Developing Your Indigenous Procurement Strategy

March 01, 2017

"A central finding of this research is that Aboriginal procurement is not the same as traditional supply chain management. Procurement from Aboriginal contractors and communities involves relationship building and sustained partnership development in a manner unique from the typical request for proposal-style of supply chain contracting and service procurement that mining operations typically followed in the past. As such, procurement agreements with Aboriginal suppliers need to be approached and understood differently." [1]

Indigenous-procurement-strategy .jpeg

A procurement strategy is the plan as to how your organization will procure (acquire) the cost-effective goods and services required to successfully operate. An Indigenous procurement strategy (IPS) is just as it sounds - a strategy to procure cost-effective goods and services from Indigenous firms, and are typically part of an Impact and Benefit Agreement between an organization and an Indigenous community.

What constitutes an Indigenous (Aboriginal) firm?

Indigenous and Northern Affairs Canada defines an Aboriginal firm as one which is 51% owned and controlled by Aboriginal persons, and whose workforce is at least one-third Aboriginal in the case of firms with six employees or more. [2] 

Let’s use a mining company developing a mineral deposit as an example. A mineral deposit is where it is……..they aren’t strategically located in the vicinity of a hub of service providers. Most mineral deposits are located in remote regions of the country and in the traditional or treaty territories of Indigenous Peoples.

As a mine in the making requires a plethora of people, equipment, material and services over an extended period of time it is a situation that lends itself well to a company having an IPS. It’s not necessary or even possible sometimes to restrict the IPS to local Indigenous firms but there are many benefits to doing so.

A company that patronizes local Indigenous firms can claim to have accommodated the Indigenous interest aspect of the duty to consult, and has an opportunity to contribute to the local economy and to building business capacity within the community. Additionally, a community that has a vested interest in a project is more likely to support the project, as long as their Constitutional rights and title are recognized and respected, environmental concerns are addressed and traditional rights and practices are not impacted. However, it should not be assumed that patronizing local Indigenous businesses automatically guarantees support. 

If there is a significant number of opportunities for local businesses a company could consider hiring an Indigenous business development coordinator or liaison person. The coordinator would:

  • assess existing capacity
  • develop a registry of Indigenous businesses
  • identify contract opportunities
  • develop service contracts that match the capacity of the community/ies

Some IPSs include training and/or financial support to the community/ies so that they are sufficiently prepared to provide required services. Funding can be direct or can take the form of a letter of intent with the community so that they can secure outside financing to purchase equipment.

Companies committed to working with Indigenous businesses should exhibit that commitment by enrolling in the Progressive Aboriginal Relations (PAR) certification program developed by Canadian Council for Aboriginal Business. 

“PAR is a certification program that confirms corporate performance in Aboriginal relations at the Bronze, Silver or Gold level. Certified companies promote their level with a PAR logo signaling to communities that they are

  • good business partners;
  • great places to work and;
  • committed to prosperity in Aboriginal communities

PAR certification provides a high level of assurance to communities because the designation is supported by an independent, third party verification of company reports.” [3]

In future articles we will be writing about how to effectively communicate your procurement needs, barriers to Indigenous procurement opportunities, and a generic procurement strategy so check back frequently to our blog.

[1] Partnerships in Procurement Understanding Aboriginal Business Engagement in the Canadian Mining Industry 

[2] Indigenous and Northern Development Canada

[3] Canadian Council for Aboriginal Business

 

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Topics: Indigenous relations, Indigenous economic development

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