Ottawa's federal government is facing renewed scrutiny over a program meant to direct contracts to Indigenous-owned businesses, after new research suggests hundreds of millions of dollars may be providing little real benefit to Indigenous workers.
A new study has found that $699 million has been awarded to suppliers flagged as potentially problematic under the federal Procurement Strategy for Indigenous Businesses (PSIB) — a program designed to ensure Indigenous communities share in federal spending.
What the Study Found
The research identified what it calls "red flag" suppliers: companies that received PSIB-designated contracts but show signs that the economic benefits may not be flowing to Indigenous employees or communities as intended. The $699 million figure represents a significant chunk of the program's total spending and raises questions about oversight and verification mechanisms.
The PSIB requires that at least 33 per cent of a contract's labour be performed by Indigenous people. But critics and researchers have long argued that enforcement is inconsistent and that some businesses may be exploiting the program without delivering on its social goals.
A Program Under Pressure
The procurement strategy has been one of the federal government's key tools for advancing Indigenous economic reconciliation. In theory, it creates a dedicated pathway for Indigenous entrepreneurs and firms to win government contracts — everything from construction and IT to catering and consulting.
But the program has faced criticism before. A 2023 Auditor General report found the government couldn't verify whether many PSIB contracts were actually benefiting Indigenous people. The new research appears to reinforce those concerns, putting a dollar figure on the scale of potentially misdirected spending.
What Happens Now
For Indigenous communities and advocates, the findings are frustrating. Reconciliation-focused procurement was supposed to be one of the more tangible, immediate ways the federal government could translate policy commitments into economic outcomes. When the money doesn't reach the people it's meant for, it undermines trust in the entire framework.
Public Services and Procurement Canada, which administers the PSIB, has previously said it is working to strengthen verification and compliance measures. But with nearly $700 million in question, calls for a more thorough audit and stricter enforcement are growing louder.
Indigenous business groups have also pointed out that the issue isn't just fraud — some of the "red flag" patterns may reflect structural problems in how the program is designed, including vague labour requirement rules and limited capacity for small Indigenous firms to compete for large federal contracts.
The Bigger Picture
Canada's federal procurement system spends tens of billions of dollars annually, and the PSIB represents a relatively small but symbolically important slice of that. Getting it right matters — not just for fiscal accountability, but for the credibility of the government's broader reconciliation commitments.
With a federal election on the horizon, Indigenous economic policy is likely to come under increased scrutiny. This study adds to a growing body of evidence that good intentions in procurement policy need to be backed by rigorous oversight — or the dollars meant to drive change end up doing little of it.
Source: Ottawa Citizen — Original article
