Evidence of meeting #148 for Government Operations and Estimates in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was businesses.
A video is available from Parliament.
Conservative
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Thank you very much, Mr. Chair.
Mr. Conn, Ms. Wilson and Ms. Sultan, thank you for joining us.
You just mentioned compliance. Non-compliance is considered a breach of contract, but what consequences do contractors face for breach of contract, not only at the time but over the long term?
Deputy Minister, Department of Indigenous Services
There are a few potential consequences. As Ms. Sultan said, the company in question could be subject to an audit. Depending on the results of that audit, it is possible that the company
will be removed from the indigenous business directory. If there are more serious allegations, obviously those consequences can be brought to other levels of criminal activity. It's not something we deal with frequently, but those would be some of the consequences.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Thank you.
Earlier, you mentioned discussions about indigenous organizations taking over the management of the indigenous business directory.
Briefly, where do those discussions stand now?
Director General, Economic Policy Development, Department of Indigenous Services
Those discussions are occurring as part of something called the transformative indigenous procurement strategy, which is a five-year strategy that started in 2021 to transform indigenous procurement. The conversation has been ongoing since then. That's why I bring that up.
As my deputy mentioned, they're going well. They're ongoing. We're at the point of being in discussions with figuring out, as I call it, the nitty-gritty of how that would work. The concept and the understanding of the need to transfer are there, and we're going through what we need to in order to understand, operationally, how that would happen.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
I've been hearing for some time now that we can conduct compliance audits, but they're not always mandatory.
Director General, Economic Policy Development, Department of Indigenous Services
Audits are mandatory in certain situations and not mandatory in others. For example, it is mandatory to do a pre-award audit for contracts that are over $2 million, and the contracting authority or client could request to do one for a contract under $2 million.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
Thank you.
When I look at the list of indigenous businesses hired by the government between April 1, 2023, and March 31, 2024, I see that most of the contracts are valued at well under $2 million.
Am I to understand that none of these contracts was subject to a compliance audit?
How do we verify that the companies on that list exist?
Unless there was an error in the French files or a translation error, the first company on the list provided by the Administrative Tribunals Support Service appears neither in your directory, nor in the Canadian Council for Aboriginal Business's directory, nor anywhere else.
If the majority of contracts are under $2 million, how do you ensure that they actually meet the standards, i.e., that indigenous businesses must be at least 51% indigenous-owned and that at least 33% of the value of the work is done by an indigenous business?
Director General, Economic Policy Development, Department of Indigenous Services
Before we get to the audits—the pre, post and discretionary—there's a process that needs to happen for the business to be registered on the IBD. We don't call that an audit: It's a verification of eligibility. In order for a business to be on the IBD, it needs to provide proof of indigeneity and of the 51% ownership. In addition to checking that this is the case when we register a company the first time, we also regularly go through the IBD and perform that, on a routine basis, to ensure that the companies remain eligible. That is how we will be looking to make sure that the companies are eligible for contracts under $2 million.
With regard to ensuring compliance with the 33%, it would be in the.... If a contract is awarded under PSIB, it needs to meet the 33% content requirement; otherwise, it doesn't. If it were awarded under PSIB, there would be terms and conditions in the contract that would require compliance with the 33%.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
In fact, of all the organizations that provided us with a list of the indigenous businesses they used, none followed up on the subcontractors they used. You mentioned that as well.
If no one is taking notes, how do we ensure that 33% of the value of the work was done by an indigenous business?
Conservative
Director General, Economic Policy Development, Department of Indigenous Services
I apologize. I have to clarify the question.
Conservative
The Chair Conservative Kelly McCauley
Would you repeat it, Mrs. Vignola, please? Then it will have to be a brief response.
Bloc
Julie Vignola Bloc Beauport—Limoilou, QC
None of the organizations that provided us with a list of indigenous businesses followed up on the subcontractors they used.
How do we then ensure that 33% of the work done by these subcontractors is actually done by indigenous people if no one is following up on that?
Director General, Economic Policy Development, Department of Indigenous Services
Okay, so the source of my question comes from.... I'm not understanding whether you're saying that the businesses told you that none of them checked with the subcontractors. I'm sorry, but I don't understand the question.
Conservative
The Chair Conservative Kelly McCauley
Perhaps we can leave it for the next round.
Mr. Boulerice, welcome. I understand you'll be our regular Thursday “OGGOite”.
The floor is yours for six minutes, please.
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Thank you very much, Mr. Chair.
I'd like to thank the witnesses for being with us today as part of this important study.
For the NDP, increasing federal procurement from first nations businesses is a very high priority. We completely agree with that goal, and it must be done on a nation-to-nation basis while avoiding any paternalism.
Currently, who manages the directory of eligible businesses owned by first nations, Métis or Inuit people?
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
All right.
If the goal is a nation-to-nation relationship, why aren't first nations the ones managing this list?
Deputy Minister, Department of Indigenous Services
We are in the process of working with first nations, Métis and Inuit to transfer the responsibility for registration and verification to them, but it's a lengthy process. It won't happen overnight.
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
Is that the five-year plan you mentioned in your opening remarks? When do you expect to meet that target? I'm surprised they're not already managing it. I understand there's a transition, but when will that be completed?
Director General, Economic Policy Development, Department of Indigenous Services
The five-year plan that Ms. Wilson referred to at the beginning of her opening remarks is the entirety of the transformative indigenous procurement strategy. That does include looking at transferring the list, but it's broader than that. The five years doesn't equate to being when we would plan to transfer the list. I think it's fair to say that we are very keen to make the transfer as soon as possible.
NDP
Alexandre Boulerice NDP Rosemont—La Petite-Patrie, QC
“As soon as possible” is rather vague as far as dates go.
The Assembly of First Nations has been fairly clear about its goals. It wants more than 5% of public contracts to be awarded to indigenous businesses and for them to also have fair, transparent and open access to contracts offered by provincial and territorial governments. It also calls for working in partnership with first nations to fulfill our obligations under the United Nations Declaration on the Rights of Indigenous Peoples.
In February 2024, the First Nations Financial Management Board, the First Nations Finance Authority, the National Aboriginal Capital Corporations Association, the Canadian Council for the Advancement of Native Development Officers, or CANDO, and the Aboriginal Financial Officers Association, AFOA, came together to form the First Nations Procurement Organization, or FNPAO.
What is your relationship with this new organization, created last February, and what is the status of your discussions with it? Do you plan to proceed to this notable transfer with that organization?
Deputy Minister, Department of Indigenous Services
I go back to the point about the percentage. The AFN and others would actually like the percentage to be more than 5%. The 5% is a floor, for sure, not the ceiling. We definitely encourage more than 5%. In fact, this year the Government of Canada went to 6.27%, so we've exceeded that. At ISC, for instance, our department has gone as high as almost 18% of the value of contracts.
So it's possible.
The First Nations Procurement Organization is one of the organizations that we have at the table, which Keith and Jessica work with. It's an important partner.
There are also other Métis and Inuit organizations.
In fact, I think we're funding about 22 organizations right now to build capacity around indigenous procurement.
