Government Operations Committee on June 9th, 2021

[Philip Ducharme]

If I may answer that one, I think there are changes being made. I know that the federal government—and I've mentioned it a few times—is not the best at relaying the information and reporting it, but there was a report released just a while ago from the PSAB program. From 2015 to 2018, there was an incredible increase in procurement opportunities. In 2018, PSAB actually started reporting the spend that was not part of the PSAB program, that were not set-asides. At that time, it was 1.96% of the federal procurement. When we started working with the federal government and going to the government, we had that 5%. Again, that was a floor, and that was set based just on our indigenous population. We wanted it to be over five years because we don't want the government to be set up for failure. The government hasn't always been our friend. Again, realistically, we want to ensure that this is going to be something that's sustainable, something that's going to happen.

It is happening. For instance, in the past, PSAB was in the ISC portfolio, but it looks as though more ministries are becoming involved in it. I think that's what has to be done. It has to be across the entire federal government—all ministries, and even Crown corporations. I think Defence Construction Canada is probably one of the most proactive Crown corporations within the federal government in trying to increase opportunities for our indigenous businesses.

[Marnie Suitor]

I would add to that a couple of points that have come from my discussions with indigenous business owners and entrepreneurs.

One thing is the uncertainty as to whether there is a mandate, or at the very least an expectation, that the set-asides will be considered and applied through all federal departments. At this point, it appears that some departments have that as a target and others don't. One example given to me involves Indigenous Services Canada and the funding they are in charge of with respect to capital projects within first nations. The gap there is the fact that when those contracts for the building of infrastructure on first nations are issued, they are not typically granted to or in consideration for those businesses that are part of the PSAB set-aside. To me, it's a glaring disparity when we are utilizing first nations funds for first nations infrastructure, yet the first nations are not in a position to engage or at least put in proposals on work that would further their indigenous communities.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Ms. Suitor.

We'll now go to Mr. Green for two and a half minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

I want to make sure that I'm setting the record straight from my perspective. The grace that I have extended to the members of this particular committee in a non-partisan way I don't extend to government. In fact, I want to just go ahead and name that systemic racism has provided a considerable barrier to indigenous procurement, and there is a particular type of anti-indigenous racism that is presented. We've heard now about trust. We've heard about the 70% cuts to programming, programming that would help make these businesses more viable within our procurement supply chains.

There are two things we know to be true during COVID. One is that we missed an opportunity, as Ms. Suitor has identified, in terms of PSAB and the set-asides. The amount of money that has gone out in this COVID time, I think, was a missed opportunity. However, there is going to be a COVID recovery. There are going to be significant investments in infrastructure. There could be significant opportunities to ensure that we get it right this time around.

I want to direct my question to Mr. Sinclair in my last round here to talk a little bit about what it would look like to have the 70% cuts restored to the types of programs that would help the supply chain to get indigenous businesses into the supply chain at 2021 values.

[Donald (Rocky) Sinclair]

Without knowing specifically what those 70% cuts relate to, I would say that in my experience of the effects of those cuts and the work that we do on the front lines in the community, they are not only felt by the entrepreneur in the community and those fledgling businesses but institutionally. If we're an organization—and I am speaking as an AFI, an aboriginal financial institution—those kinds of cuts are deep, and they make it difficult for us to do our job and be able to support those entrepreneurs to develop or to have their businesses progress to a point to be able to realize some of those opportunities.

It really is, in some ways, where we started from in terms of developmental lending. We still need all of those supports in order to even come close to realizing some of those opportunities.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Sinclair.

Thank you, Mr. Green.

We will now go to Mr. McCauley for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you, again, to the witnesses. It's great feedback we're receiving here.

Mr. Sinclair, it's good to see you here. I was at Enoch a couple of weeks ago, visiting the fire hall. They have some work to do there, so I'm hoping we can get some work done on that.

I want to make a couple of comments. When we did this study three and a half years ago on how to better serve indigenous small businesses, I spent some time with the U.S. Small Business Administration. They don't set goals as we're trying to do here; rather, they do it on a name-and-shame business. They far exceed their goals, similar to the numbers you were talking about in Australia.

I asked how they did that, and they said that no one in the government—the bureaucrats—wanted to be the person who did not reach their targeted goals for marginalized groups. Even without these concrete goals, some other countries are succeeding.

We've heard a bunch about difficulty in meeting qualifying restrictions. Can you give us some examples, Ms. Suitor? I think you brought it up.

[Marnie Suitor]

I'll give you a couple of real live examples. An RFP was completed. I think there were 55 to 60 hours put into this RFP. In the fine print within that RFP was a requirement to submit the technical response on one USB and the narrative on another. The entrepreneur overlooked that one requirement and was immediately disqualified from the process.

The second example would be an RFP that went in after significant hours of investment. Again, the fine print had indicated that the font needed to be a certain size within the document. Unfortunately, the font was not 11, but probably a 12, so again the application was kicked out very early in the process.

I have to ask in both scenarios: What did that have to do with the quality and the content of the response? Absolutely nothing. I think that taking a really good look those criteria for responses comes first and foremost.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Ducharme, I saw you nodding. Do you have anything to add?

[Philip Ducharme]

I do agree with everything Ms. Suitor said.

One of the other ones was.... It was interesting when one of the RFPs that came out was for cloth face masks. The federal government came out right at the beginning, in March, saying that they were looking at businesses to pivot to help meet the needs, and within that RFP there was a requirement for three previous cloth requirements. How are we going to get any opportunities if we had to have those requirements before even applying to the RFP? I think that's something the government has to look at if it is really serious about bringing in indigenous businesses. Again, that's almost a weed-out thing, sort of what Ms. Suitor was talking about. I think that's a prime example of what we have heard about within the last year.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's an excellent example.

I'm going to bring up the previous hearing again.

We heard about the difficulties in scaling up businesses. We've heard that the mother parliament in the U.K., when large contracts are given to, say, a PCO doing parliamentary precinct work, actually requires them to repost their subcontracting jobs on the government website. We tried to push for that, but it went nowhere. Do you think something like this would help with the scaling issue, where a company is perhaps not large enough to bid on a billion-dollar contract but they're shut out of the subcontracting? It's still taxpayers' money, but they're not getting access to the subcontracting jobs.

[Philip Ducharme]

I believe that is something the government does have to look at. I understand that in a lot of the RFPs coming out right now, they are asking for the impact benefit plans. The federal government is looking at their prime vendors to help them meet that 5%. That's something they have to record and monitor. What makes us a little nervous when they have these indigenous benefit plans is the follow-through. What happens if they haven't met the requirements? There have been instances in the past when an indigenous business partnered with a non-indigenous on a contract; the non-indigenous business won the contract, but when the work was actually awarded, the indigenous business was told their capabilities were no longer needed. They were utilized for that.

Again, I think it has to be incentivized. Even when you look at the U.S. government, if they don't meet that target, I believe they're put into a caution and might not have the opportunity to bid on future government contracts.

[Kelly McCauley, Conservative, Edmonton West, AB]

That is an excellent point.

Is there anything that is working right now? Is there any good news in the procurement process?

Feel free to say no.

[Philip Ducharme]

I do think some stuff is working, as I said earlier. I've never had as many connections with different government departments.

[Kelly McCauley, Conservative, Edmonton West, AB]

Is there something we can build upon?

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you. Excuse me, our time is up.

Mr. Ducharme, if you would like to say more, it would be greatly appreciated if you would submit that in writing to the clerk.

We will now go to Mr. Kusmierczyk for five minutes.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

This is an open question, kind of a basic one, but I think it's important to understand. What impact has the pandemic had on indigenous businesses, whether we're talking about revenue, cancellation of contracts or even about access to proper mentoring and supports throughout the process? Can you give us a picture of how disruptive COVID has been to indigenous businesses?

[Philip Ducharme]

I can start.

I think we lost a lot of opportunities because many indigenous businesses were smaller and relied on face-to-face meetings. They—especially the artisans—would go to powwows or to trade shows. They'd go around and do that.

A lot of our businesses struggle as well with the fact that everything is online right now and there are connectivity issues for some remote locations. Of the first nations businesses we deal with, I would say close to 30% don't even have a website. Again, we're trying to educate the businesses about this, because most people will do a search on a company's website before approaching them. That's an area where we've struggled.

Again—and this is not regarding procurement—indigenous businesses were unable to take advantage of a lot of the programming that had been introduced until groups like ours and NACCA stepped in and said, “Things need to be changed.” Indigenous businesses have been disadvantaged in a lot of ways that others haven't.

[Donald (Rocky) Sinclair]

If I can just speak directly to my experience on the lending side in support of entrepreneurs in the first nations within Alberta, we were right in the middle of the downturn in the oil and gas economy, so we were already hurting very badly in Alberta, and of course the pandemic following that has caused a lot of problems and failures in our community.

In terms of just the pandemic itself, in our organization the kind of support that we provide is really hands-on, and with the limitations and the challenges of the pandemic, our ability to deliver what we need to deliver in the community has been severely affected. We're going to have to make up for lost time in that regard.

It really has been in a holding pattern currently. Yes, it's been tough, just as it has been for everybody else out there.

[Marnie Suitor]

I could add to that a little bit. A lot of our businesses, as has already been said, are owner-operated or smaller businesses. Not having the ability to pivot quickly or have the resources to help with a pivot strategy was definitely felt here. Then, of course, an unfortunate outcome of the pandemic is all the social disorder that has resonated. I think there was reference made to discrimination and those sorts of things, and unfortunately we have seen that heightened, not just here in Edmonton and Alberta but certainly across the country, and that has been difficult to manage as well.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

When I was working for a regional innovation centre, we had started a program called Supporting Aboriginal Youth Entrepreneurship in Windsor and Essex. We had run the program for two years, and I know other regional innovation centres across Ontario run similar programs like that, but again they're concentrated around big urban areas.

How can some of the government programs—agencies like OSME, for example, the organization for small and medium-sized enterprises—bridge that gap and reach out to more communities outside of those major urban hubs? How can they provide that connection, get the awareness out and also maybe provide some mentoring and help build capacity?

[Shannin Metatawabin]

The Aboriginal Financial Institutions Network has 59 members from coast to coast to coast, and they've been doing this for more than 35 years. Rocky's got one of the first AFIs that was ever created. It's in Alberta, and they connect with their communities on a daily basis. They've been developing entrepreneurs. They have deep social connections within the regions where they operate, and to create a partnership with the AFI network would instantly connect you to the community. The AFI Network has been processing government support programs for many decades now. We've processed $3 billion in lending to 50,000 loans. That's the reach of the AFI network.

This has been successful because there is a stimulus program that was in place, and this is the one I referenced with a 70% decline. Twenty years ago it was about an $80-million program with 10 urban offices and a bunch of aboriginal financial institutions. That program was reduced to $34 million.

The stimulus program, which enables a loan to be bought down so that the risk is bought down and the entrepreneur has a better chance of success, is a program that works. They've had lots of success, and the program has shown that it's an investment. For every dollar provided, there's $1.20 back in the government's treasury department—never mind about the social impacts that are felt and the reduction in social spending that happens from supporting an indigenous business.

I forgot where I was going with that.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Metatawabin.

Now we will go to Mr. Paul-Hus for five minutes.

[Pierre Paul-Hus, Conservative, Charlesbourg—Haute-Saint-Charles, QC]

Thank you, Mr. Chair.

We seem to be going in circles. We have been talking for just over an hour and we keep coming back to the same basic problem. There is a trust issue, but there is also the fact, as Mr. Ducharme said in his opening remarks, that there are a lot of discussions with the present government, but not many results.

I am trying today to see whether, before the end of our meeting, we can find at least one solution that could help everyone. What is interesting today is that we are with people who represent groups of entrepreneurs from indigenous communities. These are people who want to do business for everyone's benefit.

In fact, indigenous people are not the only ones who have had problems with government contracts during the COVID‑19 crisis. Many non-indigenous people have never received a reply from anyone and don't understand why. Those are questions for another time. I would actually have far preferred to get products from your communities rather than bringing products in from China.

That said, what can we do to make it work?

I spoke a moment ago about the Wendake indigenous reserve, which is next to where I am from. I know an entrepreneur who has the same business in Wendake, where he is subject to the rules and the law that apply to indigenous people, and in town, in Quebec City, where he is subject to the provincial and municipal rules.

Does saying that you are an indigenous business when an application is made create a problem from the outset?

For example, in your group, Mr. Ducharme, are there businesses that have responded to tenders without saying they were indigenous, and did that change anything?

If it was impossible not to declare it, has that been tried in the past?

If not, are there businesses that have two statuses, one as indigenous and the other as non-indigenous?

If so, do they see a difference when they send in their applications?

[Philip Ducharme]

A number of our businesses have applied to the PSAB program. Within the PSAB program, you are identifying that you are an indigenous-owned business. They never got the PSAB contracts, but when they applied to open tenders within the federal government, they've been successful in the contracts, so I think there is an unconscious bias on indigenous businesses within the procurement evaluations.

When you talked about one of the concrete things that needs to happen, it has to be past the mandate. It has to be within the executive and within management's reporting requirements. They have to have that target set right in there. If they have that target, they're going to make sure that it is happening.

Within the corporate world, Suncor has done that. That came from the the top down. They went to all the buying managers and told them that this was what they needed to do, and that if they didn't reach it, their evaluation was not going to be 100% successful and potentially they wouldn't have the bonuses as well.

That's the one thing that really needs to happen with the federal government for indigenous procurement. It has to be incentivized and have teeth to it.