Why is Aboriginal Procurement Important?

Aboriginal procurement is an important driver of economic reconciliation and development for Aboriginal communities due to the revenue procurement generates for Aboriginal businesses as well as the relationships formed through corporations and Governments establishing procurement agreements with Aboriginal businesses. The focus on Aboriginal procurement has grown significantly in recent times, resulting in greater demand for procurement outcomes particularly from Aboriginal businesses, with Canadian corporations and Governments also seeking opportunities to grow their outcomes in Aboriginal supplier diversity.

By increasing Aboriginal procurement opportunities not only will the Aboriginal economy grow but the overall Canadian economy and this will help lead to economic reconciliation whereby Aboriginal peoples will no longer be managing poverty but managing wealth.

CCAB, with support from Indigenous and Northern Affairs Canada, has been moving forward with the Aboriginal Procurement Strategy focused on highlighting the opportunities and value of procurement relationships. This strategy was developed following a Canada-wide survey of Aboriginal and non-Aboriginal businesses, conducted by the CCAB in partnership with Environics Research. The survey showed intense mutual interest in improving and facilitating procurement opportunities as another key element of economic reconciliation. This message was also reflected in the CCAB/Sodexo 2017 Indigenous Business survey, with 80% of Canadians supporting Indigenous business as a pathway to healing Canada’s relationship with Indigenous people.

Insights from global best practices was then applied to these research findings to develop a strategy consisting of the following five pillars:

• Aboriginal Procurement Champions: A high-profile group of corporations committing to increasing opportunities for Aboriginal businesses to participate in their supply chains.
• Aboriginal Procurement Campaign: A national campaign  that will leverage the profile of the Champions Group to encourage widespread engagement in Aboriginal procurement, leading to more organizations joining the Champions Group and creating more procurement opportunities.
• Certified Aboriginal Businesses (CAB): Growing the CCAB’s already-existing directory of Certified Aboriginal Businesses. This designation provides organizations and communities with the same assurance that Aboriginal procurement opportunities are going to businesses who have been independently pre-certified as at least 51% Aboriginal owned and controlled. The number of CAB businesses in Canada. Research found that 82% of corporate respondents regard CCAB’s CAB designation useful for enhancing Aboriginal procurement outcomes.
• Aboriginal Procurement Marketplace: A two-way directory consisting of:  Certified Aboriginal Businesses that can readily engaged by corporations, and; -Procurement opportunities posted by corporates to connect Aboriginal businesses to opportunities they are seeking that aren’t available on conventional procurement platforms.
• Aboriginal Procurement Best Practices: Sharing of Aboriginal procurement success stories to enable more Aboriginal businesses and corporations to better work together to increase Aboriginal procurement outcomes.

Why is Government Procurement Important for Aboriginal Businesses?

When it comes to the Federal government’s current Procurement Strategy for Aboriginal Business, there is significant room for improvement. Recently, an internal memo was sent out to all Ministries imploring each department to mare serious efforts in raising their percentage of procurement from Aboriginal businesses up to 5%. This is a momentous and encouraging development which we at the CCAB fully support.

Ensuring Aboriginal peoples play a meaningful and substantial role in the economy is critical to laying the foundation for both healthy Aboriginal communities and reconciliation nationally. Prime Minister Trudeau has committed to renewing the fiscal relationship between Aboriginal peoples and the Federal Government, prioritizing this relationship as the most important for his Government. CCAB believes that increased procurement is the most direct way the Federal Government can improve this relationship and foster sustainable economic development in Canada. The Federal Government can improve this relationship and foster sustainable economic development in Canada. The Federal Government can greatly increase and improve procurement outcomes for Aboriginal businesses by implementing a process to measure and promote engagement with Aboriginal businesses, as well as between Aboriginal business and corporate Canada.

It is imperative for government departments to have access to legitimate Indigenous owned and operated businesses in order for this initiative to function. CCAB’s CAB program certifies that Aboriginal Businesses are 51% or more owned and controlled by an Aboriginal person(s) thus ensuring that procurement from CAB’s is legitimately benefitting Aboriginal owned entities.

Federal efforts to procure from Aboriginal businesses have been in place for roughly 30 years and have seen some success.  According to the Treasury Board of Canada, Federal government procurement totaled approximately $20 billion in 2015. Of that, roughly $63 million (0.32%) was spent on PSAB. Based on those numbers, if the Federal Government were to increase the percentage spent on PSAB by just 1% this would translate into $264 million increase in the Indigenous economy. This would have a meaningful impact on local prosperity for Indigenous people, raising living standards in small communities from coast to coast to coast and would require no additional investment on behalf of the Government of Canada.

When compared to Corporate procurement numbers, the Government of Canada is not doing enough, particularly given that they are the largest purchaser of goods and services in Canada.

It is estimated that the oil and gas sector alone does $1.8 billion of business with Indigenous firms annually, Imperial Oil ($255 million +), Syncrude ($300 million +) and Suncor ($400 million+) are three of the companies driving those results.

An alternative option would be for the Government to adopt the best practices demonstrated from the Governments across the globe. The Australian Government recently implemented an Indigenous Procurement Policy (IPP), a three-pronged approach to increasing Indigenous procurement through the creation of targets, mandatory set-asides, and minimum Indigenous participation requirements in contracts valued above 7.5 million. In just two years, the IPP has resulted in 4,880 contracts awarded to 956 Indigenous owned businesses, with a total value of $594 million.

CCAB  commends Federal government’s continued efforts to improve PSAB and look forward to providing any support they require as we as a country move towards economic reconciliation.