The nation’s federal procurement watchdog just dropped what they called the “most shocking” report of their entire tenure.
Driving the news: Canada’s Procurement Ombudsman released a damning report about Ottawa’s indigenous procurement strategy, detailing widespread confusion among federal departments, resulting in guidelines not being followed. It also warns that gaps in the system open the door for non-Indigenous firms to use Indigenous businesses as shell companies.
The report backs up investigative reporting done by the Globe and Mail and the findings of a two-year federal consultation involving hundreds of Indigenous leaders.
Catch-up: In 2021, the feds revamped the Procurement Strategy for Indigenous Businesses (PSIB), setting a target to procure 5% of the total value of federal contracts for goods and services from Indigenous companies. To qualify, a business must be at least 51% Indigenous-owned and at least 33% of the work must be done by an Indigenous contractor.
Yes, but: Necessary steps often aren’t followed to ensure the legitimacy of contractors. The report reviewed 27 procurement files across three different departments and found that in 20 instances they failed to check the Indigenous Business Directory to confirm if the supplier was registered or exempted.
In several instances, the departments claimed they were unaware of mandatory auditing procedures.
Why it matters: In 2024, the Assembly of First Nations estimated that just 1% of federal contract spending goes to Indigenous businesses due to loopholes and negligence. That’s a massive black mark on economic reconciliation and the efficacy of federal contracting.—QH
