfield. You have seven minutes.