What is an Aboriginal Business in 2017?

January 23, 2017 /

As we start to fill our new 2017 calendars and contemplate another year of opportunities and successes, it’s also an opportunity to reflect on some of our assumptions imbedded in the practice of aboriginal business law.

For businesses seeking procurement opportunities in energy projects, one assumption we have worked with for some time has been that BC Hydro has historically defined “an Aboriginal business” to be a business that is at least 51% Aboriginal-owned. However, recent BC Hydro procurement policy changes are challenging this assumption. Under BC Hydro’s revised procurement policy, an Aboriginal business is:

“any business arrangement in which Aboriginal individuals and/or Aboriginal communities have an ownership or other interest, and includes any business entity identified by an Aboriginal community as its designated business partner.”

In contrast, BC Hydro’s prior procurement policy stated that at least 51% of the ownership rights (including any voting rights) had to be directly held by one or more Aboriginal Businesses or Aboriginal People for a business to qualify as an Aboriginal business. As of January 1, 2017, BC Hydro stepped away from this 51% threshold.

While the common 51% requirement is not prescribed in law or regulation, versions of it can be found in the procurement policies of governments, Crown corporations and private sector entities across Canada. For example, the Eligibility for Aboriginal Procurement Set Aside, published by Indigenous and Northern Affairs Canada, is based on a minimum of 51% ownership by an Aboriginal group or person, with a further requirement that two of every six employees must be Aboriginal.  Similarly, some Aboriginal entities such as The Canadian Council for Aboriginal Business have developed and maintain a directory of certified Aboriginal Businesses that are 51% or more owned and controlled by Aboriginal persons.

We see a number of potential advantages to less prescriptive procurement policies. At a high level, they respect the right of communities and nations to choose what businesses represent them.  Many of our clients are tired of being told they need to conform to Western views on ownership and control to be eligible for economic development, and feel that these policies are another example of colonialism in the modern world.

More specifically, the 51% requirement led to unnecessary costs and organizational work for Aboriginal businesses and their partners who needed to meet these requirements prior to winning a bid. The shift away from the 51% rule is a welcome change that may ultimately benefit Aboriginal businesses by reducing the time and energy associated with the pre-bid organizational work that was previously needed under the 51% requirement.

If you would like more information regarding Aboriginal procurement or procurement policy requirements, please contact Drew Lawrenson.