Feds reviewing Indigenous procurement policies as they grapple with ArriveCan revelations

Indigenous Services Minister Patty Hajdu said Tuesday the federal government is reviewing its procurement policies to determine who can claim to be Indigenous when bidding for federal contracts set aside for First Nations, Mtis and Inuit people.

"It's really complicated, actually. Defining who is Indigenous is challenging in some cases," Hajdu said.

Hajdu's department is responsible for auditing some Indigenous companies contracted to provide services to the federal government.

Her comments come as questions continue to swirl around the COVID-era ArriveCan app that tracked travellers in an era of pandemic restrictions.

"We're working with Indigenous partners to think through a better way, perhaps even at some point turning over maintenance of the list to Indigenous partners," the minister said, referring to the Indigenous Business Directory.

That directory includes a list of Indigenous companies eligible for special consideration when bidding on some federal contracts.

As part of a reconciliation push, the government has been trying to allocate more of its business to Indigenous-owned firms and Indigenous contractors.

Ottawa has said it wants a minimum of 5 per cent of federal contracts to be awarded to Indigenous businesses contracts worth billions of dollars.

"There are sometimes people on the list that other Indigenous people may dispute. We're trying to work through how to do this," Hajdu said. "Indigeneity this is a difficult concept."

Auditor General Karen Hogan released a damning report earlier this month that pointed to a number of irregularities in the contracting process for that app.

The RCMP is investigating matters "relating to certain employers and contractors,"the AG said.

In a statement sent to CBC News, the RCMP said it is "assessing the available information, including the Auditor General's performance audit report, and will take appropriate action."

One of the firms retained to work on ArriveCanwas Dalian Enterprises Inc., a company that describes itself as "Aboriginally owned, veteran operated."

The company received an estimated $7.9 million in public funds for its work on the app, according to the AG.

It's hard to say if that's the total amount the firm received because government record-keeping was so poor, Hogan said.

Hajduwas asked about Dalian's contract Tuesday.

"Obviously, this situation with ArriveCan is both under investigation by the RCMP and, as you know, and there are other methods of examining contracts that go awry like this," she said.

"I think contracting fraud needs to be held accountable, if that's what it is. We do expect contractors to be honest in their applications."

A government spokesperson also told CBC News that Indigenous Services Canada is auditing Dalian's past governmentwork "in light of allegations of wrongdoing and ongoing reviews and investigation."

The company's president and founder, David Yeo, has said he is the "direct descendent" of"our treaty signing First Nations chiefs" and has cited Alderville First Nation in Ontario as the community to which he's connected.

Yeo has used his ties to Alderville to assert his Indigenous ancestry and eligibility for certain federal contracts earmarked for First Nations, Mtis and Inuit people and businesses.

He has told Parliament his great-grandfather was Chief Robert Franklin, a past Alderville leader who signed the Williams Treaties with the federal government in 1923.

CBC News has asked Alderville First Nation officials for comment on Yeo's ancestry claims and will update this story accordingly.

People at another IT firm, Botler AI, which has been contracted towork on other federal projects, came forward with claims about Yeo's Dalian firm last year.

Botler's chief executive, Ritika Dutt, told MPs that she fears Dalian's procurement policies are "another example of monetization and theft using the trauma of marginalized communities."

Dutt claimed Dalian is used by other companies who want government business because they can "go after Aboriginal contracts because now that there is more than 51 per cent ownership that is Indigenous or Aboriginal."

"I believe Dalian is just there in name and on the letterhead," Dutt said.

MPsasked Yeo about Dutt's claims during an October committee meeting.

"These types of accusations don't ring true, in my opinion,"Yeoreplied.

CBC News asked Dalian on Tuesday to respond to the claims but hasn't heard back.

After reviewing some of the evidence tabled at the government operations committee studying ArriveCan, Liberal MP Jenica Atwin said "it's clear to me" that Dalian "appears to be the flow-through as an Indigenous-led organization."

"It is deeply disturbing to me that it was used in such a manner," Atwin said.

When questioned about his firm's work on the ArriveCan app last year, Yeo struggled to tell MPs what exactly his company did on the file.

He conceded that his two-person firm usually subcontracts out the "daily" work on federal projects to other businesses.

Dalian bids for tenders set aside for Indigenous businesses, collects the government money and disperses funds to the relevant parties that do work on a particular project, he said.

Yeo said his firm is "ultimately responsible for the overarching contract management of everything that goes on."

"I maintain all of the governance as it relates to the PSAB and make sure that the company is absolutely in line, in step, with everything that relates to procurement and government contracting within the federal government," he said.

PSAB is an acronym for the Procurement Strategy for Aboriginal Business, a program established in 1996 to increase the number of Indigenous suppliers bidding for federal contracts.

Yeo told MPs that he actually helped "form the policy" that his company now benefits from.

"I'm very proud to be part of the PSAB and the PSIB, which is the procurement strategy for Indigenous business. I helped form the policy," he said.

"Many other Indigenous leaders and I created this policy."

WATCH:Questions surroundArriveCan app contracts

Questions about contracts awarded to firm behind the ArriveCan app

7 months ago

Duration 2:05

The federal government is facing new questions about money paid to GC Strategies, the small company at the centre of a blistering auditor general's report about the ArriveCan app. Update: the government says contract amounts in this story are inflated due to duplicated data on its website.

Yeo said the government's procurement policy allows an Indigenous-owned firm to "hire pretty much whoever we want as far as consultants are concerned," but the work can be audited by federal officials to ensure compliance with theProcurement Strategy for Indigenous Business (PSIB).

The PSIB demands that at least 33 per cent of the total work performed under a contract be done "by the Indigenous contractor or by a combination of that contractor and other Indigenous businesses."

Dalian often works with another Ottawa-based firm, Coradix, on federal projects.

The Globe and Mail reported in December that Dalian and Coradix havenot beensubjected to an auditto determine whether they followed through on the PSIB's requirements for Indigenous work.

A spokesperson for Public Services and Procurement Canada (PSPC) told CBC News Tuesday that, after confirming the properreviews weren't done, it has asked Indigenous Services Canada to launcha "post-award audit" of Dalian.

"The post-award audits are ongoing," the spokesperson said.

A2021 research reportby the Canadian Council for Aboriginal Business urged the federal government to address "predatory practices" in Indigenous procurement.

It said phantom joint ventureswhere an Indigenous partner is "used as a front" by a "non-Indigenous business to obtain a contract ... corrodes the integrity of an Indigenous procurement policy."

Inanother 2021 report, the council warned Ottawa about "predatory joint ventures" that either "falsify Indigenous heritage" to get contracts or create a company where "passive income flows to a non-participatory Indigenous business, community or person."

Minh Doan,Canada's chief technology officer, has saidPSPChas suspended all contracts withGC Strategies, Dalian and Coradix, the firms that received the most money to build and run ArriveCan, following allegations of wrongdoing.