Evidence of meeting #44 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 business.
A recording is available from Parliament.
11:05 a.m.
Conservative
The Chair Conservative Kelly McCauley
I call the meeting to order.
Welcome, everyone, to meeting 44 of the House of Commons Standing Committee on Government Operations and Estimates, fondly known as “the only committee that matters”.
11:05 a.m.
Conservative
The Chair Conservative Kelly McCauley
We will wait a moment while we fix our translation.
While we're checking translation, can we confirm that the witnesses who are Zooming in have passed the audio check?
They have. Thank you.
Is the translation working now, Ms. Vignola?
11:05 a.m.
Conservative
The Chair Conservative Kelly McCauley
The translation is back and it's working.
We are continuing our diversity in procurement study. We have four witnesses today, each with an opening statement.
We'll start with the opening statement from Mr. Metatawabin.
Please go ahead for five minutes.
11:05 a.m.
Shannin Metatawabin Chief Executive Officer, National Aboriginal Capital Corporations Association
[Witness spoke in Cree]
[English]
Waachi’ye. My name is Shannin Metatawabin. I'm the chief executive officer for the National Aboriginal Capital Corporations Association. I am also a member of the Peetabeck or Fort Albany First Nation of the Mushkegowuk nations.
Thank you for the invitation to speak to you today.
Before I start, I would like to acknowledge that we are meeting on the traditional and unceded territories of the Anishinabe Algonquin people.
The National Aboriginal Capital Corporations Association, NACCA, is the representative organization of over 50 indigenous financial institutions across Canada, from coast to coast to coast. They provide developmental lending to hundreds of first nations, Inuit and Métis businesses across the country.
Indigenous financial institutions are an incredible success story. They were recently highlighted in a 2019 OECD study that promotes this network as a model for the rest of the world.
During a 30-year program partnership with the Government of Canada, indigenous financial institutions have provided over 50,000 loans, totalling $3.3 billion, to indigenous-owned businesses. Each year, IFIs make over $120 million in loans to indigenous-owned businesses. Indigenous financial institutions have a current aggregate loan portfolio of $329 million. We are proud to state that we have a 97% repayment rate.
Recently, we launched an indigenous growth fund. It is a $153-million investment vehicle to provide the private sector mechanism to invest into our community. This was supported by BDC, EDC and FCC, along with the Government of Canada.
Indigenous businesses are a key driver of employment, wealth creation and better socio-economic outcomes for indigenous communities and people. Every loan we provide results in 3.34 jobs and contributes $3.6 to GDP for every dollar lent. Additionally, IFIs' lending in indigenous communities is linked to marked improvements in community well-being scores, with poor health outcomes being reduced by 75% and food insecurity being cut in half.
I commend your committee for undertaking your work to examine diversity in procurement. I believe that NACCA can provide some important insights and recommendations to support your study.
Since the government announced its commitment to ensure that a minimum of 5% of the total value of federal contracts is held by indigenous businesses, six indigenous organizations—NACCA, CCAB, AFN, ITK, CANDO and NIEDB—formed the national indigenous procurement working group to begin planning. These are in your packages, so you'll see the full names of them there.
Additionally, in 2022, the national indigenous economic strategy for Canada, which was developed by over 20 indigenous organizations, recommended that the government devolve government procurement processes to indigenous institutions.
Article 5 of the United Nations Declaration on the Rights of Indigenous Peoples reaffirms the need by highlighting “the right to maintain and strengthen their distinct political, legal, economic, social and cultural institutions, while retaining their right to participate fully, if they so choose, in the political, economic, social and cultural life of the State.” This is something that Canada is also supporting.
The federal procurement process is a complex system with many players, including Indigenous Services Canada, Public Services and Procurement Canada, the Office of the Procurement Ombudsman, Treasury Board Secretariat, and the Office of the Comptroller General.
The federal procurement process presents many barriers to our businesses, including systemic bias within the procurement ecosystem, restrictive administrative processes, multiple procurement actors creating a complex landscape to navigate, capacity for first nations to respond to opportunities, and lack of a trustworthy and updated national database of available first nations businesses.
Today, I'm proposing the creation of a first nations procurement institute that will play a key role in the procurement industry by providing culturally appropriate wraparound services via a single window of contact for all things related to first nations procurement.
The mission of the first nations procurement institute will be to maximize the potential for first nations businesses to successfully access and win procurement opportunities through providing necessary certification, education, networking and promotion. The first nations procurement institute will be focused on better outcomes for first nations businesses while assisting the federal government to reach its 5% procurement target.
The first nations procurement institute will offer four streams of service to address the needs of its users, including a first nations business certification and a directory of certified businesses; education services and training; networking, collaboration and partnerships; and the promotion of first nation procurement and, most importantly, advocacy and accountability.
It is time that Canada acknowledges that the current system is not working. It is also time to recognize that indigenous-led solutions have been enormously successful. The success of the indigenous financial institutions is a testament to our view that indigenous organizations are best placed to design and deliver programs and services to indigenous people, including first nations.
The existing federal structures that are supposed to support indigenous procurement opportunities, including the procurement strategy for indigenous business, have not been successful. After more than 25 years of operation under PSIB, indigenous procurement remains stubbornly under 1% of total federal procurement. You may recall, from their testimony before your committee in October, that federal officials were unable to provide any concrete measures of the government's effort at moving toward the 5% target.
During the last election, all major parties committed themselves to undertaking the important work of walking the path to reconciliation. Reconciliation is not possible if indigenous people continue to be excluded from Canada's economy and the sharing of Canada's prosperity. First nations want an end to the systemic economic exclusion, and to be full partners in this confederation. This is what we mean by economic reconciliation. Working together to meet the government's indigenous procurement commitment is a significant step in the journey, but the Government of Canada must be willing to accept that first nation people are true partners in this effort.
Meegwetch.
11:10 a.m.
Conservative
The Chair Conservative Kelly McCauley
Thanks very much.
Now, over Zoom, we have Ms. LaBillois, please, for five minutes.
11:10 a.m.
Victoria LaBillois Vice-Chairperson, National Indigenous Economic Development Board
Thank you, Mr. Chair.
[Witness spoke in Mi'kmaq and provided the following text:]
Weli'egsipug. Teluisi Gepme'g Gitpuisq. Gespe'gewagi tleawi. Aq Wigi Listuguj.
[Witness provided the following translation:]
Good morning. My name is Victoria LaBillois. My traditional territory is Gespegewagi, and I live in Listuguj.
[English]
I come to you from the Listuguj Mi’gmaq First Nation, located on the southern shore of Gaspésie.
Thank you for inviting me to speak with you today on the issue of diversity in procurement. I'm the vice-chair of the National Indigenous Economic Development Board, a ministerial-appointed, non-political organization mandated to provide advice to the federal government on issues related to indigenous economic development.
Our board was established in 1990 and is comprised of first nation, Inuit and Métis business and community leaders from across Canada. I invite you to check out our board's website, which includes our series of national indigenous economic progress reports, the next of which will be released in late 2023.
I also invite you to review the national indigenous economic strategy referenced by my colleague Shannin. This strategy was released in June 2022. Brought forward in partnership with more than 20 national indigenous economic organizations, this strategy provides economic development practitioners and policy-makers with a coherent vision designed to guide efforts in the coming decade.
As you are aware, the Government of Canada is the largest purchaser of goods and services in the nation, spending approximately $22 billion annually on goods and services. Clearly, the federal procurement policy has the potential to be a key driver of economic reconciliation.
However, despite the federal commitment to increase access to federal procurement opportunities for indigenous businesses, year over year, indigenous businesses have received less than 1% of the value of contracts for tendering goods and services to the Government of Canada.
Despite the Government of Canada's goal that federal departments and agencies ensure that a minimum of 5% of the total value of federal contracts is awarded to indigenous businesses, innovation in this area continues to lag. There are a number of reasons for this, including constraints that are hard-wired within the Indian Act and impediments to accessing capital by indigenous communities and governments.
The NIEDB is a member of the federal government's indigenous procurement working group and the indigenous reference group created specifically for these issues. We applaud the government's openness to working with indigenous representatives on these issues and recognize the significance of the new 5% target. However, more can be done in the immediate term to better utilize government procurement processes. In this context, the NIEDB believes a significant investment is necessary for the establishment of a new indigenous-led procurement institution at the national level. This is our key recommendation for immediate action.
Indigenous national economic development organizations are close to finalizing a business plan for an indigenous procurement institute with the responsibility of maintaining a directory of certified indigenous businesses, and helping such businesses navigate federal and corporate procurement processes.
The NIEDB also recommends that the very low thresholds for non-competitive processes and sole-source contracting be increased immediately. The current rules indicate that contract opportunities for goods over $25,000, services over $40,000 and construction over $100,000 must be advertised via tendering, and that only opportunities under these amounts may be awarded through a sole-source contract. These limits have not changed for many years. In 2021, the Treasury Board Secretariat indicated that increasing the sole-source contract limits for indigenous businesses to $100,000 would not contravene Canada's free trade agreements.
Increasing these thresholds immediately will assist indigenous businesses in taking advantage of the opportunities presented by procurement within the federal government.
I would also like to share a few more recommendations. The implementation of these will be crucial to the success or failure of the government's goals in this area.
In areas of the country where the indigenous population is more than 5%, the target for the total value of federal contracts awarded to indigenous businesses should also be proportionally higher.
Training on indigenous cultural awareness for procurement officials should be mandatory. This is necessary not only to ensure that government officials understand indigenous cultures and the importance of economic reconciliation, but to deal with the growing issue of false indigeneity within business lists used by the Government of Canada.
Finally, the NIEDB recommends that the government monitor and report on an annual basis, distinct from other reporting processes, whether or not each federal department is meeting its mandated 5% indigenous procurement target.
Thank you. Wela'lioq.
11:15 a.m.
Conservative
The Chair Conservative Kelly McCauley
Thank you very much. That was right on time.
Mr. Ducharme, please go ahead for five minutes—see if you can match that.
11:15 a.m.
Philip Ducharme Vice-President, Entrepreneurship and Procurement, Canadian Council for Aboriginal Business
Good luck with that, but thanks.
Good morning. As mentioned, my name is Philip Ducharme. As vice-president of entrepreneurship and procurement at the Canadian Council for Aboriginal Business, I want to thank you, Mr. Chair and all distinguished members of this committee, for the opportunity to provide you with my testimony and to answer your questions.
Speaking to you from my home office, I acknowledge the land as the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinabe, the Chippewa, the Haudenosaunee and the Wendat peoples, and now home to many other first nations, Inuit and Métis people.
Since CCAB's two previous appearances before this committee, in February and June 2021, it is heartening to see that one of our recommendations that was brought forward has been implemented. We were asking for measures that would mandate federal government departments and agencies to publicly report on their purchases from indigenous businesses within a shorter time frame. Currently, the most recent data we have been able to publicly identify for indigenous procurement was from fiscal year 2018.
On August 6, 2021, the Minister of PSPC announced new and immediate measures to increase federal procurement opportunities for indigenous businesses across Canada. Included in that announcement was the development of a reporting framework that would see spending publicly reported in a much more timely manner. My understanding is that the value of federal spending with indigenous businesses for the fiscal year ending March 31, 2023 will be published by the end of calendar year 2023.
By having a fulsome mechanism for measuring and reporting on indigenous procurement, we will be better situated to evaluate and improve on meeting the minimum mandated requirement of 5% indigenous procurement spend.
In 2022, CCAB conducted research on government contracting and heard from indigenous business owners about a wide range of challenges preventing them from taking full advantage of federal procurement opportunities. One of the most common themes that indigenous businesses expressed was a concern about the lack of knowledge among government staff regarding indigenous peoples and communities and the procurement process itself.
Business is best conducted between parties that understand and respect each other, so providing increased training and awareness for government employees will help facilitate lasting and mutually beneficial relationships, which are the cornerstone of a robust procurement strategy. True economic reconciliation is accommodating indigenous peoples to ensure their full participation in the Canadian economy, not forcing them to assimilate in order to obtain contracts.
A portion of this concern was addressed in the PSPC minister's August 21 update, when she announced that the federal government will be developing a mandatory training for the federal procurement community on modern treaty and self-government agreement implementation of procurement obligations, and ensuring that such training is integrated into the regular curriculum. Enhanced indigenous cultural awareness will also be explored, so that more responsive and culturally relevant procurement strategies may be developed. That is a start, but we will push to ensure that the enhanced indigenous cultural awareness will quickly move from exploratory to implemented.
Indigenous businesses also claim that the federal government has failed to make the necessary changes to promote access to the procurement process itself, given its many intricacies. Businesses consulted felt inferior and marginalized by the contract requirements, which excluded indigenous businesses in favour of larger mainstream companies. Some participants found the process difficult and time-consuming, and believed that the requirements were set up in a way that excluded indigenous businesses, despite having the capacity to execute a project. Bonds, payment holdbacks and, particularly, over-complex applications all contributed to these barriers.
If the federal government is truly committed to allocating 5% of its procurement spend to indigenous businesses, it should also be responsible for providing indigenous businesses with the tools and resources they need to participate meaningfully in that process.
Another challenge frequently cited by indigenous participants in our procurement research is that federal departments need to better collaborate to share best practices when engaging with indigenous businesses and communities. While collaboration among federal departments to share best practices will help, the way forward must include establishing a government-wide approach to indigenous procurement that ensures consistency by explicitly laying out the best path and penalizing those who break from it, while ensuring that the context and needs of indigenous businesses are substantively addressed.
If the federal government is truly committed to indigenous reconciliation, more must be done to mobilize the recommendations of national indigenous economic organizations such as CCAB, and those that my fellow witnesses are representing, and apply the learning and the takeaways we gather directly from indigenous business leaders.
We at CCAB are very fortunate to have the opportunity to connect with our indigenous businesses on a daily basis, and we will continue to be the voice for indigenous businesses as we engage with the federal government to ensure that our indigenous businesses reach the minimum of 5% of the dollar value of federal procurement. Even though there are still many barriers and challenges to overcome, we look forward to the future with hope and excitement as we rebuild and strengthen the path towards reconciliation and a healthy and prosperous Canada.
Thank you. I look forward to answering any questions you may have.
11:20 a.m.
Conservative
The Chair Conservative Kelly McCauley
Thank you, Mr. Ducharme.
Now, Mr. Wanuch, go ahead, please, for five minutes.
11:20 a.m.
Ray Wanuch Executive Director, Council for the Advancement of Native Development Officers
Good morning, honourable Mr. McCauley and honourable members of the standing committee.
My name is Ray Wanuch. I am the executive director of the Council for the Advancement of Native Development Officers, otherwise known as CANDO. Today, I am speaking from Edmonton, the traditional name of which was Amiskwaciy Waskahikan, which means “beaver hills house”, located within Treaty 6 territory, the traditional territory of the Cree, Blackfoot, Dene, Stoney and Métis peoples.
Indigenous economic development is essential is for positive socio-economic outcomes and empowerment of indigenous peoples. CANDO is a national indigenous organization established in 1991 by economic development officers throughout Canada. CANDO provides membership certification, training and tools to support EDOs, land managers and community leaders to create positive impacts on indigenous economies. CANDO provides both in-person and virtual support for EDOs through a national “Links to Learning” educational series, an annual conference and an annual youth summit.
CANDO has co-developed an innovative community economic development initiative called CEDI, which creates positive relationship-building opportunities between indigenous communities and their municipal neighbours to work together on mutually beneficial projects. The initiative is co-delivered by the Federation of Canadian Municipalities and CANDO. One such example was the CEDI project that partnered Enoch Cree Nation with the City of Edmonton.
Since 2021, CANDO has worked with procurement assistance Canada to create studies, pilots and new tools for EDOs and community leaders to support increased indigenous community and business access to federal procurement opportunities. As part of this partnership, CANDO has developed several reports and studies around indigenous participation in federal procurement: in November 2020, on federal procurement and indigenous capacity building and an assessment of how CANDO and the EDO network can support PSPC; in July 2021, a road map of federal procurement progress for indigenous communities and businesses; and also in 2021, an inventory of federal programming supporting indigenous businesses.
Inclusive procurement and making procurement more inclusive are good for everyone, and by finding better and more creative solutions to increase indigenous participation in federal procurement, the government will begin to change its culture and will also have very positive impacts for other disadvantaged groups.
CANDO feels that the government needs to have better reporting and data collection. Eventually this responsibility is expected to be transferred to a group of indigenous organizations to manage the process. CANDO feels that the concept of a data lake, which aggregates data from multiple sources, will likely be required to support and measure the impact of the 5% policy and the transformation of the procurement study for indigenous business.
During the work completed by the indigenous business COVID-19 task force, CANDO and other national indigenous organizations compiled a database focused on providing more indigenous businesses to supply PPE to the Government of Canada. The data lake concept was attempted between the collective networks of national indigenous organizations and Indigenous Services Canada. CANDO viewed this effort as being successful, as several indigenous organizations won federal procurement contracts and were supported by the task force. Yet a key issue with the process was the inability to obtain contract award data for indigenous businesses. That made it difficult to track progress. Being able to have a central point for indigenous business services and capabilities and more timely access to contract bidding and award data would allow for more effective decision-making.
CANDO has been developing a capacity assessment process and tools for EDOs, which are currently being piloted in B.C. One important consideration for achieving the 5% goal is to ensure that we can understand the current skills gaps that keep indigenous people from working in major industries.
Early engagement with indigenous rights holders, communities and businesses is essential. In many communities, economic development officers and economic development corporations are a key hub for engagement with indigenous peoples. The earlier in the process the government can engage with communities to allow time to prepare for opportunities, the more socio-economic benefits will likely be realized.
CANDO provides training for EDOs through virtual and in-person “Links to Learning” events and an ongoing weekly webinar series.
CANDO and procurement assistance Canada are expanding their EDO procurement mentorship pilot, which will provide a “train the trainer” model for EDOs to understand the basics of procurement. Two cohorts have graduated 18 participants, and this program will now be rolled out within all procurement assistance Canada regions, of which there are six.
A key barrier noted in CANDO's work is a lack of ability to understand the procurement process, whether it's a community responding to an indigenous participation plan requirement in an RFP or whether an EDO is supporting a community-based business writing a proposal. CANDO's procurement mentorship should provide more insights into training requirements.
One of the lessons learned from the indigenous business COVID-19 task force was that there needed to be a support service for indigenous communities and businesses to participate in federal procurement. The support service was launched to help communities go through the process. Under an SPI pilot, CANDO is developing a virtual EDO website space to provide a library of support tools for EDOs, communities and businesses, along with a resourced indigenous procurement navigator role. We feel this strategy will provide more procurement and be more inclusive for indigenous communities and businesses.
Ensuring that public servants understand the culture of indigenous communities is essential. Specifically, giving procurement officers the authority to take more time to prioritize working with indigenous communities and businesses and respecting the communities' requirements will increase trust and build relationships. An example of positive cultural—
11:25 a.m.
Conservative
The Chair Conservative Kelly McCauley
Mr. Wanuch, I'm sorry. I've given you a bit of extra time because you're from Edmonton as well, but can I get you to wrap up, please?
11:25 a.m.
Executive Director, Council for the Advancement of Native Development Officers
Okay.
CANDO is well positioned to support the rollout of this 5% policy with national, regional and local networks, within indigenous communities and government organizations. We're currently working with PSPC, ISC, NRCan, PrairiesCAN, Transport Canada and DFO's Coast Guard.
Thank you.
11:25 a.m.
Conservative
The Chair Conservative Kelly McCauley
That's wonderful. Thank you very much.
Before we start, I just want to thank all four witnesses for the very important testimony you've given today in your opening statements. I've worked on this particular issue, I think, three times now in OGGO, and the information you've put forward is fantastic.
I also want to welcome back a couple of OGGO alumni. Mrs. Shanahan is joining us today virtually, and Dr. Robert Kitchen is back today. Welcome back, OGGO alumni.
We'll start with Mrs. Kusie for six minutes.
Go ahead, please.
11:30 a.m.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Thank you, Mr. Chair.
Thank you very much, esteemed witnesses, for being here with us today. Meegwetch. I'm the member of Parliament for Calgary Midnapore, which is located in the traditional territories of the Niitsitapi and the people of the Treaty 7 region of Alberta. As well, of course, the city of Calgary is also home to the Métis nation of Alberta, region three.
Madame LaBillois, Indigenous Services Canada maintains the indigenous business directory, which identifies over 2,100 businesses that can compete for federal contracts set aside through the procurement strategy for indigenous businesses. Only indigenous businesses that meet the eligibility requirements for the indigenous set-aside program can register in this directory.
Do you think the eligibility criteria are adequate, or do you think there need to be changes?
11:30 a.m.
Vice-Chairperson, National Indigenous Economic Development Board
Thank you for the question.
I think changes need to be made. What we see happening across the country, actually across North America, with the issue of false indigeneity, is also pervasive throughout the Government of Canada's listing of indigenous businesses. Where there is self-identification as the threshold, you need to ensure that there are mechanisms put in place to verify the authenticity and veracity of this type of information. It's a pervasive problem that has existed for a number of years across the procurement strategy for indigenous businesses.
The short answer to your question would be yes.
Thank you.
11:30 a.m.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Thank you.
What do you think are the biggest barriers for indigenous businesses to get on the indigenous business directory?
11:30 a.m.
Vice-Chairperson, National Indigenous Economic Development Board
I don't think there's a barrier to get on the list. I think the barrier is that there is a lack of due diligence in confirming the indigeneity of these businesses. Where there is a potential for material gain, we are going to see abuse and fraud. As more attention is being paid to procurement and with setting the 5% procurement threshold, that brings lots of non-indigenous businesses out of the woodwork. It could be putting a red face on a company and seeking to register on this procurement database.
We have a challenge. I've heard my colleagues mention the difficulty in accessing procurement opportunities. You have companies pretending to be red-faced to benefit from the strategy. They have the experience to navigate the system, and it's at our expense. We have a wonderful program that exists on paper, yet the challenge is implementing this and addressing it. How can we address this? I think it's by strengthening the offices regionally, having more contact with boots on the ground, with legitimate indigenous companies that exist. The centralization of this does not allow for that knowledge to exist.
Thank you.
11:30 a.m.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Given that, how can we encourage more indigenous businesses to apply to be on the directory? To your point, what I would potentially describe as fraudulent applications might exist, but given that, how can we encourage more indigenous businesses to apply, please?
11:30 a.m.
Vice-Chairperson, National Indigenous Economic Development Board
That's an easy question. Thank you.
We have a number of organizations that exist across the country that interface regularly with legitimate indigenous businesses. You've heard from my colleagues, be it the Canadian Council for Aboriginal Business—which does have an existing database through its market-based program—through my colleague Ray with CANDO—they have a network of economic development officers from coast to coast to coast who know who indigenous businesses are—as well as through my colleague with NACCA. The lending institutions are very familiar with legitimate indigenous businesses.
We have these networks. How do we collaborate and bring them together under an indigenous-led procurement institute? I think that would help us to achieve this. Thank you.
11:35 a.m.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Do you believe the process to get on the directory is too cumbersome for indigenous businesses?
11:35 a.m.
Vice-Chairperson, National Indigenous Economic Development Board
I'm a serial entrepreneur, and I have registered a number of my businesses. Is it cumbersome? No, but there were a number of steps to take, like obtaining the SRI number and different pieces. The issue was that once I got on the database, I started to receive spam and people trying to sell things. It represents an opportunity cost for a small entrepreneur. There was some navigation to get on the system, but once I was on the system, I wasn't hearing about opportunities that I could apply for for my companies. I was more being sold things.
Thank you.
11:35 a.m.
Conservative
Stephanie Kusie Conservative Calgary Midnapore, AB
Mr. Metatawabin, did you want to weigh in, please?
11:35 a.m.
Chief Executive Officer, National Aboriginal Capital Corporations Association
Thank you for that. I'm glad you're spreading it around.
I think what we want to recognize is that we're not trying to promote the continued use of a database that hasn't been successful over many decades. I think what we're trying to do is provide solutions for a better way forward so that we can actually impact the target positively.
What we're promoting is the creation of a new institute that will maintain and develop a database that will look at all the problems of the current database, which include self-identification, those businesses that are on there that are probably not indigenous. They're currently going through an audit of that database right now so that when we do develop a database it will be good information. I think we should focus, really, on where we need to go.
