Mandate commitment: Creation of a 5% target in procurement-Indigenous business—Standing Committee on Indigenous and Northern Affairs—June 19, 2020

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The mandate letter for the minister of Public Services and Procurement includes a commitment to “work with the minister of Indigenous Services and the president of the Treasury Board to create more opportunities for Indigenous businesses to succeed and grow by creating a new target to have at least 5% of federal contracts awarded to businesses managed and led by Indigenous Peoples.”

Indigenous Peoples in Canada, as well as their business ventures, face unique challenges, and this is reflected in lowered levels of participation in federal contracting. Indigenous Peoples in Canada comprise approximately 5% of the overall Canadian population; however, they are consistently awarded a lower percentage of federal contracts.

The 5% target seeks to leverage government spending to help grow Indigenous businesses and improve the socio-economic conditions of Indigenous communities. This has the potential to improve the lives of not just Indigenous Peoples, but all Canadians.

Public procurement in Canada (federal, provincial, municipal) represents approximately $200 billion in annual economic activity. Of this, federal spending averages $22 billion per year. Around the world, governments are leveraging public procurement spending to meet public social and economic objectives. The Organization for Economic Cooperation and Development (OECD), highlights the importance of social procurement, noting that “from an economic perspective, public procurement is recognised as a lever for improving the efficiency and effectiveness of public spending.”

Research from the National Aboriginal Economic Development Board suggests that if the socio-economic conditions of Indigenous Peoples were such that they had the same access to economic opportunities as the average Canadian, over $27 billion would be added to Canada’s gross domestic product (GDP). In this light, using federal government procurement as a tool to effect socio-economic change for Indigenous Peoples should be thought of as an investment in Canada, as well as an important step in improving the relationship described by the prime minister in his mandate letters for each minister as being the most important to him—the relationship between Indigenous Peoples and Canada.

Developing a strategy to implement the new government-wide policy: 5 per cent of federal contracts awarded to Indigenous businesses

As the Government of Canada’s central purchasing agent, there are many opportunities for PSPC to set new strategies and implement meaningful approaches and tools, within its existing authorities, to further support the socio-economic goals of Indigenous communities.

“I am directing every single minister to determine what they can do in their specific portfolio to accelerate and build on the progress we have made with First Nations, Inuit and Métis Peoples”—Prime Minister of Canada, Minister Anand’s mandate letter, December 13, 2019.

Task teams comprising members from PSPC, Indigenous Services Canada, (ISC) and Treasury Board of Canada Secretariat (TBS) as well as the Department of National Defence (DND), Defence Construction Canada (DCC) and Shared Services Canada (SSC) have been established to examine and develop options to allow the government to achieve its 5% target.

Final review of the policy options by the task teams will take place in the summer with a goal of finalizing the way forward by fall 2020.

These task teams are examining a number of key issues including:

Current contracting efforts with Indigenous businesses

Over the last 2 fiscal years, PSPC under its own delegation, has awarded an average of 465 contracts (including call ups and amendments) per year to Indigenous suppliers, valued at $18.3M annually. This represents 3% of PSPC’s total awarded procurement under its own delegation (based on value). During that same timeframe, PSPC, as a common service provider, has awarded an average of 844 contracts (including call ups and amendments) per year to Indigenous suppliers, valued at $492 million annually. This represents 3.8% of PSPC’s total awarded procurement on behalf of other departments (based on value).

To support Indigenous businesses, PSPC increasingly incorporates requirements for benefits for Indigenous Peoples and businesses into federal procurement, such as through Indigenous benefits plans (IBP). These plans increase the possibility of Indigenous Peoples and businesses competing successfully for contracts and/or of participating in employment and training opportunities. For example:

In addition, in response to the COVID-19 pandemic, PSPC has awarded 12 contracts to 10 Indigenous businesses, logistics and air charter services, accommodation and cleaning services, IT professional services, masks and thermometers. These contracts are collectively worth nearly $40 million. In addition, PSPC recently issued a request for proposal for 25 million non-medical face masks that is limited to Indigenous businesses only.

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