Canada Moves to Crack Down on False Indigenous Business Claims in Federal Contracts

The Canadian government has pledged stricter oversight of companies claiming Indigenous ownership in order to access billions of dollars in federal contracts reserved for Indigenous businesses. The move comes amid growing concerns that some companies have falsely represented themselves as Indigenous owned to benefit from government procurement programs.

In a letter sent to the House of Commons’ Indigenous and Northern Affairs committee, Indigenous Services Minister Mandy Gull-Masty outlined new steps to strengthen verification procedures for businesses listed in the government’s Indigenous Business Directory (IBD). The directory is used by federal departments to identify eligible Indigenous-owned companies when awarding contracts under the Procurement Strategy for Indigenous Business (PSIB).

The federal government requires that at least five percent of all government contracts be awarded to businesses owned and operated by First Nations, Métis or Inuit people. In the 2023–24 fiscal year alone, contracts worth approximately $1.24 billion were awarded through this initiative.

According to Gull-Masty, the department has already begun reinforcing its review process. Officials have enhanced staff training and introduced stricter verification guidelines to ensure that only legitimate Indigenous-owned companies are listed in the IBD. A recent comprehensive review of the directory resulted in the removal of 1,881 businesses that did not meet eligibility requirements.

New applicants to the directory are now required to complete a detailed questionnaire outlining the ownership structure and control of their business. The aim is to standardize the evaluation process and improve the accuracy and efficiency of the registration and renewal procedures.

Despite these changes, the minister did not adopt a recommendation from the parliamentary committee to immediately introduce new eligibility and verification standards for companies claiming First Nations, Inuit or Métis ownership.

Some lawmakers say the government’s response does not go far enough. Conservative MP Billy Morin, a member of the Indigenous and Northern Affairs committee, criticized the measures, arguing that they lack concrete enforcement actions.

Morin said Canadians and Indigenous communities deserve greater transparency about the extent of fraud within the procurement program. He also warned that if fraudulent companies continue to benefit from contracts intended for Indigenous businesses, public trust in the program could erode.

The issue gained attention following a 2024 investigation by Global News and the First Nations University of Canada, which found that billions of dollars in federal contracts had been awarded with limited scrutiny of whether the companies involved were truly Indigenous-owned.

The investigation revealed several tactics used by non-Indigenous companies to access contracts reserved for Indigenous businesses. In some cases, individuals of Indigenous heritage were reportedly used as nominal owners or figureheads in exchange for a portion of the contract value. In other cases, businesses were listed in the directory without submitting proper documentation verifying their Indigenous ownership.

The report also highlighted weaknesses in the verification system. Some businesses were reportedly allowed to register without providing meaningful proof of Indigenous affiliation, exposing serious gaps in the program’s oversight.

The PSIB program was originally introduced in the late 1990s as part of Canada’s broader effort to support economic reconciliation with Indigenous communities. By reserving a portion of federal procurement for Indigenous businesses, the program aims to help them compete against larger and more established corporations.

Federal officials had raised concerns about potential misuse of the program even in its early years. Internal reviews suggested that some non-Indigenous businesses were attempting to exploit the system to gain access to lucrative government contracts.

Looking ahead, the government says broader reforms to the procurement strategy are being considered. A policy update is expected later this year, and discussions are underway with Indigenous leaders to develop long-term changes.

One proposed reform would transition oversight of the Indigenous Business Directory to an Indigenous-led organization. Under that model, Indigenous groups would take a central role in verifying business eligibility and maintaining the directory used by federal departments to identify qualified suppliers.

Meanwhile, Canada’s Auditor General has launched a review of federal Indigenous procurement programs following the investigation. The findings of that review are expected later this year and could lead to further policy changes aimed at ensuring the integrity of contracts intended to support Indigenous businesses.