Shannin Metatawabin, chief executive officer of National Aboriginal Capital Corporations Association says the ability of non-Indigenous companies to access funding through a joint venture with an Indigenous company has long been a source of concern and that there should be stronger penalties for companies found to have misused the federal system.Cole Burston/The Globe and Mail
An Indigenous business leader is calling on Ottawa to eliminate tokenism in the federal procurement program aimed at helping Indigenous businesses by imposing tougher penalties on companies that abuse the system.
A Globe and Mail report on Monday detailed how a large nursing company was able to access federal contracts set aside for Indigenous companies by creating a joint venture with one First Nations nurse as the head, even though the nurse said she was not involved in leadership decisions.
The Globe reported that an Indigenous Services Canada audit found in 2016 that the joint venture between Canadian Health Care Agency and the nurse’s one-person foot care business did not comply with the program, leading to its removal. Yet that same department continued to award 30 more contracts to the nursing company, paying it more than $131.7-million since 2019, which is allowed under current rules.
Shannin Metatawabin, chief executive officer of the National Aboriginal Corporations Association, said in an interview there should be stronger penalties – such as fines or temporary suspensions – for a company that is found to have misused the federal system.
“There should have been some consequences, because we have to deter people from doing this,” he said in response to The Globe’s report on the nursing joint venture.
Mr. Metatawabin said the ability of non-Indigenous companies to access the program through a joint venture with an Indigenous company has long been a source of concern.
“That’s why we call it ‘renting-a-feather,’” he said. “It’s generally the tokenized business structures that they create, which is an individual is promised to make a lot of money by just signing on to the dotted line to become a part owner. And the whole intent is so that the non-Indigenous company has access to the business opportunity and they have the windfall of opportunities. No real social impact hits the community.”
Mr. Metatawabin’s organization is part of a push by five national Indigenous economic organizations and the Assembly of Fist Nations to promote the creation of a new First Nations Procurement Organization. Its proponents say the body could take over the management of the federally run Indigenous Business Directory to ensure the companies listed are genuinely Indigenous.
Tabatha Bull, president and CEO of the Canadian Council of Indigenous Business, which operates its own directory, declined to comment on the specific case of the nursing joint venture but said in a statement there should be stronger consequences for companies that are found to be in breach of the rules.
“That would be a necessary deterrent,” she said. Ms. Bull said the program is “needed and necessary” but reform is required.
Indigenous Services Minister Patty Hajdu has said the government is looking to update the Procurement Strategy for Indigenous Business, which has been in place in various forms since the 1990s.
Conservative MP Garnett Genuis challenged Ms. Hajdu on Monday over the nursing joint venture.
“They say ‘Let’s go into joint venture with one of our employees, and therefore we will call ourselves an Indigenous partnership, even though this is a totally non-Indigenous company.’ Can we at least agree that this is a clear instance of an abuse of the program?” he asked.
“I would say it was an abuse of being on the list without adequate representation,” Ms. Hajdu replied during an appearance before the Commons committee on Indigenous and Northern affairs.
Earlier in the hearing, Mr. Genuis accused the minister of having a “disastrous record on Indigenous procurement.”
Ms. Hajdu responded by defending the program.
“That member should be ashamed for not understanding that Indigenous business has had a hard time competing for procurement with the government of Canada,” she said, adding that it is the type of program that would be at risk under a Conservative government. “I would imagine that member would call it too woke.”
Ms. Hajdu also defended the nursing company on Monday, saying it “has provided important health services to First Nations.”
The company’s previous owner, Sharon Umana, who negotiated the joint venture, has declined to comment to The Globe when reached by phone.
The Commons government operations committee is conducting a study of the federal Indigenous procurement program, which awarded $862-million in contracts in the 2022-23 fiscal year, up from $170-million five years prior.
Contracts awarded under the program are subject to less competition in an effort to help support the growth of Indigenous businesses.
It is part of a larger goal set by the government to ensure that at least 5 per cent of all spending on federal contract work is awarded to Indigenous businesses.
Last month, Assembly of First Nations (AFN) Regional Chief Joanna Bernard told MPs she estimates the true percentage of funding going to genuine Indigenous businesses is closer to 1 per cent and that the majority are shell companies.
“Sadly, the government’s arbitrary Indigenous procurement target has created an incentive for officials to overlook abuse of the program. It’s more about the government trying to look good than actually delivering for Indigenous people,” he said.
