Government Operations Committee on April 16th, 2026

[The Chair, Conservative, Kelly McCauley]

Good morning, everyone.

Welcome to meeting number 35 of the House of Commons Standing Committee on Government Operations and Estimates.

We welcome back our good friend, procurement ombudsman, Mr. Jeglic.

It's wonderful to have you here. I said before that you're a great friend of the committee, a great friend of taxpayers and those seeking fairness in our procurement system.

It's wonderful to have you back.

We'll turn the floor over to you for five minutes, sir.

[Alexander Jeglic, Procurement Ombud, Office of the Procurement Ombud]

Thank you very much.

First, I'd like to begin by acknowledging that the land on which we gather is the traditional unceded territory of the Algonquin Anishinabe people.

Thank you, Chair and members of the committee, for inviting me here today to share the results of my office's review of federal procurement practices related to contracts awarded to indigenous businesses under the procurement strategy for indigenous business, which I will refer to for the remainder of the session as PSIB.

My office was established in 2008 as a neutral and independent organization that helps resolve contractual disputes between Canadian businesses and the federal government.

We review supplier complaints, provide mediation services to help resolve contract disputes and conduct systemic reviews of procurement practices across roughly 90 federal departments and agencies.

My office launched this review in response to long-standing concerns regarding the implementation of PSIB. Testimony before this committee, media reporting and procurement data have all pointed to systemic challenges in how PSIB is being implemented.

We launched this review to assess the procurement practices of selected departments in relation to contracts awarded under PSIB.

We reviewed Indigenous Services Canada’s guidance and oversight of PSIB and its reporting against the federal 5% indigenous procurement requirement.

We also examined 27 PSIB set-aside contracts to determine whether their procurement practices supported fairness, openness and transparency, and whether they were consistent with applicable legislation, regulations, policies and guidance.

The five departments subjected to our review were Indigenous Services Canada, Public Services and Procurement Canada, Employment and Social Development Canada, Correctional Service Canada and Shared Services Canada.

Our most significant finding is that the federal government lacks a clear, centralized policy framework for indigenous procurement, resulting in fragmented guidance, unclear roles and inconsistent implementation across departments. This has led to confusion about when to apply the PSIB set-aside, how to verify indigenous ownership and how to monitor and enforce compliance.

Many files lacked verification of indigenous business directory status, and some suppliers were not listed in the indigenous business directory at the time of contract award.

Moreover, for PSIB contracts over $2 million, Indigenous Services Canada must conduct a pre-award audit to verify the 51% indigenous ownership; yet in most cases, there was no evidence on file that the audit was ever requested or completed.

Equally concerning are the oversight gaps that affect whether PSIB contracts deliver real economic benefits to indigenous communities.

We found no evidence that departments verified compliance with the requirement for 33% of the work on PSIB contracts to be delivered by indigenous-owned companies, nor that they had tools to track it. As a result, there was no reasonable assurance that indigenous businesses performed a meaningful share of the work, rather than acting as a flow-through while most of the work was carried out by non-indigenous suppliers.

When it comes to reporting of results, Indigenous Services Canada reported that the government awarded $1.24 billion to indigenous businesses in 2023-24, surpassing the 5% target. However, our review found that the current reporting approach overstates the actual economic benefit to indigenous businesses as it includes the full value of contracts, both PSIB and non-PSIB, without accounting for the portion of the work performed by non-indigenous entities.

We also noted concerns related to documentation, specifically multiple cases where required solicitation and contract clauses were missing. When these clauses are missing, there is no formal mechanism to hold contractors accountable for meeting PSIB obligations.

These gaps in oversight are particularly concerning because indigenous suppliers challenging the award of contracts under PSIB cannot access the recourse mechanisms of the Canadian International Trade Tribunal, or those of my office, as PSIB contracts fall outside the scope of trade agreements.

The issue has existed for 30 years. This means that these indigenous-owned companies' only option is to go to Federal Court, a process that is onerous, time-consuming and often prohibitively expensive.

I've long advocated for regulatory changes to fix this gap. One of my three recommendations in this report is to establish an impartial recourse mechanism for indigenous suppliers.

Overall, fragmented guidance, inconsistent practices and weak oversight mechanisms reduce opportunities for indigenous suppliers and erode their confidence in federal procurement.

Through our outreach, indigenous business owners shared concerns about how PSIB is being implemented, and our findings confirm many of these concerns. To address these issues, I made three recommendations.

The first one is to develop a comprehensive indigenous procurement policy. Indigenous Services Canada, in collaboration with first nations, Métis and Inuit stakeholders, should develop a comprehensive, government-wide indigenous procurement policy, with support from PSPC.

The second one, which is long overdue, is to establish a permanent recourse mechanism to review indigenous supplier complaints about the award of PSIB contracts. My office should serve as a temporary interim mechanism until a permanent and potentially indigenous-led model is established.

The third recommendation is to improve reporting. Indigenous Services Canada should ensure that reporting on the 5% target reflects only the value of work actually carried out by indigenous businesses, so that reporting accurately reflects the actual impact on these businesses.

Before I close, I want to emphasize that indigenous procurement is a powerful tool for economic reconciliation, but only if it is applied consistently, transparently and with strong oversight. The current gaps in policy, guidance, monitoring, reporting and recourse mechanisms undermine the effectiveness of PSIB and erode confidence in federal procurement.

This report should serve as a turning point in strengthening the administration of indigenous procurement.

Implementing my office's recommendations will help ensure that the intended economic benefits reach indigenous communities and strengthen trust in Canada's procurement system. The pillars behind the PSIB strategy are good, but the implementation is not. The next steps must provide indigenous businesses with better outcomes, not worse.

My office believes accountability and transparency are crucial to ensuring that progress is made, and it will monitor and publicly report every six months on the implementation of these recommendations. I note that this is a significant change from our normal practice of two years.

Thank you for your attention. I would be pleased to answer your questions.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, sir.

We'll start with Mrs. Block for six minutes.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you, Mr. Jeglic, for joining us today.

As we all know, we're here to speak to the report that you tabled at the end of last month on the procurement practice review of contracts awarded to indigenous businesses.

You mentioned that you reviewed five departments, but these aren't the only departments that have the ability to procure services under PSIB. Is that correct?

[Alexander Jeglic]

That's correct.

We chose the three that have the highest value and volume of procurement, in terms of the sample size that we cite in the report.

To give a quantum to the value of the contracts that were reviewed, of the 27 samples, that amounts to approximately $100 million in procurement value.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Wow. Thank you for that.

I want to add that I believe this report is extremely damning of the ongoing issues with PSIB. It is consistent with so many findings over the past number of years of both your office and the Office of the Auditor General when addressing issues with the government's procurement practices in general.

I want to zero in on your second recommendation to PSPC. I should note that the recommendations you have put forward actually mirror to some degree recommendations that were made back in 2018 by this committee in its modernizing procurement report. Here we are in 2026, eight years later, hearing some similar concerns and recommendations coming forward.

I want to zero in on the second recommendation that you mentioned, which is that in collaboration with the Department of Justice, PSPC should establish your office as the interim recourse mechanism office to handle supplier complaints related to the award of PSIB set-aside contracts until a permanent mechanism is established.

Given PSPC's outright rejection of this recommendation, can you provide any more insight to this committee as to why you made this recommendation?

[Alexander Jeglic]

I can start, Mr. Chair, by indicating that this recommendation flows from a long-standing frustration. As I mentioned in my opening remarks, we have identified this issue as a systemic barrier since 2021-22. This has been an annual occurrence in our annual report that is tabled in Parliament.

I have briefed the department on numerous occasions about the importance of providing a dispute resolution mechanism, and I've never received a formal response as to whether there will be adoption of a regulatory change. As a result, we note that this creates a blind spot. You can imagine that it also creates an awkward conversation when my office goes before indigenous communities and speaks to them about the importance of their engagement in federal procurement but also formally has to let them know that if they do have a complaint, I cannot formally assess the complaint if the contract is awarded pursuant to PSIB.

There is still ongoing work with the department. Even though I know in the report there is seemingly an outright rejection, we are still working behind the scenes with the department to encourage adoption of the recommendation. There is also the timing. You'll note ISC's response in terms of when they anticipate being able to stand up the permanent dispute resolution mechanism is that it will not be until 2028, so there would be two additional years without a recourse mechanism.

We believe we can create a methodology that would allow for adoption of an interim mechanism. It would also remove a blind spot for our office. We weren't aware of some of the issues in a timely manner because we didn't have the jurisdiction to review certain complaints.

I will say that once we publicly identified the fact that we were doing this report, the number of complaints or issues that were raised with our office by indigenous communities increased significantly. There was a doubling of the number of contacts from indigenous communities, which indicates to me that the problems were there, but they just didn't know where to go, and if they did come to us, the result was not what they were hoping for.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

I know that when I was first appointed to the position of shadow minister for public services and procurement, I did hear from a number of indigenous businesses that were deeply concerned about the process when they had a complaint. I think I referred one of them to your office to follow up with a complaint that they had, and I imagine they would have been very disappointed with the response given the limitations you've outlined for us here today.

I'll end it there, Chair, and pick up again with my next round.

[The Chair, Conservative, Kelly McCauley]

Thank you.

Mr. Gasparro, please go ahead.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you, Mr. Chair.

It's great to see you both again. As I've said to both of you before and as I've said to other witnesses, thank you for your service to the country.

The economic reconciliation of our indigenous Canadians is of particular importance to me. I have some experience working with indigenous nations. I was formerly the head of clean energy finance at a financial institution, and I had the honour of financing the Six Nations of the Grand River's equity in Ontario's second-largest wind farm, one of the largest in the country.

I got a first-hand look at how important owning assets and generating revenue for development corporations are in particular, as well as the socio-economic impact that revenue provides to individuals on reserve. It was eye-opening for me. Obviously, it was an excellent transaction for the Six Nations, and I was proud that the financial institution I worked for was able to provide that financing with some additional partners.

I raise that because I'm looking at some of the figures here. In 2022-23, indigenous procurement exceeded the 5% threshold, which represented $1.63 billion in contracts. Then, in 2023-24, we again cleared the 5% threshold with a total of $1.24 billion awarded to indigenous businesses. It's great to see.

Do you have any line of sight on the multiplier effect of those contracts awarded, such as jobs they created, etc.?

[Alexander Jeglic]

Mr. Chair, I have two answers.

One, certainly there is a multiplier effect, but where I'll go with the answer is unfortunately a bit negative in the sense that the data points that exist around indigenous procurement are certainly not where we would like them to be. That triggers the second part of my response, which is around the 5% and how verifiable it is that the 5% actually directly impacts indigenous suppliers.

Then, if you'll allow me, I'll build out what we have said in the report and why it's important to get a much stronger baseline set of data so that we can know, as we make incremental progress and hopefully more than that in the weeks and months ahead, how we're progressing.

Essentially, the way the 5% is calculated is a combination of both PSIB set-asides and non-PSIB set-asides that are awarded to indigenous suppliers. When you look at the attributes of the strategy, there are two important criteria. One is 51% ownership and control, and the other one is 33% of the value being delivered by that indigenous supplier that was contracted. The total value of the contract, however, is counted against the value that's included in the 5%, so immediately there's a disconnect that's created. In the 33% specifically, you could have a delta of 67% that's not actually provided to the indigenous supplier but is in fact counted against that 5%.

An additional concern we had was also the amount of discretion associated with the exceptions to the total value of government procurement. It's 5% of the total value of procurement that's ultimately calculated, but these exceptions amount to as much as 50% to 60% of the total value, so you're diminishing the denominator significantly before calculating that 5% criteria.

The last thing I'll say is that in addition, we found a lack of integrity associated with the 33% criteria, and that 33% wasn't a contractual term in all of the contracts we saw. Therefore, the integrity associated with even that 67% figure is in question.

The PSIB has absolutely produced positive results for certain indigenous suppliers, but I don't think it's commensurate with the talking points around the 5%. The 5% has resulted in an overstatement of the impact on indigenous communities, and when you speak to those indigenous communities first-hand, they are also struggling to see that level of impact in their communities.

That being said, our office has also heard very positive things about the PSIB, and there have been positively impacted indigenous suppliers who have benefited from the set-aside. By all means, what I'm asking is let's not punish indigenous suppliers, because any wrongdoing is not theirs. The wrongdoing is in the implementation of a strategy that has existed for 30 years, and that is my ultimate frustration with why I'm here today. I shouldn't have to speak on 30 years of failed implementation.

That's why I think so many people are disappointed with the outcomes from this report, but it's also important to reflect back on other recommendations made and see why more change hasn't already happened.

I know you asked a data question, and I've taken it elsewhere, but the last point I'll make is about accountability.

Ultimately, we have to have accountability to ensure change. That's where the recommendations are so important to having a policy that provides that centralized guidance to everyone so everyone understands their obligations so they too can experience the positive impact you experienced first-hand across the board so indigenous suppliers feel supported and that they can trust in the federal procurement process.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Is that it?

Okay.

[The Chair, Conservative, Kelly McCauley]

That was very good.

Madam Gill, welcome back to OGGO. The floor is yours for six minutes.

[Marilène Gill, Bloc, Côte-Nord—Kawawachikamach—Nitassinan, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for sharing the various findings and recommendations in their report.

I wanted to start by saying that it has now been 30 years. The PSIB is indeed 30 years old. In terms of reconciliation, it has been over 10 years. We have the United Nations Declaration on the Rights of Indigenous Peoples. We have the 5% target, which has been in place for four years. Yet we still haven't reached it.

I'm thinking of the Assembly of First Nations Quebec‑Labrador, or AFNQL, for example. The AFNQL asked me about this topic. The organization is wondering whether we currently have everything that we need. I'm not necessarily talking about willingness. However, we could resolve all the issues that you raised in your report. We could do so.

[Alexander Jeglic]

We could do so for sure. I'm sure that all the issues in our report can be resolved. However, someone must take this matter very seriously. I'm not saying that no one is taking this matter seriously. That said, someone must take responsibility and accountability.

[Marilène Gill, Bloc, Côte-Nord—Kawawachikamach—Nitassinan, QC]

Someone must indeed take accountability.

This is more or less the concern that people shared with me when they saw this report. At this point, we're still at the same stage.

I know that the Assembly of First Nations Quebec‑Labrador is also wondering about the possibility of establishing which businesses are indigenous. The AFNQL, the Assembly of First Nations and the first nations themselves can't establish which businesses are indigenous. Obviously, for the first nations, this still amounts to a demonstration of paternalism. The first nations would like to carry this out themselves, as they do with the first nations identification, or ID1N.

Couldn't we leave the identification of eligible businesses to the indigenous bodies, which really play a key representational role?

[Alexander Jeglic]

I'll respond in English to be more specific.

Indigeneity is a significant issue, but you'll note that one of the scope exclusions of our report was we didn't look at the indigenous business directory. The reason is that at the time of our launch, there were three other groups, including a House of Commons committee and ISC themselves, that were conducting an internal audit and looking specifically at the indigenous business directory, and they were assessing eligibility at the time. We were very concerned that we had no unique expertise around indigeneity and felt like, at a minimum, we would have to provide recommendations consistent with what those reviews were providing.

I absolutely echo the comment about inclusion of all indigenous people in the conversation. Our recommendations are worded in the way they are to ensure that inclusion forms part of the outcome, because if you don't have buy-in from indigenous communities, then what's the point of the strategy?

[Marilène Gill, Bloc, Côte-Nord—Kawawachikamach—Nitassinan, QC]

Exactly. This is especially true because, as you also showed in your remarks on the figures, when we exceed 5% and we're actually at 6%, it isn't really 6%.

I would like to talk about another aspect, even though it's a bit off topic. It's actually still related, because these issues are interconnected. The AFNQL was also wondering about authentication mechanisms, as I spoke about earlier, but more generally in terms of the fight against cultural appropriation and indigenous identity fraud. This identity fraud remains a possibility, so we need to address it. The AFNQL is wondering about this and I find the issue noteworthy. I would like to hear your opinion on this.

We know that, when it comes to craft or cultural markets, the products on offer may not be legitimately indigenous. The AFNQL is wondering about this. The United States has legislation in this area. I'm not saying that we should apply legislation in exactly the same way. I'm talking about the Indian Arts and Crafts Act of 1990, which protects the first nations from this type of identity fraud.

Could something be explored? We know that this matter is another issue entirely and that it's a bit off topic. That said, having this type of legislation would strengthen accountability and really support the first nations. They could then say that these products are truly made by the first nations and that these aren't cases where someone decided to make money, as we say in Quebec, on the backs of the first nations.

[Alexander Jeglic]

I support that sentiment. I'm not in a position to suggest a policy to the federal government, but I do support it. There are indeed examples in procurement.

There are exceptions already considered in federal procurement, where, for example, a unique supplier for a specific good or service is available to also be an exception to competitive procurement. It sounds like, in the area of cultural appropriation, there are examples where authentication is important. These issues must be looked at through the lens of whether additional protection is necessary.

In terms of a policy position from our office, again, we obviously support indigenous suppliers to make sure they are treated fairly, and that will always be our mandate. Through that lens, I can say it's important to be treated fairly.

[Marilène Gill, Bloc, Côte-Nord—Kawawachikamach—Nitassinan, QC]

Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Ms. Jansen has the floor for five minutes.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I want to start with something that happened during my 2024 by-election because I think it illustrates the issue at hand very well.

The Liberal candidate who ran against me publicly identified as Métis during the campaign. It wasn't a passing comment. It was part of how she presented herself to voters. In B.C. and across Canada, Métis identity is not something informal. There are recognized registries and organizations that require documentation, genealogy, community connection and verification. It's a process, and it's intentionally rigorous because it protects the integrity of the identity of people who have carried it through the generations.

During that campaign, the local Waceya Métis Society came forward and asked a very straightforward question. They asked her to provide documentation to substantiate that claim. She wasn't able to produce any of the documentation to satisfy their request.

What I saw was something more important than a headline at that time. It was a serious breach of integrity without any consequences. The issue basically just went away, and it was clear that the Liberal Party hadn't properly vetted their candidate and didn't require any documentation of her Métis background, nothing.

To tell you the truth, I'm not surprised to see these serious breaches in this program that you've documented in your report.

If your report shows that these basic verification steps aren't being taken, what is actually in place to prevent the kind of abuse that Canadians have already seen in other contexts from happening here? What are the consequences for cheaters? Do we even care as long as we hit our 5% target?

Can you explain the lack of integrity in this 33%?

[Alexander Jeglic]

That's a lot to unpack, but I'll start with the front end in terms of how we can reinstill integrity into the process.

The requirement to be registered on the IBD is that initial check to determine compliance with indigenous eligibility. That check happens, and then there's a subsequent check that can happen by way of contractual provision. The contractual provision can stipulate that there's an attestation indicating that they continue to comply at the time of contract award. Then there's a final contractual provision that would also require continuity of the 51% maintenance through contract performance.

You'll note in our report we also identified that, in contracts in excess of $2 million, there's a mandatory pre-award audit that would validate that contract award that the supplier is in fact compliant with the 51% ownership and control requirement.

You have four different touch points that would help determine whether that eligibility is being maintained. What you saw in our report was that there were gaps in compliance with each one of those elements. That's how you get to a situation where, even with all of these considerations in place, if the implementation isn't appropriate then, all of a sudden, they're meaningless.

I'll now turn to the 33%. You'll note that we actually excerpted it in our report. There's a fundamental difference of opinion as to what the 33% is meant to achieve. From at least several departments, the view is that unless there's subcontracting involved in the contract, as identified on contract award, there's no need for the 33% provision because ultimately the contract is awarded to an indigenous entity, and there is no subcontracting. Therefore, 100% of the value is flowing back to the indigenous supplier.

The issue we see is that they, in fact, allow for joint venture agreements. There are also instances where you may not identify subcontracting at the initial phase, but the subcontracting happens later, and if you don't have that provision in the contract, you can't enforce the 33% requirement.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I have a very quick question, as I think I'm running out of time.

What about consequences? You don't mention anything in here about consequences. I don't see how we fix it if people aren't actually given consequences.

[Alexander Jeglic]

In terms of consequences, that's a very good question. I use the term accountability, but consequences are a different form of the same question.

There's been a very recent change, in February 2026, which includes the provision of liquidated damages clauses. That's a pre-established calculus as to what financial consequence will happen if you no longer meet that eligibility criteria. If you're alluding to criminal implications, if we're seeing fraud, then that would be something that would have to be referred to the RCMP.