(Ottawa) The Dalian company, which has only two employees and has been singled out in the scandal surrounding the design of the ArriveCAN application in recent months, is not the only one to obtain a windfall in federal contracts thanks to to its status as an indigenous company, essentially playing the role of matchmaker between Ottawa and other companies.
Four-employee Advanced Chippewa Technologies Inc. has used a similar business strategy for years and has successfully won about $134 million in federal government contracts since 2004.
This company, which names a residence in Ottawa as its headquarters, also obtained $1 million in contracts in the ArriveCAN affair. Enough to rekindle the debate on companies which play the role of intermediaries between the government and other firms in the information technology sector.
The company, also known as ACT, says on its web page that it provides “sourcing strategy and vehicle” management services for manufacturers and software publishers who want to do business with the federal government. She represents their products to departments and agencies and helps them “obtain access to federal procurement mechanisms.”
“Managing and developing these contracts for your success is our value,” she sums up.
It also has contracts with the federal government which allow it to act as an intermediary.
By acting as an intermediary, these companies collect a commission based on the value of the contracts, according to information disclosed during hearings by two parliamentary committees that have been looking into the ArriveCAN financial fiasco for nearly 18 months.
In the case of GC Strategies, the two-employee firm at the heart of the ArriveCAN financial fiasco, the commission ranged between 15% and 30%.
“We do not use subcontractors,” Advanced Chippewa Technologies Inc. President Tony Carlson defended by email. He categorically rejects the comparison with Dalian. “Our entire deliverables for ArriveCAN were iPads and business analytics software,” he added.
Still, the scale of contracts awarded to this type of company which acts as an intermediary raises questions. Between 2011 and February 2024, Dalian won as many as 445 contracts totaling $127.8 million from various federal ministries. Dalian, which is owned by David Yeo, has also partnered with a non-indigenous company, Coradix, which has around 40 employees. Together, they obtained 122 contracts for a total value of $189.5 million, according to data released last month by the Treasury Board. These two companies can no longer obtain contracts from Ottawa since the ArriveCAN affair broke out, just like GC Strategies.
In the case of Advanced Chippewa Technologies Inc., it received its first-ever National Defense contract in December 2004 worth $53,777. Since then, the number of contracts has multiplied. According to the Ministry of Public Services and Procurement (PSPC), this small company has obtained 432 contracts in 20 years totaling a value of $134.4 million.
In 2021, the Trudeau government has set a goal of annually awarding at least 5% of the total value of all public contracts to Indigenous businesses, the equivalent of the proportion of the country’s Indigenous population. That’s about $1 billion a year in contracts.
This objective, which is part of the Aboriginal Business Procurement Strategy (ABPS), was to be implemented in three phases. All departments and organizations must meet or exceed this target by March 31, 2025.
Businesses that are at least 51% owned and controlled by members of Indigenous peoples (First Nations, Inuit or Métis) ordinarily residing in Canada) are eligible for the PSAB. Joint ventures between eligible Indigenous business partners and non-Indigenous businesses are permitted, provided the Indigenous business can demonstrate that it will carry out at least 33% of the value of the work. Beforehand, eligible businesses must register in the federal Indigenous Business Directory.
Tony Carlson claims to “meet all the criteria of the indigenous procurement strategy” and claims to be from a First Nation in northwestern Ontario, located about a hundred kilometers from Thunder Bay. “We are 100% owned, controlled and operated by Indigenous Red Rock Band members,” he said.
In the past, Indigenous leaders and organizations have asserted that while the objective of PSAB is important and laudable, it is subject to misuse by some companies. Last year, a group of more than 50 Indigenous financial institutions argued in a report that PSAB encourages the use of “shell companies and other methods of concealment to gain an advantage” in public procurement – a deplorable situation that harms legitimate Indigenous businesses.
In recent weeks, the Government Operations and Estimates Committee has begun to take an interest in the SAEA to ensure that procurement rules are respected.
During a recent meeting of this committee, Conservative MP Garnett Genius expressed concern that the SAEA could be misused. “Some of these companies appear to be following the GC Strategies model. In other words, these are very small businesses established in private residences in Ottawa – not on reserves, but in Ottawa – which advertise expertise in the management of government contracts. In other words, their business is simply obtaining contracts and subcontracting,” Genius said.
