Formation of new procurement organization may muddy the waters for Indigenous businesses

The newly created First Nations Procurement Organization (FNPO) aims to make the federal government live up to its 2021 commitment of awarding a minimum of five per cent of the value of contracts from government departments and agencies to Indigenous managed or owned businesses.

That target was set to be reached by 2024.

However, currently less than one per cent of about $22 billion the federal government spends every year procuring goods and services from businesses across Canada goes toward Indigenous businesses.

Indigenous Services Canada (ISC) is an exception. In the fiscal year 2022-2023, ISC awarded close to 18 per cent, or almost $44 million, of the total value of its contracts to Indigenous businesses.

ISC is now undertaking engagement sessions to “inform the co-development of procurement policies and process with Indigenous partners that will better support Indigenous business development and participation in federal contracting,” said Jennifer Cooper, spokesperson for the department.

That work has been done by Indigenous organizations over the past three years culminating in the launch of FNPO, launched earlier this week.

FNPO brings together the expertise of its founding members—the National Aboriginal Capital Corporations Association (NACCA), Council for the Advancement of Native Development Officers, First Nations Finance Authority, First Nations Financial Management Board, and the Aboriginal Financial Officers Association of Canada.

FNPO is “an institute that can live and breathe, advocate and lobby to ensure that the government lives by its mandate and (can) make sure that the organizations are supporting Indigenous businesses on the ground that can align with those targets and see opportunity from the federal government,” said NACCA CEO Shannin Metatawabin.

Notably absent from the FNPO founding organizations is the Canadian Council for Aboriginal Business (CCAB), which for years has championed and advanced Indigenous procurement with all three levels of government, as well as non-Indigenous corporations, institutions and organizations.

CCAB was an original member of an Indigenous procurement working group coordinated by NACCA that included the other four FNPO founders, as well as the National Indigenous Economic Development Board, Assembly of First Nations, and the Métis Voyageur Development Fund. The group worked for three years toward transforming procurement as undertaken by the federal government.

CCAB was fully committed to the working group and the process, says CCAB CEO Tabatha Bull. CCAB believed that using the foundations of all of the organizations could provide access to more opportunities at a faster rate for Indigenous businesses.

But starting a new organization for something already being undertaken by CCAB, she says, wastes the “many years of work, investment and relationship-building that CCAB has done to advance Indigenous procurement” and CCAB wasn’t willing to do that by signing on to FNPO.

In 2018, CCAB launched Supply Change, an Indigenous procurement program and marketplace platform. In that time, relationships have been developed with government and corporate Canada to advance Indigenous procurement, says Bull.

Supply Change has grown to more than 1,300 certified Indigenous businesses and more than 150 buyers using a two-way procurement platform to connect. Indigenous businesses are certified by CCAB if they are 51 per cent or more owned or controlled by an Indigenous person.

“Starting from scratch will only delay progress and create confusion. No one benefits when you duplicate work or efforts and put resources into building something that already exists,” said Bull.

That’s not an assessment Metatawabin agrees with.

He points to the resolution he advocated for and was passed by the Assembly of First Nations in July 2023 that mandated NACCA “to immediately initiate the development of a new First Nations-led procurement organization…that will increase First Nations and First Nations businesses’ success in securing procurement opportunities no matter where they reside.”

“When you do something on the side of your desk, it never gets done right. So we need an organization to really live and breathe it,” said Metatawabin.

He says there is no certification in place for Indigenous businesses and he wants to ensure “the Indigeneity of the individual so that the citizenship is there, (so) that the business structure is set up to be a true Indigenous business.”

Metatawabin says NACCA, which is a network of more than 50 Indigenous financial institutions having provided 50,000 loans totalling $3 billion to Indigenous-owned businesses over 35 years, makes sure there’s “no contrived applications” for financing because loans have a social impact on the ground.

FNPO is embracing six definitions for the Indigenous procurement process: Indigenous sole proprietorship, Indigenous (for profit) corporation, Indigenous non-profit organization, Indigenous charitable organization, Indigenous cooperative, and Indigenous micro-enterprise.

With exception of the sole proprietorship, which must be 100 per cent owned by an Indigenous person, the rest must be at least 51 per cent controlled or owned by Indigenous people.

Metatawabin emphasizes that the definitions, which were determined through consulting with Indigenous organizations, are a “live document” that is open to modifications.

He says these are the definitions they want the federal government to use when practising procurement.

“And that's exactly what you saw with the ArriveCan app scandal that's going on right now. It was an Indigenous set-aside by a group that claimed Indigeneity and they weren't Indigenous. So we're losing opportunities for our communities with the different barriers and problems with procurement,” said Metatawabin. ArriveCan tracked travellers during COVID-19 pandemic restrictions.

Dalian Enterprises received $7.9 million for the app. According to a report in The Globe and Mail, Dalian presents itself as an Indigenous-owned company, regularly winning federal contracts under the Indigenous business procurement program. Dalian has two staff members and often operates in joint ventures with Coradix, a larger company that does not bill itself as Indigenous.

Dalian company president and founder David Yeo has claimed Alderville First Nation in Ontario as the community to which he is connected, telling Parliament, according to CBC, that his great-grandfather was Chief Robert Franklin. He is accused of using a distant ancestor to claim Indigeneity for the benefit of other non-Indigenous-owned companies who partner with him to access Indigenous procurement opportunities.

The situation with ArriveCan is under RCMP investigation, said ISC Minister Patty Hajdu.

Cooper says the co-development process at ISC will include a review of the definition of an Indigenous business “for the purposes of federal Indigenous procurement.”

Presently the government requires Indigenous businesses to be registered in the federal Indigenous Business Directory. At the time of registration, they must provide information on the Indigenous status of the business owner as well as corporate structure and governance. ISC is to review that information to ensure the Indigenous partner maintains majority control of the business. Regular audits are also to be undertaken.

“We (will) continue to advocate and lobby to ensure that (the federal government) take economic reconciliation seriously, because we will not see any support or success in the Indigenous community unless the federal government makes substantive changes in the processes,” said Metatawabin.

While FNPO’s definitions are for Indigenous businesses, the institute at this point is focused solely on First Nations.

Metatawabin said it was made clear during the planning process that the Métis National Council and Inuit Tapiriit Kanatami “were going to create processes for their own people…But the NACCA network provides loans to many Métis, Inuit and First Nations so we're hoping that the Inuit and the Métis will come together with their own processes and their own databases and share into an umbrella-type organization like this institute.”

FNPO is also looking for federal funding for the first five years of operation to build its membership and structure. Metatawabin did not provide a dollar figure.

In 2021, ISC set aside $35.2 million over five years to modernize the Procurement Strategy for Indigenous Business.

“I don't know what they included within that $35 million, but I do know that they have a short-term strategy which is internal to government and their bureaucracy, and the long-term strategy that includes an organization like ours,” said Metatawabin.

Once operational, the process of supporting First Nations businesses to participate in procurement opportunities will switch to fee for service, which Metatawabin says will be paid by the various government departments in order to meet their five per cent Indigenous procurement mandate.

That money will be used to support Indigenous businesses on the ground to scale up and add capacity, and to ensure Indigenous businesses are reaching out for government opportunities.

“There’s a cost to ensuring that you're hitting a target, and that's what this procurement organization is going to do,” said Metatawabin.

However, he does point out that right now NACCA, which receives more than 90 per cent of its operational dollars through the federal government’s Aboriginal Entrepreneurship Program, has yet to know if funding will continue in the next federal budget.

“I think the ask we have of the federal government to support us in Budget 2024 is integral so that we can fully support this procurement initiative,” said Metatawabin.

CCAB is funded through a variety of sources, including membership fees, revenue from events, donations, and project-based funding from various partners. While Ottawa doesn’t contribute to operational funding, a portion of CCAB’s research, procurement and entrepreneurship programs does receive federal dollars on a project-by-project basis.

The organization’s current procurement strategy and marketplace includes businesses owned by First Nations, Métis and Inuit.

CCAB hosts webinars to educate non-Indigenous businesses and organizations wishing to do business with Indigenous companies, as well as assists Indigenous businesses in learning how to best leverage opportunities.

“Indigenous businesses accessing that marketplace are making deals and connections every day. We have to keep this momentum going, because it is changing the lives of Indigenous families and communities across the country,” said Bull.

CCAB does not track the business conducted between the Indigenous businesses and the non-Indigenous suppliers through Supply Change.

“We believe that a solution that includes all Indigenous businesses will be most beneficial to the Indigenous economy. Splintering procurement opportunities will do a great disservice to Indigenous businesses and economic reconciliation efforts,” said Bull.