Government Operations Committee on Sept. 24th, 2024

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Welcome to meeting number 140 of the House of Commons Standing Committee on Government Operations and Estimates.

As always, colleagues, I remind everyone to keep your headphone away from your mic so that we can protect the hearing of our very valued interpreters.

We have two witnesses today.

Thanks for joining us.

We'll open the floor to Chief Bernard for five minutes for an opening statement and then go to Mr. Ducharme.

Chief Bernard, the floor is yours. Go ahead, please.

[Joanna Bernard, Regional Chief, Assembly of First Nations]

Thank you very much.

Greetings. I am Joanna Bernard, the Assembly of First Nations' regional chief for New Brunswick.

The Assembly of First Nations is a national organization representing first nations and their elected chiefs across Canada. The AFN's mandate is received from first nations rights holders through resolutions. It is important to have a clear understanding of who the rights holders are for work related to policies, frameworks and strategies.

I welcome the opportunity to speak to you on the topic of indigenous procurement.

I must note that first nations require direct consultation on this matter. Procurement policies at all levels of government need to be inclusive to reflect diversity and equality. A distinctions-based approach is required to transform the indigenous procurement landscape. The federal government needs to fulfill its duty to consult and accommodate first nations on procurement issues in order to effectively review and advance policies. This will help eliminate wasteful and corrupt procurement procedures.

Equitable procurement policies have an important role in supporting the economic development of first nations and meaningful reconciliation. Procurement policies at all levels of government must be inclusive and distinctions-based, moving away from a “one size fits all” approach.

The federal government's 5% target is reflected in the United Nations Declaration on the Rights of Indigenous Peoples Act action plan, which we uphold. However, 5% is a minimum target. The population of Canada is estimated to be 5% first nations people. If the government is to close the gap with first nations and lift communities out of poverty, procurement contracts need to reflect an increase beyond the minimum target. The 5% minimum only maintains the current economic status quo. When first nations businesses have the capacity and support to participate in bidding and win contracts, economic prosperity can be reinvested into communities and help them thrive.

In October 2019, the AFN prepared an evergreen report on updates and revisions needed to better support access by first nations businesses to procurement in Canada, focusing on the federal procurement portfolio.

In 2016, the Government of Canada awarded over 340,000 contracts for goods, services and construction valued at over $18 billion. However, targeted indigenous procurements, under the procurement strategy for aboriginal business—as it was known then—totalled only $93.5 million in 2015, representing less than 1% of all federal procurements. Today the federal government spends approximately $22 billion every year on procuring goods and services from businesses across Canada. Still, less than 1% of that goes towards indigenous businesses.

Tto protect first nations' best interests, procurement policies must also eliminate the risk of fraudulent players looking for financial gains. In 2022 and 2023, the federal government released a report on its progress towards the 5% minimum target. The AFN had concerns with the lack of transparency on business definitions and eligibility criteria for the types of businesses that would qualify as indigenous. Transparency must be prioritized to maintain trust and uphold legitimate indigenous businesses.

Fair, transparent and open access to procurement opportunities with the Government of Canada, provincial governments and the private sector is a key priority for first nations and critical to economic growth, self-determination and community well-being.

The AFN has been working with partner organizations to establish the First Nations Procurement Organization, known as the FNPO. It aims to help first nations peoples and businesses overcome systemic barriers in accessing federal procurement opportunities.

Since the first meeting in December 2023, the FNPO has formed a steering committee of six indigenous organizations, including the AFN.

The AFN has also been supporting the development of indigenous business definitions, led by the National Aboriginal Capital Corporations Association. It was launched in March 2024, and provides a set of criteria that determine what constitutes an indigenous business or organization for the purpose of procurement.

An indigenous business is identified as a business in which an indigenous person has sole responsibilities for making decisions, receives all profits, claims all losses, assumes all risks, pays personal income tax for the indigenous sole proprietor and is 100% owned by indigenous people.

Co-operatives, partnerships, non-profit and not-for-profit corporations, charitable organizations and joint venture definitions will include that at least 51% of the business structure is owned or controlled by indigenous people. There is currently no consistent way of verifying the legitimacy of indigenous businesses, which creates a risk of false claims, tokenism and exploitation by bad actors.

The indigenous business definitions aim to provide clarity and structure to the procurement processes and to prevent the erosion of trust and respect between indigenous and non-indigenous partners.

The AFN calls for increased transparency, accountability and support in the government's procurement processes, particularly those impacting first nations businesses. The AFN will continue to advocate necessary changes in procurement policies and practices while also advocating programs and initiatives designed to enhance the capacity of first nation businesses.

Increasing first nation opportunities to compete for—

[The Chair, Conservative, Kelly McCauley]

Chief Bernard, we're past our time.

Can I ask you to summarize and wrap up, please?

[Joanna Bernard]

I have two short paragraphs here.

[The Chair, Conservative, Kelly McCauley]

Perfect. Go ahead.

[Joanna Bernard]

—and win federal contracts should not be impeded by the government's lack of proper first nations citizenship programs or anti-imposter protections.

The process for recognizing first nations identity, whether of individuals, businesses, or organizations claiming or seeking to assert first nations identity, must be led by first nations to ensure legitimacy.

I want to thank everybody for giving me this time. This is not the first time. I've been working on this since, I think, 1999, when the first procurement came out. We've had issues, according to the standing committee, going back to 2006, when my brother John Bernard, from Donna Cona, spoke on this. I'm not sure if everybody at the table has this information from that standing committee, which would help the committee move forward and make the best decision possible.

I have another thing before I finish. I do want to insist, again, that you stop going behind closed doors, preparing documents and policy, throwing it at us and telling us that's the way it should be. You're wasting our time, your time, and money.

It's important that we start this first nations procurement opportunity for our people to be able to work together with you so that we can save time and money and get this going. It's been ongoing for way too long.

Thank you. Woliwon..

[The Chair, Conservative, Kelly McCauley]

Thanks, Chief Bernard.

I'm now going to go to Mr. Ducharme, please.

[Philip Ducharme, Vice President, Entrepreneurship and Procurement, Canadian Council for Indigenous Business]

Thank you. Good morning.

As mentioned, my name is Philip Ducharme, and I'm a member of the Manitoba Métis Federation. I am thankful to be here on the unceded, unsurrendered territory of the Anishinabe Algonquin nation.

As vice-president of entrepreneurship and procurement at the Canadian Council for Indigenous Business, or CCIB, I want to thank you, Mr. Chair, and all distinguished members of the committee for the opportunity to provide comment on indigenous procurement.

Earlier this year, CCIB celebrated our 40th anniversary of building bridges between indigenous and non-indigenous businesses and the rest of Canada in support of mutual growth, opportunity and economic reconciliation. We do this through a number of programs and initiatives, including the research that we conduct, which was recently cited by the OECD to our president and CEO Tabatha Bull as some of the best on the indigenous economy.

One of our key priorities over the last eight years has been on indigenous procurement. In January 2018, CCIB officially launched Supply Change, our trademarked indigenous procurement program, made up of key pillars including certified indigenous businesses, the indigenous procurement marketplace and indigenous procurement champions.

The indigenous procurement marketplace is an online platform that allows our certified indigenous businesses and corporate buyers the opportunity to engage and develop relationships while sharing relevant opportunities. There are currently over 1,300 certified indigenous businesses and 155 indigenous procurement champions and advocates within the indigenous procurement marketplace.

CCIB-certified indigenous businesses are members of CCIB that we certify through an internal audit process to confirm at least 51% indigenous ownership and control. We require proof of indigeneity. Self-identification is not accepted. In addition to the proof of indigeneity, we require business documents proving that the share ownership and controls meet the threshold of 51% indigenous ownership and control.

Upon yearly renewal, all certified indigenous businesses are required to attest that that ownership and control has not changed. However, if the validity of one of our certified indigenous businesses is questioned at any time, we confirm the data we have on record to the extent of confirming membership within the community. If we find that a business no longer meets the definition, their certification is revoked.

CCIB has long advocated targets and reporting on indigenous procurement, and we were pleased to join former procurement minister Anand on August 6, 2021, when she reaffirmed a mandate of 5% of indigenous procurement and required reporting on a set timeline. Additionally, other levels of government and numerous corporations have publicly disclosed indigenous procurement targets, including the Yukon Territory, with a 15% target, and the City of Regina, with a 20% target. These indigenous procurement policies are instrumental and necessary to rectify historical injustices and empower communities that have long been marginalized and intentionally excluded from the economy to the benefit of corporations and every individual in Canada. The policies are not merely about meeting quotas but are required to foster economic opportunities for indigenous people and communities.

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. By consistently portraying indigenous procurement in a negative light or by disproportionately highlighting instances of alleged misuse or failure, a narrative is being created that questions the competence and legitimacy of indigenous businesses. This narrative is affecting public perception and, I fear, influencing policy decisions. We cannot allow a few bad actors to cause us to move backwards on crucial support mechanisms designed to uplift indigenous communities.

For clarity, indigenous business success through procurement and that supports indigenous prosperity and self-determination largely outweighs the negative reports. Indigenous procurement in line with the 5% target would inject $1.2 billion directly into the indigenous economy. We can take Pro Metal, a steel manufacturer owned by Pasqua First Nation Group of Companies, as an example. Pro Metal works to supply components for armoured vehicles, including LAVs, to the Canadian Army. PFN Group's procurement success is enabling the construction of 46 new homes, expansion of the high school and the opening of a 12-suite long-term care facility. This is just one example of the impact successful indigenous procurement can lead to.

In closing, we are not blind to instances of identity fraud, and we acknowledge that there are businesses that have taken advantage of policies and that this has resulted in benefits not reaching those for whom they were intended. However, as in any policy, there will be people who will manipulate the system to make it work to their advantage. The wrongdoings of a few should not call into question the need or value of indigenous procurement. The solution is not to punish those for whom the policy is built, but to strengthen the policy.

I would like to thank the committee for the opportunity to contribute to this important topic and I look forward to answering any questions you may have.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much, Mr. Ducharme.

We'll start with Mr. Genuis, please, for six minutes.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

I want to thank both of our witnesses for their testimony.

I want to share with you that people in my constituency are seized with the importance of advancing truth and reconciliation and, as part of that, with promoting and supporting economic development in indigenous communities. We want to make the system better. We want to do more to promote economic development. It is in that spirit that we pushed for this study to take place.

I also want to highlight that this committee has been studying procurement abuses in general. We've seen serious problems with procurement under this government. Our goal is to strengthen procurement, to provide more benefit for indigenous peoples, for all Canadians and for taxpayers as well.

Minister Hajdu told the INAN committee in March that the federal government's indigenous contracting program has one objective: to verify indigenous identity. She said, “The indigenous business directory is to provide assurances to other departments, including Public Services and Procurement Canada, that the people on that list are indigenous. That is the sole purpose of the list.”

Meanwhile, while she was telling this to a committee, according to revelations in Global News, her officials were telling applicants that all they had to do to verify indigenous identity was to upload a picture of a bunny.

We've all heard the expression “you had one job.” That one job, according to the minister, was to verify indigenous identity, and then all you had to do to verify indigenous identity was to upload a picture of a bunny.

This committee ordered documents on subcontracting, because when you get an indigenous set-aside and when you subcontract work, a certain percentage of those subcontracts are supposed to be to indigenous companies—not all, of course, but a certain percentage—yet across departments, we found that there was no tracking whatsoever of subcontracts.

The minister said that the purpose of this program is to verify indigenous identity, and then it spectacularly failed to put systems in place to verify indigenous identity. I note that as part of it, it seems that the qualification of an indigenous business by the government doesn't line up with the way indigenous business organizations and communities are qualifying and defining indigenous organizations.

I would like to hear from the witnesses what your reactions are to these revelations about an absence of verification of indigenous businesses and what can be done to ensure that procurement that is supposed to be for indigenous businesses is actually for real indigenous businesses.

Maybe we'll go to the chief online first and then to Mr. Ducharme here.

[Joanna Bernard]

Thank you very much for the question.

It's been an issue since the beginning of the program, as you know—

[The Chair, Conservative, Kelly McCauley]

I'm sorry, but I'm going to ask you to hold on for two seconds. We're barely hearing sound. We're going to turn it up on our end. Can you give us a couple of seconds?

I'm sorry. Bear with us for one moment.

Do you mind starting again, Chief Bernard? We think we can hear you better now.

[Joanna Bernard]

Thank you very much.

Yes, it's very important. It's been an issue from the very beginning in regard to this strategy of using token Indians. I'm sorry to say that you could pick up somebody on the side of the street, and if they're indigenous, they become that token Indian and there are no qualifications needed for that indigenous person, so there's some work to be done in that aspect of ensuring that the aboriginal is capable of having the ownership of this so-called business, if it is a shell company, and to make sure that they're there working day to day and not just being given a couple of dollars on the side just for their name. This is huge.

In reference to our status, we have a status card. I think every first nation person does have a status card. When it comes to the Métis, I'm not sure if there are regulations put in place, as is done in the first nations, so that our status is recognized in Canada. I want to ensure that for all the memberships of all the organizations, there is something in place to ensure verification that they are either Métis or Inuit or first nations and that someone is not just walking in a door and saying, “I'm Métis because my great-grandfather was, and he has a descendant.”

This is important to us, especially when we're looking at 5% in procurement and we want to ensure that the first nation organization has an adequate percentage of that 5% and ensure that we're not just giving 5% to a person in another organization whose membership has not been verified by INAC or who doesn't fall within the terms of that membership. That's very important, and it's been an issue from the very beginning.

I'll give you a perfect example. I owned The Brick furniture store back at the time when Bernard Valcourt was the minister of Aboriginal Affairs and Northern Development. I told him that I wanted to sell my mattresses to the shipbuilding down here in Halifax. I asked him about that because at that time, it was 10% procurement. He said yes and he said it was the law, but there was nobody pushing it, so that's been a problem from the very beginning. This was in place, but there was nobody governing it or managing it to ensure that we did receive our 10%.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Just to quickly probe that in the time I have left, though, can I ask why the federal government's qualification isn't lining up with the qualifications that are coming from indigenous communities? Why is there a dissonance between what they're calling an indigenous business and what you're calling an indigenous business?

[Joanna Bernard]

It's because there's no verification. At the end of the day, they seem to think that if you walk in the door, you cannot be asked for proof of being indigenous, and that's where the problem lies when anybody can walk in the door and say they're Inuit or Métis or first nations without any verification, and as you know, first nation communities and band members have received their status from Ottawa.

As for membership in the other indigenous organizations, I'm not sure how that's being done, but that's questionable to me as a first nations person. I just want to ensure that we are doing this in a correct way and stop going behind closed doors and coming out with documents and saying that this is what we have as a policy and tweak it. You wasted time and money.

As I mentioned earlier, we need to be at the forefront of this discussion because we know where the needs are within these policies. Please take that into consideration before moving forward and again going behind closed doors and saying that we heard from them, and this is what we've come up with. That's got to stop. They've done it for years and years and years, and it's got to stop. It's wasting government money as well as your time and my time.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Ducharme, maybe we can get to you in the next intervention.

Mr. Battiste, please go ahead.

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

Thank you for that.

Regional Chief Bernard, it's good to see you.

[Joanna Bernard]

You too.

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

Regional Chief, I understand from your testimony that there is not one way in which all three—first nations, Métis and Inuit—determine indigeneity. Would you say that's accurate?

[Joanna Bernard]

Yes.

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

Can you tell us a little bit about how first nations status works? I know that I and you have had conversations about the second generation cut-off, but can you explain it to the committee in just a minute?

[Joanna Bernard]

Yes. I will try to do that in a minute.

Basically, the first nations status is cut off after the second generation. The problem with the Métis membership is that they could be 10 generations down. They just have to say that their grandfather or great-grandfather or great-grandmother was indigenous and they become members. There is a very distinct problem there when it comes to why we as first nations are being cut off after the second generation and not the membership of the Métis and Inuit.

As I said, I'm not sure of the details, but it's very concerning to first nations communities [Technical difficulty—Editor]—

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

We lost you there for a little bit.

As a status Indian, I might have a child with someone who's outside the Indian Act. That child would therefore become what they call a “6(2) Indian”, but if that child were to have a child with someone not part of the Indian Act, then they would lose status. That's how second-generation cut-off works.

Is that correct, in your mind frame?

[Joanna Bernard]

Yes, it is, when you're speaking of status. In a lot of communities like mine, we are allowing our descendants to become members. They may not have status, but they are band members of our communities, because we have control of our membership list.

Status is a different story. If a first nation person who is non-status can prove, maybe through a letter from the chief and council, that, yes, they are members of our community, then they should be [Technical difficulty—Editor]—

[Jaime Battiste, Liberal, Sydney—Victoria, NS]

Then the complexity involved in this, Joanna, is much more than just having a template for who is and who isn't indigenous.

I will go to the Métis with this question. Is there one way to determine who is Métis between all of the different Métis organizations in Canada?