How the N.W.T.'s procurement policies could change to support northern, Indigenous businesses

Widespread change is needed to make the territory's procurement policies more equitable for northern and Indigenous-led businesses, according to members of the territory’s business community.

Territory reviewing procurement rules for the first time in a decade

A construction vehicle sits at the site of an overflow on the Mackenzie Valley winter road in March 2019.
Procurement is the way the territory contracts goods and services, including construction. (John Last/CBC)

Widespread changes to the N.W.T.'s procurement policies are needed to make things more equitable for northern and Indigenous-led businesses, according to members of the territory's business community.

The territory, through a third-party review panel, will be reviewing all its procurement policies for the first time in a decade to identify what works, what doesn't and gather some innovative ideas on how to fix them. The review is also one way the territory is also looking to speed up economic recovery as the COVID-19 pandemic stretches on. 

Procurement is the process used by the N.W.T. government to buy and contract goods and services. Since January, the third-party review panel has been conducting online consultation sessions on the policy, with the goal of having a list of recommendations in place sometime this summer. 

As part of that review, the third party panel will be reviewing its Business Incentive Policy, or BIP.  The policy gives businesses based in the N.W.T. or who use local employees an advantage in the bidding process, by automatically knocking as much as 20 per cent off their bid on tenders under one million dollars.

On contracts over a million dollars, the BIP reduction shrinks to just two per cent for N.W.T.-based businesses with local workers.

Jack Rowe, a principal with Rowe's Construction, said the decreased benefit on multi-million dollar projects gives southern companies "no incentive" to hire northern workers on multi-million dollar projects. 

Jack Rowe, a principal of Rowe's Construction in Hay River, said the BIP policy doesn't give southern companies any incentive to hire northern on multi-million dollar projects. (Anna Desmarais/CBC )

If southern companies spend their first million dollars on northern materials, Rowe said, there is not much benefit to hiring from the North — or even keep spending on northern materials.

"You've lost any incentive to hire local people or buy local goods," Rowe said.

The territory notes in its procurement discussion paper that it's also "not always clear" which businesses qualify for that reduction.

Renee Comeau, executive director of the N.W.T. Chamber of Commerce, said the government should be reviewing which companies are paying payroll taxes and WSCC fees — proof that these companies have employees in the territory. 

"We've seen a few instances where a company has been [given the reduction] and … they were just a remote office," Comeau said. "If they don't have an N.W.T. payroll tax, it's pretty clear they don't have employees here. 

"This is easy information for the government to look into." 

Indigenous procurement 'makes sense' 

The territory's discussion paper "strongly suggests" the creation of an Indigenous procurement strategy. 

Ernest Betsina, N'Dilo chief of the Yellowknives Dene First Nation, says that "simply makes sense" for the territory. 

"We are in the majority, so I'm hoping the N.W.T. will listen to Indigenous groups," he said. 

Renee Comeau, the executive director of the N.W.T. Chamber of Commerce, says the territory should be looking into which businesses have payroll tax and WSCC fees as proof that they operate here instead of remotely from the south. (Anna Desmarais/CBC)

Last July, the Yellowknives Dene First Nation retracted their support from the Slave Geological Project, a 413-kilometre gravel road between the eastern N.W.T. and western Nunavut, due to issues over procurement. By October, the N.W.T. and the First Nation reached an agreement, although no formal work plan was developed. 

Paul Gruner, CEO of the Det'on Cho Corporation, said the government needs to treat First Nations as equal partners earlier on in the development of major projects. 

"We're not going to move forward … with advancing key infrastructure projects of that size if we don't have good, meaningful dialogue," Gruner said, noting the change in government also slowed down the consultation process.

There's also room for an N.W.T. Indigenous procurement strategy that drives local employment by supporting the creation of small businesses, Betsina said. 

"We're hoping that the money that comes to the community, stays in the community," Betsina said. 

Consider what works for Tłı̨chǫ, Yukon in review 

Comeau said another way to form the N.W.T.'s procurement strategy is to look elsewhere to see what's working. 

One example is a recent agreement between the Tłı̨chǫ and the N.W.T., which guarantees that 25 per cent of all the labour needed on a local project will be given to the Tłı̨chǫ Investment Corporation and RTL Construction Ltd. 

The territory also agreed to negotiate directly with the Tłı̨chǫ Government on other infrastructure projects. 

Garry Bailey, president of the N.W.T. Métis Nation, said this type of agreement should be replicated for other Indigenous governments. 

N'dilo Chief Ernest Betsina wants to see a procurement policy that better supports local businesses in Indigenous communities. (CBC)

"That's something the procurement strategy needs to look at for the rest of us, not just one group," he said.   

Gruner and Comeau said the N.W.T. could consider replicating what worked in Yukon's recent consultation on their new Indigenous procurement policy. 

"[Yukon's review process] was driven by business and Indigenous communities," Comeau said. "Businesses know what needs to be fixed … we just need to be willing to listen." 

Policies need annual review 

Everyone interviewed for this article agreed that the N.W.T.'s procurement strategy should be reviewed every few years in order to keep it current. 

They differ on timelines. Bailey suggests every two years at first to "smooth out any kinks" that might come up. That is also the best way, he said, to make sure a government to government relationship is in place. 

Minister Wawzonek has not committed to an ongoing timeline for reviewing procurement policies.