There are growing calls to overhaul a multi-billion dollar procurement program designed to boost Indigenous business that critics warn is open to widespread abuse by “front” companies claiming to be First Nations-, Inuit- or Métis-owned.
The Procurement Strategy for Indigenous Business (PSIB) program sets aside billions of dollars annually in federal contracts for Indigenous-owned and controlled companies.
But Shannin Metatawabin, the chief executive officer of the National Aboriginal Capital Corporations Association, warned MPs Thursday of multiple cases where Indigenous people were brought onto a project only for others to reap the benefits.
“This is fraud. This is criminal behaviour, and (companies misrepresenting themselves) should be barred from doing any business with the government going forward,” Metatawabin told a House of Commons committee.
“Indigenous identity fraud won’t happen if (the program) is handed to an Indigenous community.”
The hearings came after a Global News investigation, in partnership with researchers at First Nations University of Canada, uncovered significant loopholes with the PSIB.
The program requires that at least five per cent of all federal contracting goes to First Nations, Métis and Inuit companies. It’s a substantial amount of money meant to help Indigenous-owned and controlled companies compete against larger multinational corporations in the lucrative world of federal contracting. The stated goal, going back more than three decades, was to use federal procurement to help build up Indigenous businesses in the name of “economic reconciliation.”
Global News’ investigation found internal government documents going back to the late 1990s suggesting Ottawa was aware that the program could be exploited by “shell companies” and “fronts” claiming to be Indigenous to gain preferential access to government work.
Until 2022, the federal government allowed companies to self-identify as Indigenous and to be added to a federal directory that government agencies and departments use to find Indigenous suppliers.
Indigenous Services Canada (ISC), the department responsible for the program, could not say how many audits it has done to verify companies on the Indigenous Business Directory (IBD) were, in fact, owned and operated by First Nations, Inuit or Métis people.
The government said it is in talks with unnamed groups to transfer responsibility for verifying that information to Indigenous people.
“We don’t have the list. I’ve asked for access to the list so that we can begin to assist the government to start to certify the businesses that are on there to assist you in finding the bad actors that you’re looking for,” Metatawabin told MPs.
“I have the same list that Global News came up with. And I had two entrepreneurs sit in my office and tell me their story about how they were part of Nisha (Technologies Ltd.), and they were part of PureSpirIT … and how they were sold the opportunity to make a lot of money by being part of a process that never materialized.”
“The non-Indigenous owners of the companies took all the benefits, they were left standing with nothing.”
Nisha Technologies Ltd. and PureSpirIT are both Ottawa-area information technology suppliers listed as Indigenous contractors in federal records reviewed by Global News. Neither company responded to the joint investigation’s question about their connections to First Nations, Métis or Inuit communities. This does not mean that either company did not legitimately qualify for the PSIB or that they do not have Indigenous ownership.
The continued questions around the PSIB now have Canada’s Auditor General considering a probe – and provoked concerns that the program could be discontinued.
Both Indigenous leaders and the federal government see merit in the PSIB. The federal government buys a lot of products and services from contractors every year. If that money can be channeled to help build up Indigenous businesses, allowing them to compete with more established suppliers, it could help First Nations, Métis and Inuit communities while supplying Ottawa with what it needs.
As early as 1999, internal government reviews warned that failing to ensure “Indigenous” suppliers are legitimate would undermine the very existence of the program. More than three decades later, that problem persists.
At a House of Commons committee last week, Indigenous Services Minister Patty Hajdu suggested the opposition Conservatives – currently riding high in national polling and strongly favoured to win next year’s federal election – would axe the PSIB altogether.
In a statement to Global News, Conservative Leader Pierre Poilievre’s office did not commit to maintaining the PSIB. Instead, the party declared support for an audit by Auditor General Karen Hogan’s office.
“Those who break program rules should be investigated and held accountable just as the Trudeau government should be held accountable for their total incompetence that has allowed abuse in the system to go on,” read the statement attributed to Conservative MP Garnett Genuis.
“We will prioritize real improvements in the access of Indigenous communities to economic development opportunities.”