Government Operations Committee on Oct. 17th, 2024

[Larry Brock, Conservative, Brantford—Brant, ON]

The Assembly of First Nations testified that there are a number of shell companies securing government contracts in the indigenous procurement program. How many shell companies has the government detected and identified?

[Joëlle Paquette]

Again, I think you would have to direct that question to Indigenous Services Canada, which is responsible for the IBD.

[Larry Brock, Conservative, Brantford—Brant, ON]

To your knowledge, is ISC actually looking into the number of shell companies?

[Joëlle Paquette]

I am not familiar with their activities. I'm sorry.

[Larry Brock, Conservative, Brantford—Brant, ON]

To your knowledge, has ISC or anyone at PSPC made any referrals to the RCMP?

[Joëlle Paquette]

I am not aware of any.

[Larry Brock, Conservative, Brantford—Brant, ON]

How many cases has PSPC identified in which a company hired an indigenous person simply to gain access to federal contracts through the indigenous procurement program?

[Joëlle Paquette]

Again, that program is held by Indigenous Services Canada. They would be the ones identifying those, not PSPC.

[Larry Brock, Conservative, Brantford—Brant, ON]

Chair, I'm ceding the rest of my time to Mr. Genuis.

[The Chair, Conservative, Kelly McCauley]

Mr. Genuis, go ahead.

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

Thank you, Chair.

The AFN has said, as my colleague mentioned, that most of the companies receiving indigenous set-asides are actually shell companies. That's according to the AFN. Do you agree with their findings?

[Joëlle Paquette]

I would not be able to provide that information, or will—

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

I'm sorry to jump in. You're from the procurement department, though. You're responsible for overseeing government procurement. This is a very serious allegation from one of the leading indigenous organizations in the country. Do you have an opinion on it at all?

[Joëlle Paquette]

I do not have an opinion, and I would suggest that you refer that question to Indigenous Services Canada.

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

That's very striking. Most of the companies are shell companies, according to this program. You're responsible for procurement and you don't have an opinion either way.

The government uses its own deeply flawed indigenous business list rather than relying on criteria and lists developed by indigenous organizations. Why is that?

[Joëlle Paquette]

That is the rule we are bound by, and the rules are set by Indigenous Services Canada and the Treasury Board of Canada Secretariat.

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

Why is it that you develop your own list instead of working with indigenous organizations and relying on lists they develop? Is there a policy rationale that you're aware of?

[Joëlle Paquette]

I am not aware of that. That is a responsibility of Indigenous Services Canada. We are bound by those rules, and we are working on how we can increase indigenous—

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

Can I just clarify that? Do they make all the rules and you make none of the rules with respect to how you define what is an indigenous company or what is or is not a shell company? You don't have any role whatsoever. Is that what you're saying?

[Joëlle Paquette]

No, we do not. It is Indigenous Services Canada's responsibility to develop those definitions.

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

How come you're responsible for procurement for everything except indigenous procurement?

[Joëlle Paquette]

We are responsible for procuring and trying to increase indigenous participation in procurement, but the rules related to the IBD are not ours and the rules for the PSIB are not ours.

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

Is fraud prevention, in a general sense, part of your role?

[Joëlle Paquette]

No, not in the Indigenous Services Canada IBD. They are the ones doing the audits and the validation of those companies.

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

That's just bizarre to me. You are the procurement department. Presumably you're supposed to have some expertise in this area, yet you're taking none of the responsibility in the case of indigenous procurement.

The way to prevent shell companies from giving all of the work to non-indigenous companies is to have subcontracting requirements. That's why the rules require that a certain proportion of subcontracts in the indigenous set-asides go to indigenous companies.

Are these subcontracting rules enforced?