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Standing Committee on Indigenous and Northern Affairs: December 9, 2024

Indigenous procurement
Date: December 9, 2024
Location: In person

On this page

Opening statement

For:

The Hon. Jean-Yves Duclos
Minister, Public Services and Procurement Canada

Standing Committee on Indigenous and Northern Affairs
Study on Indigenous Procurement

House of Commons
December 9, 2024
Word count: 580
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Opening

Thank you Mr. Chair for inviting me to discuss the important issue of Indigenous procurement.

I’d like to begin by acknowledging that the land on which we are meeting is the traditional unceded territory of the Algonquin Anishinaabe Peoples.

With me today are two officials from Public Services and Procurement Canada (PSPC):

The Government of Canada recognizes the negative and ongoing impact of colonization on the self-determination and economic independence of Indigenous Peoples.

That’s why, since 2015, the Canadian government has been using a cross‑cutting, cross-departmental approach to accelerate reconciliation with Indigenous Peoples.

Procurement Strategy for Indigenous Business

My department, PSPC, participates in these reconciliation efforts by ensuring that Indigenous companies and entrepreneurs are involved in the Government of Canada’s procurement process.

For many years now, the Procurement Strategy for Indigenous Business program has been an important government tool for economic reconciliation.

Here are some tangible results and successes:

PSPC is working with the Algonquin Anishinaabe Peoples (host nation), the Assembly of First Nations, Inuit Tapiriit Kanatami and the Métis National Council to include Indigenous themes, arts and materials in Parliamentary Precinct projects, such as the Centre Block, the new Parliament Welcome Centre, the grounds of Parliament Hill, and the Block 2 redevelopment project.

Or the Future Aircrew Training Program (FAcT), a $1.7B initiative to modernize pilot and aircrew training for the Royal Canadian Air Force that includes a clear commitment to dedicate at least 5% of the contract value to creating professional and skilled employment opportunities for Indigenous workers, from apprenticeships to executive roles.

Or the Canada Dental Care Plan, with a 3-year partnership between Sun Life and the Tribal Wi-Chi-Way-Win Capital Corporation that will create more than 175 jobs in Winnipeg.

The government relies on the Indigenous Business Directory to administer the strategy, and I know that Indigenous Services Canada is working with its partners and exploring new ways to improve the verification process.

Mr. Chair, the government is committed to ensuring opportunities set aside for these suppliers are accessed solely by Indigenous businesses.

Actions taken to protect the integrity of federal procurement

In the last year, the government has taken firm action to protect the integrity of the federal procurement system from the effects of bad actors.

But let me make something clear Mr. Chair: process for fraudulent cases should be free of any political interference.

This is why, at PSPC, we created the Office of Supplier Integrity and Compliance, or Office of Supplier Integrity and Compliance (OSIC), to enhance the department’s capacity to respond to instances of supplier wrongdoing.

OSIC is acting independently from political interference and already ruled against cases where there were proof or concerns of wrongdoing.

We also introduced the new Ineligibility and Suspension Policy to provide OSIC with a range of actions on a much broader scope of misconduct. For example, suppliers who violate the integrity of the procurement process can be suspended and debarred, even without a criminal charge or conviction.

Mr. Chair, the process by which concerns are assessed by OSIC can happen in two ways: departments and agencies can come forward with concerns about wrongdoing, or OSIC can initiate an assessment itself based on information provided by a trusted source.

In either case, Mr. Chair, it is critical that PSPC is made aware of wrongdoing as soon as possible so steps can be taken to rectify the situation. And I can tell you that officials at my department are actively engaged with other federal organizations to ensure that instances of supplier misconduct are promptly referred to OSIC.

Closing

Mr. Chair, PSPC will continue to use the government’s buying power to help advance economic reconciliation.

Canada’s prosperity cannot afford to exclude the diverse range of ideas, skills and experience Indigenous businesses and people contribute.

To realize this potential, we must safeguard the integrity of Canada’s federal procurement system and ensure value for money.

Thank you, and I welcome the committee’s questions.

Increasing Indigenous involvement in procurement

Issue

Public Services and Procurement Canada (PSPC), in partnership with Indigenous Services Canada (ISC) and the Treasury Board of Canada Secretariat (TBS), are actively working to increase the participation of Indigenous businesses in federal procurement.

Key facts

Key messages

If pressed on the 5% commitment:

If pressed on the Indigenous Business Directory and verification of Indigeneity:

If pressed on alleged cases of Indigenous misrepresentation:

Background

On August 6, 2021, the Government of Canada announced a mandatory requirement for federal departments and agencies to ensure that a minimum of 5% of the total value of contracts are held by Indigenous businesses, to be phased in over three years. To facilitate transparent and timely public reporting on this initiative, a reporting framework was established and guidelines on proactive disclosure were amended as of April 1, 2022.

PSPC, ISC and TBS continue to build partnerships with organizations representing Indigenous people and businesses to best position the federal government to meet the 5% target. Organizations involved include: Assembly of First Nations, Canadian Council for Indigenous Business, Council for the Advancement of Native Development Officers, Inuit Tapiriit Kanatami, National Aboriginal Capital Corporations Association, National Indigenous Economic Development Board, Métis National Council and its governing members, the Manitoba Métis Federation, and representatives from the broader Canadian Indigenous business community.

Fraudulent billing

Issue

The Government of Canada’s is pursuing its efforts to investigate and deter fraudulent billing by sub-contractors for suppliers on professional services contracts. Since March, PSPC has disclosed a total of seven cases that have been referred to the Royal Canadian Mounted Police (RCMP) (that is, three cases in March, one older case in July when charges were laid, and three cases on November 6th).

Key facts

Key messages

If pressed on more details about the cases referred to the RCMP:

If pressed on the providing the names of the three individuals:

If pressed on the consequences for the individuals investigated by PSPC:

If pressed on the consequences for the prime contractors:

Background

Since March 2024 PSPC disclosed in seven cases of fraudulent billing by professional services subcontractors (i.e. individuals who were subcontracted) who were employed by prime contractors that held multiple contracts with a number of federal departments and agencies:

These seven cases have been referred to the RCMP for further investigation.

On July 9, 2024, the RCMP charged one of the professional services subcontractors referred to them by the department for fraudulently overbilling the Government of Canada. This case relates to an investigation launched by PSPC, in the summer of 2021, into a consultant who undertook contract work with eight separate departments and Crown corporations. Evidence indicated that the consultant had submitted fraudulent timesheets that resulted in overbilling by an estimated $250,000 between January 1, 2020 and June 30, 2021. PSPC referred the case to the RCMP for a possible criminal investigation. As a result of the RCMP investigation, Clara Elaine Visser has been charged with fraud over $5,000 contrary to Section 380(1) of the Criminal Code.

PSPC has a framework in place to prevent, detect and respond to wrongdoing in order to safeguard the integrity of the federal procurement system. This approach includes the use of a variety of tools to actively detect fraudulent activity, and respond to alleged misconduct that the Government of Canada is being defrauded in either a specific contract or on a broader scale.

PSPC employs active measures to raise awareness among procurement officers on how to identify potential instances as well as the use of data analytics and tips from the public to identify potential instances of fraud and wrongdoing. In order to respond to alleged instances, the department has an investigatory capacity to examine allegations that the Government of Canada is being or has been defrauded within its procurements.

The identified cases demonstrate that the departmental approach and techniques to prevent, detect and respond to instances of fraudulent activity are working.

The department will continue to refine and expand the use of our tools to detect and address wrongdoing and ensure that individuals or entities engaging in fraud or other illegal activities are held accountable for their actions and return monies owed to the Crown.

Office of Supplier Integrity and Compliance

Issue

The OSIC supports the government’s ability to identify suppliers of concern and take appropriate action to mitigate the risk they pose.

Key facts

Key messages

Background

The OSIC replaces the Government of Canada’s Integrity Regime which was in place since 2015 as a government-wide policy-based debarment system designed to further protect the integrity of federal contracts and real property transactions.

The new office will continue to play a significant role in safeguarding the federal procurement and real property systems, which encompasses approximately $20 billion annually for procurement contracts, real property agreements, the management of Crown-owned properties, and rental payments on 1,690 lease contracts across Canada.

The new office provides an opportunity to modernize the Government of Canada’s debarment and suspension program and further strengthen its use of data analytics to identify potential instances of fraud and wrongdoing and better leverage intelligence relevant to assessing the integrity of vendors within government contracts and real property agreements.

Under the new policy, triggers for suspension or debarment include:

The office actively monitors current events for allegations of supplier misconduct through research, information sharing, and data analytics. OSIC exercises due diligence in assessing potential suppliers and takes action when the policy is triggered.

In addition, departments and agencies are encouraged come forward with their concerns about potential wrongdoings or misconduct and to refer these situations to OSIC. Even if departments do not report issues, OSIC can self-initiate assessments if they become aware of issues. Departments also have the ability to refer cases to law enforcement directly if they suspect elements of criminality within their procurements, such as fraud.

Global Health Imports

Issue

Allegations of misconduct have been made against Global Health Imports Corporation (GHI), a supplier to the Government of Canada. There is interest in how the Office of Supplier Integrity and Compliance is addressing the risk the supplier poses.

Key facts

Key messages

If pressed on response time:

Background

[Redacted]. The company currently has one contract with Elections Canada valued at $28,298.03, although a stop-work order has been in effect since November 20, 2024.

Under the Ineligibility and Suspension Policy, the Office of Supplier Integrity and Compliance’s Registrar can, in their discretion, provisionally suspend a supplier whose alleged misconduct, acts or omissions, pose an immediate and significant risk to the Government of Canada. Pursuant to the Policy, GHI was provisionally suspended on November 22, 2024. This remains in effect until February 20, 2025, and could be extended if required.

On November 26, 2024, Public Services and Procurement Canada released a public statement confirming that GHI was provisionally suspended under the Ineligibility and Suspension Policy, effective November 22, 2024.

The OSIC will actively monitor forthcoming public information regarding GHI, seek additional court records, and fully assess the supplier against the criteria of the Ineligibility and Suspension Policy.

Procurement with Dalian and Coradix

Issue

PSPC’s procurement relationship with Dalian and Coradix

Key facts

Key messages

Background

On November 11, 2024, The Globe and Mail reported that Coradix had filed a lawsuit against the Government of Canada, claiming $64 million in damages, according to Federal Court records. The media report also indicated that at the time of its suspension, Coradix had 81 federal contracts and that all these contracts were terminated or suspended within weeks.

Increasing Indigenous involvement in procurement at Shared Services Canada

Issue

Indigenous procurement policies and set-asides are under scrutiny by media, parliamentarians and the public.

Key messages

If pressed on indigenous procurement at SSC:

If pressed on qualified indigenous vendors:

If pressed on due diligence at SSC:

If pressed on supply arrangements:

Background

The Government of Canada is committed to fostering economic reconciliation in its procurement activities, leading to opportunities for Indigenous businesses. This is done by: respecting modern treaties that include procurement obligations; limiting competition for federal contracts among businesses listed on the IBD through programs, such as the Government of Canada’s Procurement Strategy for Indigenous Business (PSIB); and implementing a mandatory requirement to ensure a minimum of 5% of the total value of government contracts are awarded to Indigenous businesses. Federal departments may also request that bidders submit an Indigenous Participation Plan with their proposals.

Follow-up information: Standing Committee on Government Operations and Estimates appearance on October 17, 2024

Question 1

MP Lawrence: Can you tell me how many contracts specifically dealing with Indigenous procurement that your department has stopped because of unfulfilled contractual obligations.

Response

PSPC performed a search for all PSPC-awarded original contracts and call-ups under the PSIB from April 1, 2019, to October 23, 2024. PSPC performed a search based on terminated contracts and validated the reason for termination. In total, 25 contracts were terminated as follows:

Table 1: Reason for termination and total number of contracts
Reason for termination Total number of contracts
Termination for defaulttable 1 note 1 23
Termination by mutual consent (loss of PSIB Status)table 1 note 2 1
Termination for convenience to Canada table 1 note 3 1
Table 1 Notes
Table 1 Note

Termination for default: This applies when the vendor breaches the contract, usually through non-performance or delayed delivery.

Return to table 1 note 1 referrer

Table 1 Note 2

Termination by mutual consent (loss of PSIB status): The vendor lost PSIB status and was removed from the IBD because it no longer met the eligibility criteria (proof of Indigenous ownership).

Return to table 1 note 2 referrer

Table 1 Note 3

Termination for convenience to Canada: The vendor could not honour contract prices for the new delivery date due to the delay by the Government of Canada (delayed over 1 year). The client chose to cancel the contract and return to solicitation.

Return to table 1 note 3 referrer

Table 1 note 3: Termination for convenience to Canada: The vendor could not honour contract prices for the new delivery date due to the delay by the Government of Canada (delayed over 1 year). The client chose to cancel the contract and return to solicitation.

Question 2

MP Lawrence: Has your department stopped any contracts because of an issue with certification?

Response

As indicated above, 1 contract was stopped because of an issue with the supplier’s eligibility with the IBD. The contract was consequently terminated by mutual consent.

Question 3

MP Vignola: I'd like to come back to what you just said and subcontractors. Some have already mentioned that there are Indigenous businesses that could be shell companies for non-Indigenous businesses. We've heard that sometimes it is necessary to go through a non-Indigenous business, but in your calculations on the value of contracts, when an Indigenous business is subcontracted, do you factor in the entirety of the contract, or only the percentage awarded to that business.

Response

As per the Directive on the Management of Procurement, Appendix E: Mandatory Procedures for Contracts Awarded to Indigenous Businesses, the total value of contracts awarded to Indigenous businesses annually is calculated so that:

Prior to fiscal year 2024-2025, PSPC did not include subcontractor data in its calculations on Indigenous contracts awarded for PSPC as a department. PSPC began a manual process, in the current fiscal year, to collect data for Indigenous subcontractors when a non-Indigenous contractor is awarded a contract. In such cases, only the portion of the contract that was subcontracted to an Indigenous business would form part of this calculation.

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2025-04-08