Diversity and inclusion in procurement: Standing Committee on Government Operations and Estimates—November 24, 2022
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Increasing Indigenous involvement in procurement
Context
Public Services and Procurement Canada (PSPC) is actively working to increase the participation of Indigenous businesses in federal procurement.
Suggested response
- Increasing the participation of Indigenous businesses in federal procurement is an important part of PSPC’s mandate and the government’s agenda to pursue reconciliation and generate economic opportunities for Indigenous people while diversifying federal supply chains
- PSPC is working with Indigenous Services Canada and the Treasury Board of Canada Secretariat to have 5% of the value of federal contracts awarded to Indigenous businesses
- From March 2020 to March 2022, Public Services and Procurement Canada, as a common service provider, awarded $1.3 billion through 1,744 contracts to Indigenous suppliers
- Shared Services Canada (SSC) exceeded the 5% Indigenous procurement target in fiscal year 2021 to 2022 with a total value of 6.3% and a volume of 7.8% of SSC-funded contracts awarded to Indigenous businesses
If pressed on the 5% commitment:
- the 5% commitment is a minimum target and we are committed to meeting and surpassing it
- as a key step forward, my department worked closely with the Treasury Board of Canada Secretariat (TBS) and Indigenous Services Canada (ISC) to establish a government-wide policy and reporting framework that came into effect on April 25, 2022
- PSPC continues to work closely with TBS and ISC to make changes to the Procurement Strategy for Indigenous Businesses to facilitate increased Indigenous participation
- we also continue to work in close collaboration with Indigenous partners and other government departments to develop tools and guidance to support the implementation of the 5% target across government. For example, through Procurement Assistance Canada, events, seminars and one-on-one sessions are being held across the country to support Indigenous businesses navigate federal procurement
If pressed on barriers to Indigenous participation in procurements:
- in support of achieving the 5% target, the Government of Canada has been consulting with Indigenous partners to identify barriers to participating in federal procurement
- PSPC efforts include changes to how it solicits and uses procurement tools to increase Indigenous participation, such as the use of dedicated Indigenous streams for standing offers and supply arrangements
Background
PSPC is working with Indigenous peoples and businesses to increase their participation in federal procurement more broadly. This is part of the Government of Canada’s commitment to reconciliation with Indigenous people and to fulfilling Canada’s obligations to modern treaties and the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).
The 2022 National Indigenous Economic Strategy estimates that boosting Indigenous participation in Canada’s economy could add $30 billion to Canada’s gross domestic product (GDP) and create 135,000 new jobs. Through these initiatives, PSPC aims to leverage federal procurement to improve the socio-economic conditions of Indigenous communities across Canada while strengthening the government’s procurement supply chains.
To achieve the 5% target, PSPC is supporting the implementation of mechanisms to limit bidding for only Indigenous businesses certified through the Indigenous Business Directory (IBD) or modern treaty area businesses. All Indigenous suppliers that are 51% owned and controlled by Indigenous persons are encouraged to register in the IBD to be eligible for this initiative. PSPC is developing new tools to support the procurement community and client departments and will continue to engage with Indigenous partners.
To generate progress on achieving its target, PSPC has adapted how it solicits and uses procurement tools to increase Indigenous participation, employing such strategies as:
- including streams for Indigenous firms in new or renewed standing offers and supply arrangements
- filtering search results to isolate Indigenous firms that have pre-qualified under a specific tool and voluntarily setting aside the procurement
- reinterpreting conditions of non-mandatory methods of supply. For example, rather than inviting all supply arrangement holders to submit a bid, on a case-by-case basis, steps are taken to do a voluntary set-aside, competing the requirements among only the Indigenous supply arrangement holders under the tool. As an example, this strategy was employed to award a $1.15M contract for an informatics professional services requirement
- directing certain requirements to Indigenous standing offer holders, as permitted under policy for requirements below $25,000. A number of contracts have been awarded using this strategy, including 2 call-ups under the furniture supply arrangement, valued at $24,230 and $21,000
- for requirements above $25,000, awarding the contract to the standing offer holder that represents best value to Canada, recognizing that lowest price is not the only criterion in determining best value, and that socioeconomic criteria are also to be considered in making this determination
- using mandatory, voluntary or conditional set-asides for competitively tendered requirements when permitted under contracting regulations and trade agreements. For example, a voluntary set-aside was used for a project management support services requirement. The value of the competitively tendered contract is $19.5M. Another contract, valued at $1.2M was awarded using this strategy for administrative and human resource support services
The use of these strategies is increasing the opportunity for Indigenous firms to obtain contracts for various types of services.
PSPC also works in collaboration with the Council for the Advancement of Native Development Officers (CANDO), a national Indigenous organization involved in community economic development. The partnership is focused on helping the council and its economic development officers support Indigenous businesses across Canada by providing information, focused access, and services from Procurement Assistance Canada.
Furthermore, the minister’s Supplier Advisory Committee contributes to understanding and addressing barriers that smaller businesses face in federal procurement, including those faced by Indigenous-owned businesses. The Canadian Aboriginal and Minority Suppliers Council (CAMSC), represented by its President Cassandra Dorrington, has been an active and contributing member since the Supplier Advisory Committee’s first meeting in 2013.
Diversity and inclusion in procurement
Context
Public Services and Procurement Canada is delivering on the Government of Canada’s commitments to increase the diversity of bidders on government contracts.
Suggested response
- Public Services and Procurement Canada is helping more businesses get involved in federal procurement to build a more inclusive economy
- In early 2022, the department launched the Supplier Diversity Action Plan, which outlines concrete steps to increase the participation of businesses from underrepresented groups in federal procurement
- The plan stems from continued engagement with suppliers from underrepresented groups to better understand the barriers they face and their needs
- It includes a Policy on Social Procurement, allowing the department to create dedicated opportunities to increase supplier diversity in procurement, and bring positive benefits to communities across Canada
- The action plan also includes enhanced services from Procurement Assistance Canada to help underrepresented groups successfully participate in federal procurement
- For example, Procurement Assistance Canada offers a coaching service to support diverse suppliers who have had limited success bidding on federal procurement opportunities. Procurement Assistance Canada has also increased its outreach and partnership-building efforts to better connect with a greater number of underrepresented communities and businesses in a more sustained manner
- In fiscal year 2021 to 2022, Procurement Assistance Canada delivered over 1,692 outreach events. For those outreach events delivered in 2021 to 2022, 50% targeted at least one underrepresented socioeconomic group in addition to small and medium enterprises in Canada
- In fiscal year 2021 to 2022, PSPC as a common service provider for the Government of Canada awarded contracts to small and medium enterprises for a value of $6.1 billion. 96% of these organizations were Canadian. These trends have been consistent over the past 3 years
- In fiscal year 2021 to 2022, Shared Services Canada awarded contracts to Small and Medium Enterprises for a value of $746 million.99% of these organizations were Canadian
If pressed on next steps:
- Public Services and Procurement Canada will continue to engage with underrepresented groups to guide its efforts to advance supplier diversity, notably how the policy will be implemented and applied
- through these important discussions, we are working towards the launch of a supplier diversity program which will outline approaches to enhance supplier diversity in PSPC-led procurements. This will include guidance and tools for the procurement community to implement a supplier diversity program
If pressed on supporting Black businesses:
- Budget 2021 proposed to leverage federal procurement to achieve socio-economic objectives, including supplier diversity, such as running competitions open to Canadian businesses led by equity-deserving groups
- in January 2021, Public Services and Procurement Canada launched the Black business procurement pilot to open bidding opportunities for small Black-owned or led businesses, which consisted of 12 procurement opportunities across the country, conditionally limited to small Black-owned or -led businesses
If pressed about data collection on supplier diversity in procurement:
- in May 2021, Public Services and Procurement Canada’s Policy on Social Procurement came into effect, enabling the department to collect data on the diversity of its suppliers to support supplier diversity initiatives
- work is underway to collect data through CanadaBuys to inform decision-making on supplier diversity initiatives and monitor progress over time. The supplier registration questionnaire on CanadaBuys was enhanced in July 2022 to enable diverse supplier to self-identify. This is a significant step forward and will enhance PSPC’s understanding of its supplier base, as well as support the government’s priority of ensuring more diverse suppliers participate in Public Services and Procurement Canada procurement
If pressed about the definition and certification of underrepresented suppliers:
- definition and certification are essential aspects of supplier diversity initiatives
- a common federal approach to the definition and certification of underrepresented suppliers will be essential to mitigate the risk of fraud and ensure that contracts related to supplier diversity initiatives are awarded to the targeted groups
- in the spring of 2022, Public Services and Procurement Canada engaged with stakeholders, most notably from equity-deserving groups, to identify approaches to definition and certification and co-develop the supplier diversity program and the Black entrepreneurship procurement program
- the supplier diversity program is currently under development, and Public Services and Procurement Canada will begin to launch concrete actions to begin program implementation in the near future
- Public Services and Procurement Canada currently uses self-attestation to certify suppliers
If pressed about Public Services and Procurement Canada’s response to 2018 Standing Committee on Government Operations and Estimates’ report on social procurement and the implementation of its recommendations:
- in response to the 2018 report entitled modernizing federal procurement for small and medium enterprises, women-owned and indigenous businesses, PSPC is implicated in 13 of the 40 recommendations that were specifically aimed toward smaller businesses, Indigenous and women-led and woman-owned businesses
- of the 13 recommendations, Public Services and Procurement Canada is leading 5 of the recommendations, with other government department partners leading the remaining. To-date, with regards to the 13 recommendations, Public Services and Procurement Canada has met its obligations on the implementation of 6 recommendations and work is underway towards the completion of the other 7 recommendations
- a more detailed response has been submitted to the committee which outlines the progress against each recommendation, but the following initiatives demonstrate the government’s action in relation to these priorities:
- the Policy on Social Procurement which came in effect in May 2021 and enables the creation of targeted tendering approaches to increase supplier diversity and provides the parameters to identify procurements where value can be enhanced through the inclusion of socio-economic objectives
- the Supplier Diversity Action Plan announced in January 2022 which outlines concrete steps to increase the participation of underrepresented groups in federal procurement, such has modernising the public-facing procurement system to make it user-friendly and accessible and providing enhanced services for underrepresented suppliers
- the launch of enhanced services for underrepresented suppliers which are provided by Procurement Assistance Canada. This includes coaching services, seminars and tools to enable them to participate in federal procurement
Background
Public Services and Procurement Canada has been working to address inequities since 2018 by modernizing its procurement practices and encouraging suppliers from diverse backgrounds to be a part of the federal supply chain. This included a 2-year socio-economic procurement experimentation cycle from 2018 to 2020, which aimed to leverage the government’s significant purchasing power to pursue socio-economic outcomes through procurement. The department also undertook a Black business procurement pilot in 2021 to expand procurement opportunities for Black entrepreneurs.
In June 2018, the Standing Committee on Government Operations and Estimates (OGGO) released the report modernizing federal procurement for small and medium enterprises, women-owned and indigenous businesses. The report contained 40 recommendations, with 13 specifically aimed toward smaller businesses, Indigenous and women-led and woman-owned businesses, all of which are in various stages of implementation. PSPC is the lead on 5 recommendations and supporting the completion of 8 of these recommendations in collaboration with other government departments. On October 6, 2022, the committee asked officials how many of these recommendations have been implemented. PSPC provided an update in writing addressing its progress for each recommendation and noting that it has met its obligations in the implementation of 6 recommendations and that work was underway for the other 7 recommendations.
Budget 2021 and the 2021 mandate letter reconfirmed the government’s commitment to social procurement, including supplier diversity, to support procurement opportunities for specific communities.
PSPC’s Policy on Social Procurement came into effect in May 2021, which allows the department to create dedicated opportunities to increase diversity and inclusion in PSPC procurements. More specifically, the policy will facilitate the inclusion of socio-economic measures in PSPC procurement to support the goal of achieving best value for the Crown and, in turn, for Canadians. In addition, a supplier diversity program outlining how the policy will be implemented and applied is currently under development.
PSPC also released 3 requests for information to understand better the procurement experience of businesses owned or led by persons with disabilities and members from the Black and lesbian, gay, bisexual, transgender, queer, 2-spirit and others (LGBTQ2+) communities.
Moving forward, a common federal approach to the definition and certification of underrepresented suppliers will be essential to mitigate the risk of fraud and ensure that contracts related to supplier diversity initiatives are awarded to the targeted groups. This will require collaboration across federal organizations. PSPC currently uses self-attestation to certify suppliers, including for Indigenous procurement; however, some stakeholders have been advocating for third-party certification.
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