Government Operations Committee on Nov. 26th, 2024

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

What role does the department play? There are obviously various functions by which procurement oversees other ministries. Can you please explain the interrelationships there?

[The Chair, Conservative, Kelly McCauley]

Just give a short answer, please.

[Michael Mills]

Just to be clear, the policy framework for procurement resides with the Treasury Board Secretariat. PSPC, as a common service provider, prepares a number of practices, template contracts and whatnot that we share to support other departments to use for their procurements.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Mrs. Vignola, go ahead please.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Mr. Mills, Ms. Poulin and Mr. Naus, thank you for being here today.

As we talked about back in May, the office of supplier integrity and compliance replaced the previous integrity regime.

I have been a member of the House of Commons for five years, and I've often had occasion to see departments passing the buck. One is responsible for the act, another is responsible for its application, and another still makes sure that the policies, regulations and act are applied. However, none of them talk to one another, and none of them are accountable.

Is it the same for this office?

Could OSIC find that a department knew—but did not check—that a business was not indigenous-owned and accepted it anyway?

In a case like that, is the department penalized? Are there any binding measures to make sure that the department adheres to the requirements?

[Catherine Poulin]

Thank you for your question.

I'd like to start by distinguishing between my two main roles at OSIC, because I think it's important.

The first really important point is that my role as registrar mainly involves determining whether a supplier poses a risk to federal procurement, and putting mitigation measures in place if necessary. My work has an impact on all departments looking to contract work out to a supplier. I focus mainly on how suppliers behave, not departments. If I am given negative information about a supplier, I examine it, determine whether measures are necessary and proceed accordingly. The supplier is then notified, and all departments are impacted.

My other really important role is conducting investigations within the department. Any other department with a similar responsibility has someone performing a similar role.

It is important to distinguish between the two roles because I don't necessarily wield the same authority or carry the same weight in both roles.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Let's say you find out information and you pass it on to a department but the department does not take it into account. Could you impose penalties or restrictions on the department for failing to take the information into account?

It's a hypothetical situation, but it could happen.

[Catherine Poulin]

At this time, the only ones we can impose restrictions on are suppliers.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

This morning, I was speaking with someone from an indigenous business. We talked about the phenomenon of using fronts, meaning a non-indigenous business joins forces with an indigenous business. The indigenous business is happy with the arrangement because it can be a springboard for opportunities as a supplier in its own right. However, the indigenous business eventually realizes that it was merely a front and no longer has any recourse.

Once the contract is signed, the indigenous business gets a pittance, even though it is providing support. It could be asked to perform lowly tasks, well below what it could be doing. In some cases, the value of the contract might increase, with, say, 20 positions being added, but the indigenous business doesn't get access to any of those jobs.

In a situation like that, where a contract is based on an economic or financial alliance between a non-indigenous business and an indigenous business, how do you make sure both receive equal treatment under the contract? How do you make sure the indigenous business isn't being used as a front?

[Michael Mills]

With joint ventures, the kind of controlling factors that Indigenous Services Canada looks at are ownership, control and the value of activity. Within the framework, under the procurement strategy for indigenous business, they would be looking at those joint ventures and ensuring that there's ownership and control, and also 33% of the value. They have the power to do post-audits to ensure that the 33% is done. If the 33% of the value is not going to the indigenous business, the contract can be terminated.

[Catherine Poulin]

I'd like to make a comment, if I may.

Certainly, if another department or organization has evidence of wrongdoing, it can report the information to the Royal Canadian Mounted Police, or RCMP. The organization can also contact our new office. In cases like that, we look at the mitigation measures at our disposal to ensure that our response has the greatest impact.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you.

I'll save my other questions for the next round.

[The Chair, Conservative, Kelly McCauley]

Thanks, Madame Vignola.

Ms. Blaney, please.

Go ahead for six minutes.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you, Chair, and thank your the folks who are here to testify to us today.

I do have some particular questions. We know that a lot of indigenous businesses are really struggling with section 89 of the Indian Act. That section really creates a lot of economic inequalities.

In the role that you play in working with ISC, are there feedback loops for indigenous businesses to let you know what's working and what's not working, and to identify some of the key legislation federally that has an impact on their business and their capacity to create more wealth?

What I've heard again and again from indigenous leadership is that they're frustrated with incremental change. It's just a little bit by a little bit. I've also heard though they may have the capacity to do bigger projects, they can't access those bigger projects because they can't get those portions of their business proposals bonded.

If this commitment by all departments is serious, what dialogue and discussions are happening to address these issues arising in different federal department through the Indian Act, with huge economic impacts on indigenous communities?

[Michael Mills]

There are a number of channels through which we have direct conversations with indigenous businesses. We have Procurement Assistance Canada, which does a lot of outreach to small businesses and is trying to understand what their challenges are within the procurement processes, and what kinds of supports and aids they can offer.

On the bonding piece, I'm very well aware of the challenges with bonding, section 89. In fact, we are about to launch some new measures on bonding to look at raising the size of projects that would require bonding so that we can create more space for unbonded transactions, which will open up space for indigenous businesses. We're also looking at more targeted projects that would have an opportunity for indigenous participation and looking at whether we would need to have bonding on an optionality basis.

Another channel is that we have quite a long-standing relationship with the National Aboriginal Capital Corporations Association. They will often bring to us what they are hearing in the marketplace and what kinds of challenges they are seeing in the procurement space.

As well, we work with Indigenous Services Canada and with the National Indigenous Economic Development Board. That's another venue for us to understand what some of the indigenous business and economic development challenges are and how they may interface with procurement, and to figure out how we might be able to improve it.

The last thing I would say is that we are working constantly on things such as indigenous participation plans. In the live procurement processes, we will have discussions with indigenous communities to see if the way we're approaching indigenous participation plans actually works, if it is effective and if it is driving those benefits.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you for that. That was a helpful response.

The next component of the question that I have concerning that is this: If I understood correctly, it sounds like you're exploring areas like.... For example, if an indigenous community has a business that is relevant for that local area and if opportunities come up through the different federal departments, is there any discussion about how to make that work more effectively so that there can be better turnaround time—again, with less focus on those small contracts and with more expansion to some of those big contracts?

We know, as I said earlier, that some indigenous businesses have talked about watching other businesses come into their own communities, sometimes, or into their own region. They could have done that work, but because of section 89, they are not eligible. Are there discussions at the process level about looking at regions and identifying where indigenous businesses have capacity, and about making that work more flexibly?

[Michael Mills]

Absolutely. We look at it through three lenses. First, we have a lot of information on the indigenous business community generally, from Statistics Canada and others. We're looking at where the business capacity is from a sectoral perspective and trying to ask how we could target procurement strategies in certain sectors where we know there's indigenous capacity.

We definitely look at it geographically, looking particularly, as an example, at the north, at Nunavut. We have very specific targets for how we get Inuit businesses into procurement in Nunavut.

Third, for all of our large projects, we always start from a place where, like I said, we have indigenous by default at the start. What is the indigenous aspect for this procurement? Can it be a prime? If it's not a prime, how do we maximize opportunity for indigenous businesses? Absolutely, on the big procurements, we look at it through a lens of how we can have some indigenous elements.

[Rachel Blaney, NDP, North Island—Powell River, BC]

Thank you for that.

This is my last question, I know that identity has come up quite a lot in the last while. We know that when people claim false identity, indigenous people trying to get into the field are the ones it really punishes. You were very clear that ISC is the one that helps guide you in that. What does that discussion look like, in terms of figuring out how to do that better? Especially now that there's such public pressure on it, I would imagine that those discussions are more fluid. Could you share what that process looks like?

[Michael Mills]

I'll be quite quick.

The conversation is very focused on what the role of indigenous communities could be, in terms of identification. We've heard loud and clear from indigenous leaders that they want to be able to validate that people claiming membership in their communities are valid members of their communities and that those businesses are indeed indigenous businesses, according to their principles.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Genuis, we'll go back to you.

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

Thanks, Chair.

I have a comment off the top. It's pretty incredible to me that the Liberals are still trying to defend Randy Boissonnault. We saw that with Mr. Sousa's comments.

Just to be clear about the facts, GHI was owned by Randy Boissonnault. It appears that he dumped his shares—yes—at the last minute. He dumped them in June this year. He owned and directed this company while sitting in the federal cabinet and while pretending to be indigenous.

I don't think that Mr. Sousa pointing out that the Liberal ex-minister dumped his shares at the last minute is much of a defence. This company was owned by the ex-minister, who falsely claimed it to be indigenous-owned. False claims about his indigenous identity were made by the Liberal Party itself. This is why it's an important issue. All of the events around the bids on these contracts happened while he owned the company and while he was still sitting around the federal cabinet table.

I have a follow-up question to the officials on the issue of indigenous identity fraud.

The AFN has said that a majority of the beneficiaries of these programs are shell companies. This is testimony that's been backed up by others. Many concerns, as you've heard, have been raised by indigenous leaders about rampant abuse, in particular, about indigenous identity fraud and various structures that seek to present non-indigenous companies as indigenous through abusive joint ventures and other things. Meanwhile, you're telling us that the government department, Indigenous Services, which is responsible for overseeing this framework, has failed to refer even one single case of indigenous identity fraud to you.

There seems to be a massive disconnect then between what indigenous leaders are saying, on the one hand, about rampant abuse and what they're saying, on the other hand, about the failure of the government department responsible for this to refer a single case of indigenous identity fraud. How do you explain this discrepancy?

[Michael Mills]

I've been in contact with my colleagues and counterparts at Indigenous Services Canada. They have followed up with the AFN. They have invited the AFN to provide specific names. We have not, to my knowledge, received the specific names.

If the AFN were to furnish the names of the companies that it is concerned with, we will absolutely look at them and will do an assessment.

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

I'll just say that you have significant concerns from many different indigenous leaders. It's not their job to police the specific enforcement of the program. They're seeing a problem in general.

You would expect that government departments would be able to assess these bids and identify the problems. When you don't have a single case identified by the government, it suggests that there's a lack of interest, a lack of capacity or whatever it is, to actually enforce the basic parameters of this program.

Isn't it your job to...well, maybe not yours as particular individuals, but isn't it the government's responsibility to enforce this program and not that of indigenous leaders, who are outside of government?

[Michael Mills]

Again, my understanding is that Indigenous Services Canada periodically is doing verification of the businesses in the indigenous business directory. Some businesses will be removed over time because they'll have changes in business status or whatnot. In their work in verification, they have yet to refer one to us on the pure basis of misrepresentation.