Indigenous Services Canada is promising stricter enforcement against businesses falsely claiming to be Indigenous-owned in order to gain preferential access to billions worth of federal government contracts, according to a document reviewed by Global News.
In a letter sent late last month to the House of Commons’ Indigenous and Northern Affairs committee, Mandy Gull-Masty, the minister responsible for the Procurement Strategy for Indigenous Business (PSIB), said the department has moved to strengthen its verification process to ensure a business is Indigenous-owned before being listed on the government’s Indigenous Business Directory (IBD).
The government is also warning it will impose consequences for any company falsely claiming Indigeneity, including removal from the directory, barring them from future federal work or referring the matter to police.
Gull-Masty said the department has boosted training and “strengthened verification guidelines for staff,” as well as conducted a “comprehensive review” of listings in the IBD that resulted in 1,881 companies being delisted.
“Further, all (IBD) applicants are now required to answer a detailed questionnaire regarding the business’ ownership and control to help standardize and expedite assessments,” the letter read.
“This approach ensures businesses understand the assessment criteria, which has helped improve both accuracy and efficiency of the business registration and revalidation processes.”
But Gull-Masty stopped short of accepting the committee’s recommendation to immediately put in place new eligibility and verification requirements for companies to be listed as First Nations, Inuit or Métis owned.
Government departments turn to the IBD to find Indigenous businesses as part of a policy that five per cent of all government contracts go to companies owned and operated by First Nations, Métis or Inuit peoples. In 2023-24, $1.24 billion in government work was awarded under the policy.
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Conservative MP Billy Morin, who sits on the Indigenous and Northern Affairs committee, told Global News in an interview last week that he doesn’t see any “concrete action” being taken by Gull-Masty’s department.
“(It’s) a bunch of jargon and not a lot of tangible things they’re going to do to protect First Nations, but also protect government coffers,” Morin said.
“They were exceeding their (five per cent) targets in 2022-23, and they don’t say how much (went to) fraudulent businesses. And I think Canadians and First Nations are owed that.”
One of the dangers, Morin added, was that concerns that fraudulent companies could gain access to work set aside for Indigenous businesses could undermine support for the program.
“What I anticipate here is more controversy and more gatekeeping against actual, real First Nation businesses and no actual protection of the government coffers here,” Morin said.
An investigation by Global News and the First Nations University of Canada in 2024 revealed that billions in government contracts had been awarded under the PSIB with little scrutiny of whether companies were, in fact, Indigenous-owned and operated.
Under the program, which was begun in the late ’90s, government departments and agencies “set aside” five per cent of all contracted work for companies owned by First Nations, Métis or Inuit people. The program was designed both as a form of economic reconciliation and a way to help Indigenous-owned companies compete for government work against established suppliers and multinational corporations.
Internal government reviews of the program obtained by Global News suggest that, from the start, federal officials were concerned that non-Indigenous businesses were attempting to game the system to gain access to billions in federal work.
Global’s investigation revealed those concerns were well-founded, with non-Indigenous companies using schemes to gain access to that work, such as arrangements where an Indigenous person serves as a figurehead for a company’s bid in exchange for a cut of the contract.
And because of gaps in the government’s scrutiny of the IBD, other businesses were listed as Indigenous-owned without proper documentation or government verification.
Global reported that some businesses were asked to provide no supporting documents to prove their Indigeneity, including an Indigenous tribal council who were told they could upload a “picture of a bunny” to qualify for the multi-billion-dollar procurement program.
In her letter to the committee, Gull-Masty noted that longer-term and potentially significant changes to the PSIB are in the works. Those include a policy update expected later this year, as well as longer-term changes being co-developed with First Nations, Métis and Inuit leadership.
Ultimately, the government wants to “devolve” the IBD into an “Indigenous-led” model that would oversee the verification process and would continue to serve as government departments’ main source for finding First Nations, Inuit and Métis suppliers.
Canada’s Auditor General is also probing the government’s Indigenous procurement initiatives in the wake of Global’s investigation, and is expected to present their findings later this year.
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