Procurement ombud slams Indigenous procurement strategy outcomes in 'shocking' report

Procurement Ombud Alexander Jeglic speaks during a news conference in Ottawa on Tuesday, July 8, 2025. THE CANADIAN PRESS/Adrian Wyld

OTTAWA — Indigenous Services Canada and other departments are failing to uphold their own Indigenous procurement strategy and may be allowing contractors to use shell companies to access contracts reserved for Indigenous businesses, says the federal procurement ombudsman.

In a scathing new report released Thursday, Alexander Jeglic says Indigenous Services Canada failed to provide timely answers to procurement officers’ questions in some cases and allowed some contracts to go out to companies not listed in the Indigenous Business Directory.

The report also cites a lack of oversight on contracts to ensure 33 per cent of the value of the work is done by an Indigenous contractor.

“Non-Indigenous businesses may use Indigenous businesses as shell companies — entities that meet the minimum ownership requirement on paper but do not actually perform the work — allowing them to unfairly access contracts intended to be set aside for Indigenous businesses,” the report reads.

“Despite the long-standing nature of the (strategy) and its role in awarding hundreds of millions of dollars of contracts annually, (Indigenous Services Canada) has omitted to clearly communicate to departments their obligation to monitor and report on the 33 per cent Indigenous content criterion.”

Jeglic took the rare step of publicly shaming the department in the report’s opening pages.

In the report’s introduction, he says it “reveals a pattern of fragmented guidance, inconsistent application and oversight, and missed opportunities to uphold the Strategy’s core objective, to meaningfully support Indigenous businesses through federal procurement.”

“Whether I’ve ruined relationships with people, I couldn’t care less, to be honest,” Alexander Jeglic told The Canadian Press, adding the report is “most shocking” he has seen in his tenure.

“We’re highlighting the right things, and people need to be held accountable and people need to step forward with solutions.”

He said while the report is “sobering,” it should serve as a “turning point” by triggering program reform in collaboration with First Nations, Inuit and Métis partners. He said that, going forward, his office will review progress on procurement strategy reform every six months, rather than every two years.

The Procurement Strategy for Indigenous Businesses is a 30-year-old initiative meant to ease access to federal procurement opportunities for Indigenous businesses.

It uses “set-asides” to reserve some contracts exclusively for Indigenous businesses. A company must be at least 51 per cent Indigenous-owned in order to bid on those contracts. At least 33 per cent of the value of the work done under a set-aside procurement contact must be performed by an Indigenous entity.

As of 2022, federal departments must also ensure that 5 per cent of the total value of their procurement contracts is awarded to Indigenous businesses.

Most of the companies eligible for those contracts are listed on the Indigenous Business Directory, which, as of November 2024, included more than 2,900 names.

Jeglic’s review of 27 procurement files, which covered a period between April 2023 and March 2025, was meant to determine if the Indigenous procurement strategy was being followed by Indigenous Services Canada, Public Services and Procurement Canada, Shared Services Canada, Employment and Social Development Canada and Correctional Service Canada.

It was launched after the scandal over the high cost of the ArriveCan app erupted and after Randy Boissonnault resigned from cabinet following a news report that said his former company claimed to be “Indigenous-owned” when bidding for a federal contract in 2020.

The report does not examine the legitimacy of the Indigenous Business Directory. Indigenous leaders have said some businesses listed in the registry may be falsely presenting themselves as Indigenous-owned, and have called for control of the directory.

Jeglic said his office is aware of concerns about that directory but felt it was not suited to litigate questions of Indigenous identity.

The report found Indigenous Services Canada, which helps administer the strategy, is not properly supporting departments’ efforts to ensure they are following its policies and guidelines, leading to “widespread confusion and inconsistent applications.”

It also notes there are conflicting guidelines within government on how the strategy works — and no explicit guideline directing procurement officers to verify bidding companies are listed in the Indigenous Business Directory.

“As a result, in the majority of files reviewed (20 of 27 files), evidence was lacking to demonstrate that contracting authorities for ESDC, CSC, SSC or PSPC reviewed the (Indigenous Business Directory) to confirm the supplier was registered or exempted prior to contract award,” the report says.

Three of the 27 suppliers examined in the report were not listed on the directory when their contracts were awarded, and remain off that list today.

The report says that when the ombuds office asked Employment and Social Development Canada why it awarded a sole-source contract to a business not listed on the directory, the department said the “registration process may feel exclusionary or burdensome for some Indigenous individuals.”

The report says the department should not have made that decision “unilaterally.”

It also notes it took Indigenous Services Canada seven weeks to respond to a question from another government department about the program — a question it was unable to answer.

Jeglic’s office is calling on Indigenous Services Canada to draft a new Indigenous procurement strategy based on fairness, openness and transparency, and to launch an impartial complaints body that allows Indigenous businesses to avoid taking the government to Federal Court.

It also calls on the department to do a better job of tracking whether the federal government is in fact spending five per cent of its procurement budget on Indigenous businesses.

The departments covered by the audit said they all support making the strategy work better for Indigenous businesses, and acknowledged existing gaps.

Indigenous Services Canada said it will take until 2028 to fully implement its new strategy, which includes a new complaints mechanism.

Jeglic said he’s anticipating “significant” reforms of the program and Indigenous businesses are expecting swift action.

“We’ve noted what we’ve noted, we are actively engaged (and) will be part of the solution,” he said.

“We will monitor this. We will bring transparency.”

This report by The Canadian Press was first published March 26, 2026.

Alessia Passafiume, The Canadian Press