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There are increasing demands for a comprehensive reform of a multi-billion dollar procurement initiative aimed at supporting Indigenous businesses. Critics argue that this program is susceptible to exploitation by “front” companies that falsely claim to be First Nations-, Inuit-, or Métis-owned.
The Procurement Strategy for Indigenous Business (PSIB) allocates billions of dollars each year in federal contracts specifically for companies that are owned and controlled by Indigenous peoples.
During a recent committee session, Shannin Metatawabin, CEO of the National Aboriginal Capital Corporations Association, cautioned Members of Parliament about numerous instances where Indigenous individuals were included in projects just for others to benefit financially. “This constitutes fraud. Such criminal behavior should result in these companies being banned from future government contracts,” Metatawabin asserted. He further emphasized that “indigenous identity fraud could be mitigated if the program were entrusted to an Indigenous community.”
The discussions were prompted by a Global News investigative report in collaboration with researchers from First Nations University of Canada, which identified significant shortcomings within the PSIB.
The initiative stipulates that a minimum of five percent of all federal contracting budgets must be directed to First Nations, Métis, and Inuit businesses. This funding is crucial for Indigenous companies to compete against larger multinational firms in the competitive realm of federal procurement. The program, established over thirty years ago, aims to utilize federal purchasing power to foster economic reconciliation and growth for Indigenous businesses.
Global News’ investigation surfaced historical government documents from the late 1990s indicating that authorities were aware of potential abuses in the program, such as fraudulent “shell companies” purporting to be Indigenous to secure favorable contracting opportunities.
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Up until 2022, the federal government allowed firms to self-identify as Indigenous to be included in a federal directory used by agencies for sourcing Indigenous suppliers. Indigenous Services Canada (ISC), the department overseeing the program, has not disclosed how many audits have been conducted to ensure companies listed in the Indigenous Business Directory (IBD) are genuinely owned and operated by Indigenous individuals. The government has announced it is negotiating with unidentified organizations to shift the responsibility for verifying this information to the Indigenous community.
“We don’t have access to the list. I have requested it so we can assist the government in certifying the businesses and identifying those who may be taking advantage of the system,” Metatawabin told lawmakers. He revealed that he possesses the same list that Global News used for its investigation and shared stories from two entrepreneurs about how they engaged with companies like Nisha (Technologies Ltd.) and PureSpirIT, only to be misled into believing they could capitalize on a process that never came to fruition.
“The non-Indigenous owners of these firms reaped all the rewards while our people were left empty-handed.”
Nisha Technologies Ltd. and PureSpirIT are both listed as Indigenous contractors within federal databases reviewed by Global News. However, neither company responded to inquiries regarding their connections to First Nations, Métis, or Inuit groups. The absence of a response does not necessarily imply that these companies do not legitimately meet the qualifications for the PSIB or lack Indigenous ownership.
The ongoing scrutiny of the PSIB has prompted Canada’s Auditor General to consider launching an investigation and has raised fears regarding the continuation of the program. Both Indigenous leaders and the federal government acknowledge the significance of the PSIB, recognizing the vast procurement needs of the government. If properly managed, these funds could significantly bolster Indigenous businesses, providing them an opportunity to compete with well-established contractors while simultaneously meeting the federal government’s procurement needs.
As early as 1999, internal reviews highlighted that failing to ensure the legitimacy of Indigenous suppliers could jeopardize the integrity of the program. Over three decades later, this issue remains unresolved. In a recent House of Commons committee meeting, Indigenous Services Minister Patty Hajdu noted that the opposition Conservatives—currently enjoying strong national support ahead of the upcoming federal election—might consider terminating the PSIB entirely.
In a statement to Global News, Conservative Leader Pierre Poilievre’s office did not guarantee the preservation of the PSIB, but rather expressed support for an inquiry by the Auditor General’s office. “Those who violate program regulations should face scrutiny, just as the Trudeau government must be held accountable for its failure to prevent abuses within the system,” stated Conservative MP Garnett Genuis. “We are committed to prioritizing genuine enhancements in access to economic opportunities for Indigenous communities.”
Source
globalnews.ca