Only specific individuals are benefiting: Indigenous groups press for greater say in Ottawa’s contracting policy rules
Indigenous business leaders say Ottawa has not done enough to oversee its Indigenous contracting policy, and they want a larger role in determining which businesses are eligible to participate.
The Procurement Strategy for Indigenous Business, designed to benefit Indigenous businesses and communities, has persistently been the target of warnings from experts inside and outside the government.
They have said the PSIB’s rules allow non-Indigenous businesses to take advantage of the policy by partnering with Indigenous shell companies – businesses with only a few employees that exist to form joint ventures with larger companies. Such arrangements have been criticized for not resulting in tangible benefits for Indigenous communities.
A Globe and Mail investigation published on Friday found that the federal government ignored decades of warnings about the policy, and that the existence of shells amounted to an open secret in the Indigenous business community.
Shannin Metatawabin, CEO of the National Aboriginal Capital Corporations Association, said The Globe’s reporting highlights a long-standing problem with the federal policy.
Launched in 1996, the PSIB allows departments to designate “set-aside” contracts that must go to Indigenous businesses. But the policy still permits non-Indigenous companies to participate through joint ventures, as long as Indigenous companies own and control a majority of the partnership.
In practice, experts said this mechanism has allowed larger, non-Indigenous companies to team up with small Indigenous companies, which often have minimal ability to carry out the work.
“It’s not the intent with which the program was created,” Mr. Metatawabin said. “I think the impact to the community is really what’s missing here. Only specific individuals are benefiting from this, and in most cases – the lion’s share – it’s the non-Indigenous.”
Mr. Metatawabin’s organization is part of a push by five national Indigenous economic organizations and the Assembly of First Nations to promote a new First Nations Procurement Organization. The group would work with the government to ensure that the policy’s goals are being met, and that Indigenous people have more say in determining what constitutes an Indigenous business.
Decades of warnings show Indigenous Services Canada is not able to properly manage the policy on its own, he said.
“I think the department is ill equipped to decide or determine authenticity of an Indigenous person, let alone the business acumen of whatever application is in front of them.”
“The whole thing needs to be reviewed,” he said. “I think it’s a very important program, if it’s done right.”
For decades, the procurement strategy occupied an obscure corner of Ottawa’s massive contracting efforts. That changed in 2021 when the Liberal government announced that 5 per cent of the value of all federal contracts should go to Indigenous businesses. Since then, the federal government has significantly ramped up its Indigenous procurement efforts. In the fiscal year ending March 31, 2023, the government awarded $1.6-billion in contracts to Indigenous companies.
Critics also say that Ottawa’s policy has allowed for a system where Indigenous businesses are housed inside, and dependent on, larger non-Indigenous companies – allowing the latter to access the PSIB without the downstream benefits that the policy was intended to create.
The Globe’s investigation highlighted the case of Adirondack Information Management Inc., a four-person Ottawa-area Indigenous company that often works in joint venture with The AIM Group Inc., a larger non-Indigenous staffing company. Under the policy, the joint venture is also considered an accredited Indigenous business. Adirondack and its joint venture are now among the most successful Indigenous companies under the procurement strategy: They were paid $70-million by Ottawa in 2024, according to public accounts data.
In a statement to The Globe in January, Jason Levesque, Adirondack’s president, said the company and AIM shared “several corporate functions including business development, marketing, bids and proposals, account management, recruiting, accounting and bookkeeping, accounts receivable and payable, invoicing, payroll and other administrative functions.” Mr. Levesque also said that Adirondack’s joint venture with AIM had been audited by the government and found to be compliant.
Representatives for Adirondack did not respond to a request for comment for this story.
The PSIB became a focus of several House of Commons committee hearings last year after MPs learned that some of the work on the beleaguered ArriveCan mobile app had been carried out by a joint venture registered with the policy.
The House operations committee held 10 meetings on Indigenous procurement in the fall, but did not issue a final report before the study was shelved because of then-prime minister Justin Trudeau’s decision on Jan. 6 to prorogue Parliament.
In an e-mailed statement on Friday, Jennifer Kozelj, a press secretary for Indigenous Services Minister Patty Hajdu, said the government “takes concerns or allegations seriously.”
“As we ensure integrity in the system, we have been removing barriers that have shut out Indigenous entrepreneurs and businesses from participating in the Canadian economy,” she said.
Ms. Hajdu pledged in December to launch an external audit of the program. “We will have more to say on that process soon,” Ms. Kozelj said.
Conservative MP Garnett Genuis, who proposed a motion that led to the committee’s study of the procurement strategy, said the Liberals effectively shut down the investigation by proroguing Parliament.
In a post on X, he also questioned why new Prime Minister Mark Carney reappointed Ms. Hajdu as Indigenous Services Minister on Friday given the complaints about her department’s management of the PSIB.
“He’s doubling down on exactly the same ministers who brought us the Liberal Indigenous Procurement Scandal,” he wrote.
Tabatha Bull, president and CEO of the Canadian Council for Indigenous Business, which operates an Indigenous business certification program that is separate from the government’s, said Ottawa needs to move faster on its pledges to update the PSIB.
Ms. Bull said there needs to be “significantly more” auditing of Indigenous contracts, including during businesses’ Indigenous certification, before a project is awarded, and after the work is conducted “to ensure that the spend did go to Indigenous businesses or the Indigenous portion of the joint venture.”
“That’s not really been happening, as far as we can see,” she said.
Ms. Bull and her organization have been in discussions with federal officials about how to address concerns regarding the PSIB. She has long advocated for preserving the policy as a way of supporting the Indigenous economy, but she has also called for more oversight and scrutiny of how contracts are awarded and managed.
“I think at some point there comes a time where decisions need to be made and change needs to happen,” she said. “I think it’s become a bit of a political football now, so we’re not seeing decisions being made as quickly as they have to.”
This article was first reported by The Globe and Mail
