Most contracts awarded to Indigenous businesses through federal program not audited

A program that provides federal contracts to Indigenous businesses has not audited most of the contracts it awarded last year, a House of Commons committee heard Thursday in Ottawa. 

The Procurement Strategy for Indigenous Business (PSIB) is meant to increase the number of federal contracts that Indigenous-owned and operated businesses receive. 

In order to qualify for the program, a business must first prove it is at least 51 per cent Indigenous-owned and register under the Indigenous Business Directory (IBD), Jessica Sultan, director general of the economic policy development branch of Indigenous Services Canada (ISC) told the Standing Committee on Government Operations and Estimates. 

PSIB has faced criticism from some Indigenous groups after it was revealed Dalian Enterprises was awarded $7.9 million in funding through the program for the ArriveCan app, even though the company was later removed from the IBD.

In the past year, multiple businesses like Dalian that initially qualified as Indigenous-owned have been removed from the IBD, Sultan said.  

Businesses awarded contracts under the PSIB may be subject to three different kinds of audits. 

Pre-award audits are voluntary for all contracts under $2 million, discretionary audits can be requested by ISC, the client or the contracting authority, while post-award audits are requested by ISC or the client, according to Sultan.  

Audits face scrutiny

Since December 2023, the government has undertaken 31 audits — 19 pre-award and 12 post-award — of PSIB companies. No discretionary audits have been performed this year. 

Pre-award audits are mandatory for all contracts over $2 million. 

At the committee, Bloc Québécois MP Julie Vignola highlighted that most of the contracts awarded between April 2023 and March 2024 are worth under $2 million and therefore would not have faced a pre-award audit. 

Gina Wilson, deputy minister of ISC, told the committee if there are changes regarding the number and frequency of audits, the government would need to hire more auditors to complete the work.

At a committee meeting last month, Assembly of First Nations Regional Chief Joanna Bernard raised concerns about non-Indigenous companies qualifying for the program. 

"PSIB is not immune to this issue [of false identity claims]," Wilson said.

She said the government has reached out to the AFN to corroborate those statements since the government has no evidence regarding those claims.

"We haven't quite received a response," Wilson said.

Additionally, Wilson said that ISC has not attempted to recover the funds paid to Dalian, adding that other departments are also looking at the case. 

The meeting Thursday ended with a brief debate over a motion from Conservative MP Kelly Block who asked the committee to report to the House of Commons and call on ISC to recover funds from non-Indigenous companies that received contracts under the PSIB.