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Indigenous businesses represent opportunity in Canadian defence procurement

By 24/07/2022August 10th, 2022No Comments

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The Indigenous economy is poised to play a growing role at a time when climate change mitigation and adaptation as well as and defence and security issues become ever-present issues. Therefore, it is crucial to understand the capabilities of Indigenous businesses and their potential contributions to national security as a method to strengthen both Canadian innovation and economic sustainability in Indigenous communities. 

Global Advantage Consulting Group (GACG) has undertaken an analysis of Indigenous-owned businesses that are registered in Canada. The analysis sought to provide a framework for categorizing Indigenous businesses according to the 17 key industrial capabilities (KICs) as outlined in Canada’s Industrial and Technological Benefits (ITB) Policy, administered by Innovation, Science and Economic Development (ISED). This policy was created for the purpose of leveraging key industries, particularly through national defence and Coast Guard procurement, to bolster innovation and economic growth.  

Under the ITB Policy, contractors that bid must submit a value proposition, which is an economic proposal outlining how federal investment in their project will support long-term sustainability and growth of Canada’s defence industry, enhance innovation through R&D, promote skills development and training, and increase the export potential of Canadian firms.  

The ITB includes 17 key industrial capabilities representing emerging technologies with strong growth potential. The policy encourages industry to invest across the supply chain in these capabilities.  

Source: Industrial and Technological Benefits Policy

Indigenous companies and KICS

According to Export Development Canada, there are more than 50,000 Indigenous-owned companies in Canada who contribute in excess of $30 billion to the Canadian economy annually. The majority of these firms are small to medium-sized enterprises, representing 1.4% of all Canadian SMEs.    

There are 2,140 Indigenous-owned and controlled businesses listed in the Indigenous Services Canada Indigenous Business Directory (IBD), or roughly four percent of all Indigenous firms in Canada. The IBD is a public directory that is intended to increase visibility and provide additional business for Indigenous-owned and controlled firms. It is free to register in the IBD and mandatory should the firm wish to compete for federal government contracts that are set aside through the Procurement Strategy for Indigenous Business (PSIB). GACG analyzed these firms, and found that 87 of the 2,140 businesses in the IBD have capabilities relevant to KICS and ITB. The graphic below shows the number of Indigenous-owned and controlled businesses that are relevant to KICS out of the 2,140 in the IBD.  

 

Indigenous owned businesses and KICSSource: GACG Analysis & Visualization

From the analysis the most striking finding is the high concentration of Indigenous companies operating under the Clean Technologies (52 firms) and Cyber Resilience (19 firms) capabilities definitions. The graphic below shows the number of businesses in the IBD according to their alignment with KICS.

Highest KICS Concentration by TechnologySource: GACG Analysis & Visualization

Benefits of partnering with Indigenous firms

Committing to invest in skills development and training within Indigenous communities represents 20% of the point-rated criteria for the value propositions firms must submit to ITB. Engaging with Indigenous firms identified as having relevant activities in KICS will help industry to secure federal defence procurement while also creating sustainable economic growth in Indigenous communities.

The Canadian Council for Aboriginal Business recommends that corporate Canada can better engage and support the growth of Aboriginal businesses in the marine and aerospace sectors through several actions, though these can also apply to defence:

  1. Identify Indigenous vendors for the products and services they require;
  2. Initiate relationships with Indigenous firms;
  3. Share information about upcoming contracts which would help Indigenous companies target their certification towards industry trends and even specific projects;
  4. Ensure Indigenous firms are receiving long-term benefits from procurements, including the further development of existing skills and the creation of new, specialized skills;
  5. Secure contracts pending certification of an Indigenous business to mitigate the risk of Indigenous firms taking time off other jobs to dedicate to certification courses;
  6. Set key goals for working with and mentoring Indigenous businesses as a way of tracking progress, outside of government minimum spend requirements.

 

Taking these steps could create a competitive advantage for companies eager to increase Indigenous procurement within the defence supply chain and benefit both organizations with positive impacts on the economy.

Read more about Global Advantage Consulting Group’s services here.

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