Ottawa says it’s awarding more federal contracts to Indigenous businesses than ever before, but the Assembly of First Nations worries some of the companies have no ties to Indigenous communities.
The House of Commons Standing Committee on Government Operations and Estimates is studying the Procurement Strategy for Indigenous Business (PSIB), after questions arose when one of the two companies awarded the ArriveCan app contract during the pandemic claimed to be Indigenous-owned.
“There is currently no consistent way of verifying the legitimacy of Indigenous businesses, which creates a risk of false claims, tokenism … exploitation of bad actors,” said AFN Regional Chief Joanna Bernard by videoconference to the committee hearing in Ottawa on Tuesday.
Bernard, regional chief for New Brunswick, holds the economic development portfolio.
In 2021, the federal government set a mandatory target to award five per cent of government contracts to Indigenous businesses. It says the target was surpassed in 2022-23, with 6.27 per cent of contracts being awarded to Indigenous businesses, amounting to $1.6 billion.
Under the PSIB, Indigenous businesses are defined as any business owned and operated by elders, band or tribal councils, or is registered with the Government of Canada’s Indigenous Business Directory or is registered on a modern treaty beneficiary business list.
Bernard told the committee the government should do more to prevent “corrupt procurement procedures.”
“The AFN had concerns with the lack of transparency on business definitions and eligible criterias for the types of businesses who qualify as Indigenous,” said Bernard.
“Transparency must be prioritized to maintain trust and uphold legitimate Indigenous businesses [to] fair, transparent and open access to procurement opportunities.”
Bernard also said it’s unfair that the government controls status for First Nations people but not for Métis or Inuit, and cuts off eligibility after second generations.
The worry among some leaders like Bernard is that many businesses getting federal contracts are Indigenous-fronted shells for non-Indigenous companies.
But Philip Ducharme, vice-president of entrepreneurship and procurement with the Canadian Council for Indigenous Business and a citizen of the Manitoba Métis Federation, told the committee the attention given to a “few bad actors” could possibly distract from the good work the PSIB is doing for Indigenous communities and business owners.
“We have a lot of our businesses that do that work with the government and they’re not shell companies, they are bona fide Indigenous businesses,” said Ducharme.
“But I still feel it’s almost like a witch hunt against Indigenous business procurement.”
The problem, he said, is often Indigenous businesses have a hard time establishing themselves, and that’s where the PSIB can help.
“There’s been so many times Indigenous people have been left out of the economy … and a lot of the requirements Indigenous people can’t meet, especially when you look at some of the bigger contracts,” said Ducharme.
“I think anything that’s going to help a marginalized group such as Indigenous peoples … is a benefit.”
In the committee meeting, it was suggested by Alberta Conservative MP Garnett Genuis the federal government should look to organizations like the CCIB to verify that applications coming through PSIB are in fact Indigenous-owned businesses.
Tackling joint venture contracts
The ArriveCan app, which was contracted out under PSIB, was a joint venture project between Dalian Enterprises and Coradix Technology.
David Yeo, president and founder of Dalian Enterprise, has told House committees his great-grandfather was chief of Alderville First Nation in Ontario and signed the Williams Treaty. He has said he does not have Indian status due to the second generation cutoff in the Indian Act.
The company received an estimated $7.9 million in public funds for its work on the app, according to the auditor general.
“Now we need to delve deeper into those contracts, there has to be a post award audit done of contracts to see what the actual value of that amount went to the Indigenous business,” said Ducharme.
Ducharme said if a joint venture project between an Indigenous and non-Indigenous business receives funding under PSIB, only 50 per cent of the funds should be included in the government’s five per cent target.
The Canadian Council of Indigenous Business does not list Dalian Enterprises as an Indigenous business, and Ducharme said he does not know the percentage of Indigenous ownership the company claims to have.