A recent study has identified shortcomings in the federal government’s implementation of a plan aimed at engaging Indigenous businesses, labeling it as a “series of failures” due to inconsistent guidelines, a lack of oversight, and insufficient scrutiny of businesses. The examination, unveiled by the Procurement Ombud on Thursday, highlighted “systemic deficiencies” in how contracts were allocated through the Procurement Strategy for Indigenous Business, resulting in a majority of contracts being granted without verifying their Indigenous status.
The government has a target of allotting five percent of all contracts to Indigenous enterprises, with Procurement Ombud Alexander Jeglic describing it as a benchmark to showcase the effectiveness of the strategy, although he believes it is misrepresented as a success story when it is, in reality, a failure. The absence of accountability mechanisms complicates the assessment of whether this target is being met, making it challenging to ascertain the actual benefits to Indigenous businesses.
The review, covering the period from April 1, 2023, to March 31, 2025, examined various government departments, including Indigenous Services Canada, Public Services and Procurement Canada, Shared Services Canada, Employment and Social Development Canada, and Correctional Services Canada. To qualify under the strategy, Indigenous businesses must be at least 51 percent Indigenous-owned and controlled, and listed in the Indigenous Business Directory. However, the assessment did not delve into how the directory is managed.
Out of the 27 contracts assessed, seven were awarded to joint ventures, where an Indigenous business partnered with a non-Indigenous entity, accounting for 61 percent of the total expenditure. The report highlighted that these contracts were not being monitored to ensure compliance with the required Indigenous work thresholds, leading to detrimental consequences throughout the process due to the lack of accountability.
Indigenous Services Canada is tasked with verifying Indigenous business eligibility and conducting mandatory audits for contracts exceeding $2 million. However, there were 13 contracts meeting this criterion where departments either failed to request an audit from ISC or ISC was requested but did not conduct one. This failure to uphold proper compliance and documentation practices was labeled as a “complete failing” by Jeglic.
The report proposed the establishment of a redress mechanism to allow Indigenous businesses to raise concerns regarding the contract allocation process under the strategy. In response, Public Services and Procurement Canada expressed support for this initiative but deferred the responsibility to ISC, citing their better positioning to collaborate with Indigenous partners in refining the strategy. ISC spokesperson Pascal Laplante affirmed the department’s commitment to addressing the Ombud’s recommendations by actively working with Indigenous partners to enhance policies and practices, potentially transferring the verification of Indigeneity responsibility.