04 Apr Procurement Strategy for Aboriginal Business

The Procurement Strategy for Aboriginal Business (PSAB) is a national initiative led by Indigenous Services Canada to increase contracting between the federal government and businesses led or managed by Indigenous peoples. Through mandatory set asides, voluntary set asides, and capacity building across all federal departments and agencies, the procurement initiative is working to channel millions of dollars of routine spending by the federal government into the Indigenous economy with the potential for billions more. “The Procurement Strategy for Aboriginal Business was created in 1996,” says a manager with the initiative who spoke with the Indigenomics institute. “Its goal is to support an increase of Indigenous business contracts on behalf of the federal government of Canada.” One of the ways Indigenous economic value is created is by deepening business and supplier relationships using innovation, competitiveness, and engagement within the supply chain. The Indigenomics Institute recognizes procurement as an economic enabler in the growth and design of the emerging $100 billion Indigenous economy. Historically, the total procurement amount deployed to Indigenous businesses hovered around one percent despite Indigenous peoples making up five percent of the population. Total procurement spending across all federal, provincial, and municipal levels of government is estimated to be as high as $183 billion, with federal spending accounting for about $20 billion. With steep growth in the number of Indigenous businesses large and small in every sector of the economy and every part of the country, Indigenous procurement is increasingly a key economic tool that can introduce billions of dollars into the Indigenous economy. The Prime Minister’s 2019 Mandate Letter to the Minister of Public Service and Procurement Canada provided direction to “work with the Minister of Indigenous Services and the President of the Treasury Board to create more opportunities for Indigenous businesses to succeed and grow by creating a new target of 5 percent of federal contracts awarded to businesses managed and led by Indigenous Peoples.” Achieving this procurement target not only benefits Indigenous communities and businesses, but the federal government as well. In the last five years, Indigenous business ownership has increased by 38 percent and created over 100,000 jobs. The Indigenous population is the youngest, fastest growing demographic in Canada. Building procurement as a tool for constructive, generative economic design is beneficial to the Canadian economy. By increasing federal procurement targets for Indigenous businesses as participants in the government, the value of Indigenous procurement within this supply chain will be expressed in billions of dollars of contracts and economic value. But increasing Indigenous procurement has not been easy or moved as quickly as critics of the initiative would like. To accelerate that movement, the government undertook an Indigenous procurement modernization effort focusing on broad external consultation and engagement. “Our engagements and consultations included regional and national roundtables and even section 35 consultations in 2019. It’s ongoing,” says the manager.

“And that’s only the beginning.” “We have an Indigenous reference group, for instance, that includes national Indigenous organizations, economic organizations, and other community leaders.” Some of the recommendations that emerged from those consultations and engagements were to introduce mandatory targets across federal departments, create the necessary buy-in at senior levels in the government, distribute opportunities to large and small businesses across different regions and sectors, simplify the procurement process to make it easier to bid, establish a local presence in regions to identify and communicate potential opportunities, and be less rigid with certain labour requirements. The collective effort to establish a process for federal departments and public service to implement the minimum five percent procurement target will require significant economic leadership that Indigenous groups have been calling for. “We, as a government, sent a letter to over 90 departments asking for their projections and targets relating to PSAB and encouraging them to achieve a five percent target,” says the manager. “About 60 percent of departments responded that they would voluntarily commit to achieving a minimum of five percent.” These modernization and engagement efforts have finally helped push the level of Indigenous procurement above one percent. “About three years ago we were under one percent if you look strictly at PSAB and none of the set asides and today we are closer to three percent,” noted the manager. “And that’s only the beginning. We can achieve a much higher number than five percent. The response we have seen from Indigenous peoples is ‘Yes, we can do it. We want to do it, and we actually can do it, it is possible.’” It is possible to build an economic future in which Canada has not only exceeded the five percent target but has revolutionized the system for Indigenous procurement to look like the Australian Supply Nation. Supply Nation is an organization that works much like PSAB and includes a directory of Indigenous businesses, essentially a concierge service, and brokerage of goods and services that is an institution arm’s length from the government. It is funded by the government but run by Indigenous peoples so that they can ensure the procurement levels are achieved. The opportunity to build Indigenous economic institutions is also embedded within the United Nations Declaration on the Rights of Indigenous peoples. The message from the manager to others seeking to further the Indigenous economy is to “look to the initiatives that are possible and stretch the impossible. Innovation is the future as are our youth and micro business, the majority of which are led by women. Now is the time for all of us to innovate and use all the avenues available to us to empower the Indigenous economy.”

Procurement Strategy for Aboriginal Business

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