Procurement Strategy for Aboriginal Business - Federal Results Report - 2005-2009

Date: October 2010




Table of Contents




Introduction

Aboriginal Affairs and Northern Development Canada (AANDC), in partnership with other federal departments and agencies, continues to develop and implement policies and programs that supports economic and business development for Aboriginal businesses and communities.






Background on the Procurement Strategy for Aboriginal Business

The Procurement Strategy for Aboriginal Business (PSAB) was launched in 1996 to encourage Aboriginal businesses to pursue federal government contracting opportunities. With its introduction, the Government of Canada recognized that, while serving its primary purpose of obtaining required goods and services at market rates, procurement is also a tool for Aboriginal businesses to grow by gaining experience, developing capacity, and forming partnerships with other businesses to compete for procurement opportunities.

The Strategy seeks to accomplish its goal of increased federal procurement from Aboriginal businesses by allowing federal departments and agencies to set aside procurement opportunities for Aboriginal-owned businesses (i.e., limit competitive bidding on the opportunity to only Aboriginal-owned businesses). The Strategy is comprised of:

  • Mandatory Set-Asides: A mandatory set-aside applies to all federal contracts with a value greater than $5,000 for goods or services delivered to a primarily Aboriginal population (i.e., at least 80 percent).
  • Voluntary Set-Asides: In addition to mandatory set-asides, federal departments and agencies may elect to voluntarily set aside select procurement opportunities for Aboriginal-owned businesses.
  • Joint Ventures and Partnerships:  To help with business and capacity development, the Strategy provides a framework for Aboriginal businesses to form joint ventures and partnerships with other Aboriginal or non-Aboriginal businesses and allows these partnerships to bid on opportunities that have been set aside.
  • Use of Aboriginal criteria:  In the qualification and awarding of prime contracts, all departments and agencies are encouraged to request Aboriginal Business Sub-Contracting Plans, either as a mandatory requirement or as rated evaluation criteria.

A business that qualifies under the Procurement Strategy for Aboriginal Business must meet the following PSAB criteria:

Aboriginal business means an entity that is:

  1. a band as defined by the Indian Act; or
  2. a sole proprietorship, corporation or limited company, co-operative, partnership, or not-for-profit organization in which
    • Aboriginal Persons have at least 51 percent ownership and control, and
    • in the case of a business with six or more fulltime employees, at least 33 percent of the Full-time Employees are Aboriginal Persons; or
  3. a joint venture in which the band, or the Aboriginal Business or Aboriginal Businesses as defined in (b) have at least 51 percent ownership and control of the joint venture.

Aboriginal content means that at least 33 percent of the Value of the Work performed under a PSAB set-aside contract must be performed by a qualified Aboriginal Business if a joint venture, partnership or subcontracting relationship with non-Aboriginal entities is proposed.

Once businesses are qualified under the PSAB, they can be listed on the Aboriginal Business Directory, which is maintained by Industry Canada (IC) and located on the IC website.






Reporting of PSAB Results for 2005 to 2009

As part of Aboriginal Affairs and Northern Development Canada's responsibility for the management of the Procurement Strategy for Aboriginal Business, the Department seeks to gather and make available data and information on the results of federal procurement from Aboriginal-owned businesses. To this end, this report provides a summary of federal procurement from Aboriginal businesses for the years 2005 to 2009.






Results of Federal Procurement for Aboriginal Businesses, 2005-2009

Between 2005 and 2009, federal procurement averaged $14.2 billion per year. For this period, Aboriginal procurement represents an annual average of 2.5% of all federal contracts awarded, which is a steady increase since the inception of PSAB in 1996.

The table below presents a summary of the total value of contacts awarded to Aboriginal businesses by federal departments and agencies for the calendar (January 1 to December 31) years 2005 to 2009. Results are presented for the 12 departments and agencies reporting the highest value of Aboriginal procurement for the period presented, as well as a total for all other federal departments and agencies. The summary is based upon data provided to Aboriginal Affairs and Northern Development Canada by Public Works and Government Services Canada.

It should be noted PWGSC does not include standing offer call-ups, purchases made by acquisition card, and contract amendments in the reports it provides for departments and agencies.  Non-set aside contracts with Aboriginal businesses (83 percent of the total) are also omitted if a certification of PSAB eligibility is not submitted, which is neither requested nor required for non-set aside procurements.

Table 1

Value of Procurement from Aboriginal-owned Businesses
By Federal Department and Agency
For the Period of January 1, 2005, to December 31, 2009
Department 2005 2006 2007 2008[*] 2009
Aboriginal Affairs and Northern Development Canada $27 333 000 $43 286 626 $25 090 221 $3 823 279 $129 176 307
Canadian Food Inspection Agency   2 832 000 3 257 217 325 288 120 889 150 240
Canada Revenue Agency 2 097 000 873 009 154 760 2 625 000 82 273
National Defence 49 915 000 173 070 917 18 630 763 39 228 087 45 861 310
Environment Canada 2 707 000 3 147 345 4 368 019 482 123 1 972 650
Royal Canadian Mounted Police 29 513 000 12 744 502 18 825 242 5 881 022 7 769 103
Parks Canada 4 942 000 10 113 923 3 852 176 9 601 255 5 628 936
Fisheries and Oceans Canada 5 965 000 5 230 319 9 870 000 13 409 409 20 745 267
Health Canada 27 003 000 4 327 727 120 800 663 2 788 272 32 457 607
Correctionnel Service of Canada 9 628 000 13 134 191 3 156 226 776 957 2 884 167
Transport Canada 4 751 000 1 668 436 1 333 155 903 346 1 639 813
Public Works and Government Services Canada 163 255 000 170 229 806 87 841 016 119 086 781 175 182 940
All other Departments 20 174 804 21 552 413  43 374 456 59 622 448 36 001 132
TOTAL - All Departments / Agencies $350 115 804 $462 636 431 $337 621 985 $258 348 868 $459 551 745

Note: The following procurement results are provided to AANDC by PWGSC.
* PWGSC is responsible for collecting the data to feed into the Treasury Board Secretariat annual Purchase Activity Reports. If Departments do not submit the data within the required time frame, then PWGSC only reports on contracts that they awarded on behalf of the departments in the consolidated report.

As noted, the results presented in Table 1 are inclusive of all contracts awarded to Aboriginal-owned businesses, whether through a set-aside process under the Strategy or through an open (i.e., not-set aside) competitive process. For all contracts valued over $25,000 that were awarded to Aboriginal businesses from 2005 to 2009, approximately 83% were awarded under an open competitive process.

In addition to total value, the number of contracts awarded to Aboriginal businesses provides further insight into the extent of federal procurement from Aboriginal-owned firms:

  • For 2005, Aboriginal-owned businesses were awarded 5,478 contracts from federal departments and agencies.
  • For 2006, a total of 5,087 federal contracts were awarded to Aboriginal-owned businesses.
  • For 2007, Aboriginal-owned businesses received 5,384 federal contracts.
  • For 2008, Aboriginal-owned businesses were awarded 7,145 federal contracts.
  • For 2009, Aboriginal-owned businesses were awarded 5, 227 federal contracts.





Action to Enhance Federal Procurement for Aboriginal Businesses

The Government of Canada has made great strides in increasing its procurement from Aboriginal-owned businesses. Over the first decade since the introduction of the Procurement Strategy for Aboriginal Business, federal procurement from Aboriginal-owned businesses has increased from a value of $44.5 million in 1996 to $350.1 million in 2005. The 2006 census revealed an increase of 38% since 2001 of Aboriginal Business owners, which exceeds that of the self-employed Canadians overall. Aboriginal businesses have also created approximately 82,000 full time jobs and 18,000 part-time jobs. Further, within the last 5 years federal procurement from Aboriginal businesses has risen to $459.6 million in 2009.

While significant success has been achieved since the initiation of the Strategy, the Government of Canada believes that Aboriginal procurement remains an underutilized tool for growing Aboriginal business, and has faced constant challenges, such as a lack of comprehensive procurement-related data collection and analysis, a unrelenting lack of pre-qualified Aboriginal businesses, and a low awareness of procurement opportunities amongst Aboriginal businesses.

To address these challenges, the Government of Canada has invested $9.5 million over four years (2009-10 to 2012-13) in the Procurement Strategy for Aboriginal Business through its action plan to implement the new Federal Framework on Aboriginal Economic Development. With this investment, the Strategy will seek to achieve a 50% increase in the number of contracts set aside for Aboriginal businesses over the next four years. Some of the actions that Aboriginal Affairs and Northern Development Canada will need to undertake to achieve this goal include:

  • Improve the collection and analysis of data on federal procurement from Aboriginal businesses;
  • Increase the number of Aboriginal businesses that are pre-qualified to compete for set-aside contract opportunities by 1,000 per year; and,
  • Provide procurement-readiness training to Aboriginal businesses and federal procurement officers.

Action undertaken by Aboriginal Affairs and Northern Development Canada for the 2009-10 fiscal year included:

  • Provision of procurement-readiness training to over 900 federal procurement officers throughout 43 departments and agencies;
  • Hosting of a national Procurement Strategy for Aboriginal Business conference and exhibition in March 2010; and
  • Issuance of an interpretation bulletin to federal departments and agencies.

For fiscal year 2010-11, Aboriginal Affairs and Northern Development Canada will seek to improve data collection, reporting and analysis, pre-qualify a further 1,000 Aboriginal businesses, provide procurement-readiness training to 500 Aboriginal-owned businesses, host a second national conference and workshop, and modernize the web portal for the Procurement Strategy for Aboriginal Business.






Conclusion

Aboriginal Affairs and Northern Development Canada will continue to support strong Aboriginal entrepreneurship as a strategic priority that will help ensure that Aboriginal Canadians enjoy the same opportunities as all Canadians to participate in the economy. The Procurement Strategy for Aboriginal Business continues to be key to achieving this goal.

The PSAB Team would like to thank all departments and agencies and their PSAB co-ordinators for making the Strategy a success. Aboriginal Affairs and Northern Development Canada also extend congratulations to all of the First Nation, Inuit, and Métis businesses whose talents, skills, and competitive desire to succeed contribute to a strong, competitive and diverse Aboriginal business sector.