This website will change as a result of the dissolution of Indigenous and Northern Affairs Canada. Consult the new Crown-Indigenous Relations and Northern Affairs Canada home page or the new Indigenous Services Canada home page.
This website will change as a result of the dissolution of Indigenous and Northern Affairs Canada. Consult the new Crown-Indigenous Relations and Northern Affairs Canada home page or the new Indigenous Services Canada home page.
The Procurement Strategy for Aboriginal Business
10 Wellington Street, 11th Floor, Gatineau, QC
Telephone: 1-800-400-7677 / Facsimile: 819-956-9837
Indigenous and Northern Affairs Canada (INAC) is pleased to present the Procurement Strategy for Aboriginal Business (PSAB) Report for 2014.Footnote 1 The report for 2014 highlights the Government of Canada's continued progress and success in enhancing procurement opportunities for Indigenous businesses across Canada. It also illustrates the continued strengthening and leveraging of the PSAB as a key catalyst in supporting Indigenous business participation in the broader Canadian economy. Since the inception of the PSAB in 1996, Indigenous businesses competed for, and won, over $1 B of set aside contracts. This active participation and contribution to Canada's economy also represents significant wealth, employment and income generation for Indigenous people, businesses and communities.
For 2014, the value of set aside contracts has reached a new high of $227.05 M. The main reason for the upturn was an overall increase in government spending, from approximately $14 B in 2013 to just over $28 B in 2014. The majority of spending was in the areas of health, information management/information technology (IM/IT) and asset management, where Indigenous firms competed and won large value contracts.
PSAB continues to create networks and identify opportunities for Indigenous business and, at the same time, collaborates with many stakeholders, including; federal government departments and agencies, provinces, private sector businesses, Indigenous organizations and the national PSAB Coordinators Network. The Network is a collection of federal departments and agencies who, work with INAC to enhance the participation of Indigenous businesses as suppliers of goods and services to the federal government.
PSAB has demonstrated its effectiveness by the sustained increase in the contract values year to year. In 2014, Aboriginal set-asides in federal procurement were $227 M representing an average annual increase in set-asides of 48% since 2009. While there has been some fluctuation, the ongoing trend is one of growth.
This effectiveness has been proven through an evaluation of the program, conducted in 2014, which made observations and recommendations in terms of relevance, needs, priorities and achievement of expected outcomes. The evaluation confirmed PSAB's effectiveness: "The objectives of the PSAB are well-aligned with government priorities and departmental strategic outcomes...The PSAB is resulting in Aboriginal firms winning an increased share of contracts over time, and significant strides have been made in promoting procurement with Aboriginal firms."
PSAB continues to be linked to other programs internally at INAC and across the federal government to build Indigenous business capacity.
We thank you for taking the time to review the 2014 PSAB Annual Report and welcome any questions or suggestions you may have to improve the report.
"Aboriginal entrepreneurs are motivated by a desire to innovate, expand and profit from their businesses, but they also face unique challenges to their growth and development. A better understanding of these realities by business and governments, combined with the optimism of Aboriginal business owners, creates unlimited opportunities for everyone…"
The Government of Canada launched the Procurement Strategy for Aboriginal Business (PSAB) in 1996 to help Indigenous firms gain access to federal procurement opportunities. The initiative is designed to increase the number of Indigenous firms competing for and winning federal contracts, and more recently, in the private sector. It is administered by Indigenous and Northern Affairs Canada (INAC), in partnership with Public Services and Procurement Canada (PSPC), Innovation, Science and Economic Development Canada (ISED) and Treasury Board Secretariat (TBS) as well as all federal government departments and agencies with a contracting budget in excess of $1 M. The PSAB program utilizes four key elements to reach program objectives. These elements are:
A full description of these elements can be found in ANNEX A at the end of the report. The program elements, in concert with the Aboriginal Business Directory (ABD), are key in advancing the participation and the ability of Indigenous businesses to compete for various contracts, both federally and in the private sector. The ABD is a search tool that is used by the federal department and agencies, and the private sector to identify Aboriginal business capacity. The increased participation and success leads to an increase in capacity and creating expertise in diverse sectors.
Since the Procurement Strategy for Aboriginal Businesses (PSAB) inception in 1996, Aboriginal businesses competed for and won over $1 B in set-asides
In 2013-14, approximately $900 K was spent on delivering the PSAB (and other procurement activities). 2014 set-asides amounted to $227 M, indicating a return on investment of approximately 250:1.
This continues a consistent, upward trend since the inception of PSAB. Since 2009, there has been an average increase of 48% for set aside contracts.
PSPC collects data from 93 federal department and agencies, which fall under the Financial Administration Act (FAA). Of the 93 departments and agencies, a minimum of 43 participate in annual reporting of performance objectives and results on their respective Indigenous procurement. Not all departments in the FAA are required to set targets and report on Indigenous procurement, only those with a contracting budget of $1 M or more. INAC and PSPC have entered into an agreement in which PSAB data shared by PSPC is verified by INAC to ensure Indigenous procurement data is accurately captured and the results are approved by the TBS. It should be noted that the time frame from the start of the data collection process to the distribution of the same data has a lag of approximately 24 months.
The results of the 2014 report includes a verification process that provides a clear and concise data set, with some data being removed as a result of this enhanced due diligence. A consistent reporting process by departments and agencies, with increased oversight by both PSPC and INAC, has resulted in data that is more reflective of Indigenous procurement government wide. The results for 2014 are demonstrative of verified contract values.
Figure 1 shows the value of contracts awarded to Indigenous companies. Set-asides increased from $49 M in 2009 to $84 M in 2011, a 71% increase over two years. After increasing to almost $109 M in 2012, the value of set asides fell to just over $82 M for 2013. The 23% decrease between 2012 and 2013 is the result of a combination of factors, including, the bundling of contracts for larger procurements in the areas of IT services.
When analyzing open data sets for the 2013 and 2014 calendar years, it was found that overall government procurement increased from $14.4 B in 2013, to $28.46 B in 2014. This is an increase of approximately $14 B. This was a result of large contracts valued at more than $11 B, being awarded in health, shipbuilding, asset management and IM/IT.
The total set aside value for contracts in 2014, represented 0.9% or $227 M of the total government expenditures of $28.46 B. The reason for the marked increase in set aside contracts can be attributed to the overall increase in contracts awarded by Health Canada ($158.75 M), Correctional Services Canada ($37.9 M) and Public Services and Procurement Canada ($11.6 M).
While total government procurement nearly doubled from 2013 to 2014, the value of set aside contracts for Indigenous business during this timeframe nearly tripled, from $82 M to $227 M. There has been an overall increase in procurement, and Indigenous businesses have benefitted due to the effectiveness of the PSAB program.
INAC maintains a national on-line Aboriginal Business Directory (ABD), in collaboration with Innovation, Science and Economic Development Canada (ISED); it is housed within ISED's Canadian Companies Capabilities database and used as a public access search engine available to industry and the federal procurement community to identify Aboriginal business suppliers to aid in determining the business capacity of Aboriginal businesses in various sectors. This direction is outlined in the Roles and Responsibilities: Interpretation Bulletin within the Government of Canada.
Since migrating the ABD to ISED's, Canadian Companies Capabilities (CCC) database in 2011, INAC has enhanced data collection and verification methods while increasing awareness of the ABD. As a result, INAC registered 467 Indigenous businesses in 2010, 565 in 2011 and 496 in 2012. As illustrated, in 2014 there were almost 1,700 businesses registered. The ABD has also served as an effective tool for non-federal stakeholders such as provincial governments and the private sector. This is reflected in the cooperation of partners in sharing hyperlinks on their respective websites. The partners include federal partners such as ISED and the Canada Business Network to non-government organizations (NGO's) such as University of British Columbia to the private sector including Hydro One, Union Gas and Businesslink.ca. Efforts will continue to expand and enhance the sharing of the ABD with partners such as the Canadian Council for Aboriginal Business, Native Women's Association of Canada and Indigenous Works.
The maintenance and continued modernization of the directory is a key, ongoing objective that requires dedicated support and resources. There has been an annual churn rate of approximately 30% of businesses that register and deregister in the ABD. However, there continues to be an overall upward trend in the total number of registered businesses from year to year.
The diagram represents a snap shot of ABD registration as of 2014.
|Province||# of Registered Businesses|
|Newfoundland and Labrador||57|
|Prince Edward Island||4|
Though continued leveraging of investments made through the Federal Framework for Aboriginal Economic Development (FFAED), INAC has focused on strengthening the PSAB by enhancing data and performance measurement as well as policy and program proposal linkages. It is also working to develop integrated, partnership-based approaches to major opportunities and to leverage partnership agreements and strategies to enhance participation of Indigenous businesses in contracting opportunities inside and outside the federal government.
INAC assists federal departments in applying PSAB policy by participating in Procurement Review Committees (PRCs), assessing Indigenous business capacity, and identifying opportunities for set-asides. Documentation is sent to members of the PRC for federal contracts valued between $2 M and $100 M.
INAC reviewed a total of 206 Procurement Review Committee requirements in 2014. Twenty-eight of these requirements (13.5%), already included provisions for a set-aside. INAC intervened in a number of other requirements and, as a result, 6 more requirements (2.9%) were set aside under the PSAB.
In 2014, INAC continued working with other provinces to promote Indigenous procurement for the benefit of Indigenous businesses across Canada.
As part of a broader approach to intergovernmental cooperation, INAC initiated the development of a Memorandum of Understanding (MOU) with the Province of Manitoba's Procurement Services Branch. Both organizations share an interest in promoting and fostering economic development through procurement among Indigenous businesses, individuals and communities in Manitoba. The five-year MOU formalizes the strong working relationship that currently exists and commits both parties to sharing information, best practices and strategies to assist Indigenous businesses in accessing federal and provincial procurement opportunities.
In January 2011, a Memorandum of Understand (MOU) was signed between INAC and the Province of Ontario's, Ministry of Aboriginal Affairs (MAA).Footnote 2 Discussions, based on the MOU, led to the launch of a two-year provincial Indigenous procurement pilot in March 2012. INAC worked closely with MAA to share information on Indigenous business directories, best practices, lessons learned on how to build and implement an Indigenous procurement strategy that will increase Indigenous business participation in bidding for and winning federal and provincial contracting opportunities.
The impacts of this MOU were:
In managing the PSAB, INAC has identified a number of important lessons and best practices which it has begun to apply to identify Indigenous business opportunities in many other areas. Business partnerships have been initiated in key sectors, such as the marine, mining, energy/electricity and transportation. INAC has recognized that meaningful Indigenous participation in major opportunities is multi-dimensional, involves working closely with both government and private sector and transcends traditional departmental mandates and program authorities. As a result, modern institutional relationships and models are evolving in relation to these major opportunities, addressing key governance and coordination gaps within the federal government and with Indigenous partners.
This has led to successful relations with Canadian Council for Aboriginal Business, Native Women's Association of Canada and a number of the Aboriginal Financial Institutions (AFI's) across Canada.
PSAB provides advice to private sector, organizations and businesses on how to organize and manage procurement. Through PSAB, INAC has supported institutional relationships by supporting Indigenous partners in building models and advancing opportunities, such as with the National Shipbuilding Procurement Strategy.
These integrated models support Indigenous-driven decision making and provide a more comprehensive approach to relationships with industry.
In efforts to increase the visibility of Indigenous businesses, INAC has conducted, participated or organized several events or activities, such as enhancing and streamlining the PSAB registration process and signing a Memoranda of Understanding (MOU) with PSPC. The activities listed below demonstrate a commitment to the advancement of the PSAB as well as an increase in capacity of Indigenous businesses, while adhering to legislation and regulations, both, within Canada and internationally.
Despite the success of the PSAB, challenges remain for some departments and agencies to set and meet PSAB targets. Challenges include changes in human resources and targeted messaging about the role of performance objectives when setting goals. In order to help departments establish or increase PSAB performance objectives, INAC continues to provide comprehensive advice and recommendations addressing misperceptions of the PSAB process, assisting in the development of purchasing strategies, defining requirements and identifying Indigenous business capacity.
Promotion and outreach activities are a necessity to inform stakeholders, Indigenous businesses and federal officials on the benefits of the PSAB. The purpose is to raise awareness, not only of the PSAB, but of Indigenous business capacity and the procurement opportunities taking place through different vehicles in the federal procurement system. In 2014, the PSAB team participated in 28 separate events across Canada. The total number of events attended since 2009 is close to 300. In 2014, PSAB and INAC participated in several conferences and trade shows. These included: the Prospectors and Developers Association of Canada Convention, Women Entrepreneurs Forum and the Northern Lights Conference.
Through its participation in national conferences, INAC has supported broader federal Indigenous economic development objectives by focusing on procurement-readiness training, business promotion and facilitating network opportunities between Indigenous businesses, government and industry.
PSAB and the Office of Small and Medium Enterprise (OSME) have continued to coordinate the delivery of educational PSAB material at outreach events and activities pursuant to an MOU established in 2011. Under the MOU, OSME and PSAB have coordinated the delivery of PSAB presentations to industry and government stakeholders, informing them of the processes and policies of the strategy.
Overall, PSAB and OSME participated in seven joint sessions in 2013-2014 where the two groups delivered information regarding their respective programs. These sessions were held across Canada and included presentations to Indigenous communities in Kamloops, Prince George and Lillooet and to private and public stakeholders at conferences and awareness sessions in a number of provinces.
In 2009, INAC created the PSAB Coordinators Network in order to establish a closer and more customized relationship with the federal departments and agencies involved with the PSAB. In 2014, there were 61 PSAB Coordinators across government. Quarterly meetings are held with PSAB coordinators to provide them with updates and to ensure the continuous availability of the team to all federal entities involved with the PSAB. INAC continues to work towards increasing departmental awareness about PSAB and to increase the number of representatives within the federal departments and agencies.
INAC is responsible for conducting compliance audits of Indigenous businesses, which include joint ventures and partnerships, who declare they meet the PSAB criteria by registering in the ABD. PSAB uses independent third party auditors who perform compliance audits to ensure the integrity of PSAB. In 2014, a total of 66 audits were completed and included: pre-award (16); post-award (12); and random (38) audits of Indigenous businesses (including joint ventures) to validate that they meet the PSAB criteria which enables them to bid on set asides.
A small number in the random category, (4), were found to be non-compliant. The reasons for non-compliance include: criteria of Aboriginal control not met; requested documents not provided and non-response to audit notification. It should be noted that these instances of non-compliance were readily addressed and corrected through direct engagement with the businesses involved. With greater capacity to audit, a higher number of audits were completed in 2014 compared to the 20 total audits completed in 2013. Of the 66 audits completed, 89% were found to be compliant. There are plans to augment the audit process to ensure even greater program integrity.
The Evaluation, Performance Measurement and Review Branch (EPMRB) at INAC, in compliance with the Treasury Board Policy on Evaluation, conducted an evaluation of the Procurement Strategy for Aboriginal Business (PSAB) and its related activities. The evaluation included findings with respect to: Relevance; Performance; Efficiency and Economy; and provided recommendations to improve the PSAB program. INAC developed a management action plan to address recommendations.
Outlined below are the highlights of the evaluation.
There is a continued need for PSAB: "There is a need for continued investment in initiatives designed to strengthen viable Aboriginal businesses. Though the PSAB supports this objective, there is concern that the approach generally favors larger and more established firms over new and smaller businesses and entrepreneurs."
PSAB was found to be in alignment with federal government priorities: "The objectives of the PSAB are well-aligned with government priorities and departmental strategic outcomes. The approaches to meeting these objectives need to continually adjust to evolving needs and business environments to ensure optimal contribution to these objectives."
The conclusions of the report acknowledged that PSAB was relevant: "There is a need for continued investment in initiatives designed to strengthen viable Aboriginal businesses and the objectives of the PSAB are well-aligned with government priorities and departmental strategic outcomes… The current activities under the PSAB are consistent with federal roles and responsibilities."
The evaluation determined that PSAB performed as designed, highlighted by specific findings. In terms of performance, the evaluation concluded: "The PSAB is resulting in Aboriginal firms winning an increased share of contracts over time, and significant strides have been made in promoting procurement with Aboriginal firms."
1) Aboriginal firms win contracts and Contribute to the Creation or Growth of Viable Aboriginal Businesses
The PSAB is resulting in Aboriginal firms winning an increased share of contracts over time, and significant strides have been made in promoting procurement with Aboriginal firms.
2) PSAB and Aboriginal Workforce Participation Initiative
Outcomes on the adoption of Aboriginal procurement strategies or participation agreements; and the outcome that Aboriginal business capacity is matched with business/procurement opportunities have only recently been established and articulated.
3) Factors affecting the success of the PSAB
The main issues affecting the success of PSAB relate to the complexity of the procurement process and challenges in securing opportunities to gain the experience necessary to be qualified for government contracts.
PSAB was found to be efficient and economical.
"The PSAB and its related activities are generally speaking an economical approach to supporting Aboriginal businesses through the Federal Framework for Aboriginal Economic Development."
The evaluation noted that the program area, Aboriginal Workforce Participation Initiative, focused on activities such as conferences, which could have been focused on addressing opportunities to enhance procurement specific activities.
"The significant expenditures currently invested in large conferences, however, may be better spent on targeted training initiatives designed specifically to match businesses with economic opportunities; adequately train them on how to bid in competitive processes; and how to be more competitive and take better advantage of regional opportunities."
Based on the findings, the evaluation made four recommendations for the program and a corresponding action plan.
The PSAB can now track the number and value of set aside contracts by region. As can be seen in Figure 3, no set-aside contracts were awarded in 2014 within Prince Edward Island or Newfoundland. That is not to say that Indigenous businesses from these regions were not awarded contracts in other areas of the country.
Set aside contracts for 2014 were awarded under a wide variety of commodities. As demonstrated in Figure 4, the greatest amounts spent were on Health and Social Services, followed by diverse purchases such as automation equipment, furniture and health equipment. Contracts were also obtained in the IM/IT field and construction.
There were numerous contracts of which the values were not significant and these were grouped together in a category named "Other". The commodities represented in this category largely included services in the environmental, natural resource and education sectors.
For the calendar year 2014, set-aside contracts, worth more than $227 M were initiated by 43 federal departments or agencies. The total accumulated values for the contracts ranged from thousands of dollars to more than $153 M, with the bulk being awarded by Health Canada, Correctional Services Canada, Public Services and Procurement Canada and Employment and Social Development Canada. These four departments awarded almost 92% of the total value of the contracts with a combined value of $208,733,382.
|Department/Agency||Set Aside Values|
|Aboriginal Affairs and Northern Development Canada||$3,938,454|
|Agriculture and Agri-Food||$141,541|
|Atlantic Canada Opportunities Agency||$14,397|
|Canada Border Services Agency||$269,833|
|Canada Revenue Agency||$157,751|
|Canadian Food Inspection Agency||$19,447|
|Canadian Human Rights Commission||$2,093|
|Canadian Nuclear Safety Commission||$395,111|
|Chief Electoral Officer||$188,174|
|Citizenship and Immigration Canada||$65,664|
|Commissioner of Official Languages||$2,327|
|Courts Administration Service||$17,388|
|Economic Development Agency of Canada||$73|
|Employment and Social Development Canada||$5,462,247|
|Fisheries and Oceans||$2,424,653|
|Library and Archives Canada||$44,357|
|National Energy Board||$95,966|
|National Parole Board||$1,317|
|Natural Resources Canada||$244,373|
|Natural Sciences and Engineering Research Council||$2,627|
|Office of the Superintendent of Financial Institute||$2,248|
|Offices of the Information Commissioner||$978|
|Parks Canada Agency||$436,415|
|Privy Council Office||$30,445|
|Public Health Agency of Canada||$269,003|
|Public Safety Canada||$1,752,648|
|Public Services and Procurement Canada||$11,631,394|
|Royal Canadian Mounted Police||$577,441|
|Shared Services Canada||$710,881|
|Social Sciences and Humanities Research Council||$9,363|
|Treasury Board Secretariat||$180,843|
|Veterans Affairs Canada||$7,762|
The success of the PSAB strategy is due to its effective use of program dollars. The dollars spent on directly assisting businesses through contracting opportunities and supporting organizations, such as the Canadian Council for Aboriginal Business (CCAB) and the Native Women's Association of Canada translate into increased business capacity and business development. This success can be translated to other program areas and integrated with other PSAB tools as demonstrated below.
In 2014, INAC continued to work with other federal departments, Indigenous organizations, provincial governments and private industry to enhance Indigenous participation in projects related to the National Shipbuilding Procurement Strategy (NSPS). Additionally, in 2014, over $931,000 in funding was secured under the Strategic Partnerships Initiative to support Indigenous business participation in shipbuilding in both the Atlantic region and British Columbia. Funded activities included opportunity identification/analysis, supplier information sessions and certification activities.
In 2013, Health Canada approached INAC with questions regarding Indigenous procurement for a Nursing Care Services requirement that would serve three provinces (Manitoba, Ontario and Quebec). This requirement was valued at over $120 M.
As the contract value was over $5,000 and the primary recipients were an Indigenous population, INAC sought to apply a PSAB set-aside. INAC officials worked closely with Health Canada and PSPC on the contract and made a presentation at an Industry Day, outlining the key components and requirements of the PSAB, to interested bidders, who were receptive to the inclusion of a set-aside. This is a success story that carried into 2014 when the contract was actually awarded.
In 2012-13 and 2013-14, the Business Development directorate of INAC supported the Native Women's Association of Canada in developing and maintaining the National Aboriginal Women's Business Entrepreneurship Network, which aims to increase representation of Indigenous women in business. The Network fosters mentorships between Inuit, Métis and First Nations women across Canada. Each of the Network projects concluded with an annual conference, and included business training and financial literacy training.
The power and impact of procurement were highlighted at the 2013 Aboriginal Entrepreneurs Conference and Tradeshow, which was hosted by the Canadian Council for Aboriginal Business and supported by INAC. Presentations included a workshop outlining "The Ins and Outs of PSAB Set-aside Contracting Opportunities," which featured insight from a successful Indigenous entrepreneur on how to compete for and win PSAB set-aside contracts, as well as a moderated panel on "The Power of Procurement – Prosperity in Partnerships," which included panelists from Seaspan Marine, Canadian National, Brookfield Renewable Power Inc., Gemini Power Corp and Regulus Investments Inc.
PSAB strives to advance Indigenous business opportunities by enhancing business capacity, competitiveness and growth. While doing so, PSAB continues to improve both its efficiency and relevance in the economic development space. The program encourages an environment for Indigenous business success, strategically leveraging the broader program suite and by extension, capacity building, networking, training, technology and research, strengthening opportunities and access for Indigenous businesses to the Canadian economy.
By creating opportunities through outreach and communications, MOUs and the development of a nationwide network, the PSAB has demonstrated, since its inception, significant returns on investments. While there has been some fluctuation, in year to year contract values, there has been a sustained upward trend with an average annual increase of 48% over the last 8 years.
PSAB continues to evolve as demonstrated by the engagement with not only the federal government, but with other levels of government and the private sector.
As part of the regular program management process the PSAB has undergone a program evaluation in 2013-14 fiscal year. INAC took advantage of this assessment to enhance PSAB's success, effectiveness and to continue improving its policies and practices in regard to procurement.
The PSAB team will continue to work in partnership with INAC and other federal departments, to advance the economic participation of Indigenous business with federal partners, which will extend to improved individual and collective economic self-reliance.
The four main elements of the PSAB are:
A) Mandatory Set Asides
Set asides are mandatory when federal contracts for goods and services are worth more than $5,000 and delivered to an area, community or group in which Indigenous people comprise at least 80% of the population.
B) Voluntary Set Asides
Federal departments and agencies may choose to voluntarily set aside procurement opportunities for Indigenous-owned businesses when operational requirements, best value, prudence, probity and sound contracting management can be assured and where Indigenous capacity exists.
C) Joint Ventures and Partnerships
PSAB encourages joint ventures and partnerships to allow Indigenous and non-Indigenous partnerships to bid on opportunities that have been set aside for Indigenous businesses. This is to help Indigenous businesses build their capacity and benefit from knowledge and competency transfers.
D) Use of Indigenous Criteria
In awarding contracts, departments are encouraged to request Indigenous sub-contracting plans, either as a mandatory requirement or rated evaluation criteria. The Indigenous criteria can be applied only if International Trade Agreements are exempt.
Indigenous businesses interested in bidding on PSAB set asides have to register and meet the PSAB criteria. An Indigenous business, under the PSAB, can be:
When an Indigenous business has six or more full-time employees, at least 33% of them must be Indigenous persons, and this ratio must be maintained throughout the duration of the contract. The bidder must certify in its submitted bid that it is an Indigenous business or a joint venture as described above.