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9.4. Annex: Requirements for the Set-aside Program for Aboriginal Business

(See 9.40.45 Certification by Suppliers)

  1. Who is eligible?
    1. An Aboriginal business, which can be:
      1. a band as defined by the Indian Act
      2. a sole proprietorship
      3. a limited company
      4. a co-operative
      5. a partnership
      6. a not-for-profit organization
      in which Aboriginal persons have at least 51 percent ownership and control,
      OR
    2. A joint venture consisting of two or more Aboriginal businesses or an Aboriginal business and a non-Aboriginal business(es), provided that the Aboriginal business(es) has at least 51 percent ownership and control of the joint venture.
    When an Aboriginal business has six or more full-time employees at the date of submitting the bid, at least thirty-three percent of them must be Aboriginal persons, and this ratio must be maintained throughout the duration of the contract.
    The supplier must certify in its submitted bid that it is an Aboriginal business or a joint venture constituted as described above.
  2. Are there any other requirements attached to suppliers in the Set-Aside Program for Aboriginal Business?
    Yes
    1. In respect of a contract, (goods, service or construction), on which a supplier is making a proposal which involves subcontracting, the supplier must certify in its bid that at least thirty-three percent of the value of the work performed under the contract will be performed by an Aboriginal business. Value of the work performed is considered to be the total value of the contract less any materials directly purchased by the contractor for the performance of the contract. Therefore, the supplier must notify and, where applicable, bind the subcontractor in writing with respect to the requirements that the Aboriginal Set-Aside Program (the Program) may impose on the subcontractor or subcontractors.
    2. The supplier's contract with a subcontractor must also, where applicable, include a provision in which the subcontractor agrees to provide the supplier with information, substantiating its compliance with the Program, and authorize the supplier to have an audit performed by Canada to examine the subcontractor's records to verify the information provided. Failure by the supplier to exact or enforce such a provision will be deemed to be a breach of contract and subject to the civil consequences referred to in this document.
    3. As part of its bid, the supplier must complete the Certification of Requirements for the Set-Aside Program for Aboriginal Business(certification) stating that it:
      1. meets the requirements for the Program and will continue to do so throughout the duration of the contract;
      2. will, upon request, provide evidence that it meets the eligibility criteria;
      3. is willing to be audited regarding the certification; and
      4. acknowledges that if it is found NOT to meet the eligibility criteria, the supplier shall be subject to one or more of the civil consequences set out in the certification and the contract.
      See Standard Acquisition Clauses and Conditions(SACC) Manual clauses A3000T , M9030T or S3035T, as appropriate.
  3. How must the business prove that it meets the requirements?
    1. It is not necessary to provide evidence of eligibility at the time the bid is submitted. However, the business should have evidence of eligibility ready in case it is audited.
    2. The civil consequences of making an untrue statement in the bid documents, or of not complying with the requirements of the Program or failing to produce satisfactory evidence to Canada regarding the requirements of the Program, may include: forfeiture of the bid deposit; retention of the holdback; disqualification of the business from participating in future contracts under the program; and/or termination of the contract. In the event that the contract is terminated because of an untrue statement or non-compliance with the requirements of the Program, Canada may engage another contractor to complete the performance of the contract and any additional costs incurred by Canada shall, upon the request of Canada, be borne by the business.
  4. What evidence may be required from the business?
    1. Ownership and control
      1. Evidence of ownership and control of an Aboriginal business or joint venture may include incorporation documents, shareholders' or members' register; partnership agreements; joint venture agreements; business name registration; banking arrangements; governance documents; minutes of meetings of Board of Directors and Management Committees; or other legal documents.
      2. Ownership of an Aboriginal business refers to "beneficial ownership" i.e., who is the real owner of the business. Canada may consider a variety of factors to satisfy whether Aboriginal persons have true and effective control of an Aboriginal business. (See Appendix A Set-aside Program for Aboriginal Business for a list of the factors, which may be considered by Canada.)
    2. Employment and employees
      1. Where an Aboriginal business has six or more full-time employees at the date of submitting the certification and is required by Canada to substantiate that at least 33 percent of the full-time employees are Aboriginal, the business must, upon request by Canada, immediately provide a completed Owner/Employee Certification form for each full-time employee who is Aboriginal. See SACC Manual clauses A3001T, M3030T or S3036T, as appropriate.
      2. Evidence as to whether an employee is or is not full-time and evidence as to the number of full-time employees may include payroll records, written offers for employment, and remittance and payroll information maintained for Canada Revenue Agency purposes as well as information related to pension and other benefit plans.
      3. A full-time employee, for the purpose of this program, is one who is on the payroll, is entitled to all benefits that other full-time employees of the business receive, such as pension plan, vacation pay and sick leave allowance, and works at least 30 hours a week. It is the number of full-time employees on the payroll of the business at the date of bid submission that determines the ratio of Aboriginal to total employees of the business for the purpose of establishing eligibility under the Program.
      4. Owners who are Aboriginal and full-time employees who are Aboriginal must be ready to provide evidence in support of such status. The Owner/Employee Certification to be completed by each owner and full-time employee who is Aboriginal shall state that the person meets the eligibility criteria and that the information supplied is true and complete. This certification shall provide the person's consent to the verification of the information submitted.
  5. Subcontracts
    1. Evidence of the proportion of work done by subcontractors may include contracts between the contractor and subcontractors, invoices, and paid cheques.
    2. Evidence that a subcontractor is an Aboriginal business (where this is required to meet the minimum Aboriginal content of the contract) is the same as evidence that a prime contractor is an Aboriginal business.
  6. Who is an Aboriginal Person for Purposes of the Set-Aside Program for Aboriginal Business?
    1. An Aboriginal person is an Indian, Metis or Inuit who is ordinarily resident in Canada.
    2. Evidence of being an Aboriginal person will consist of such proof as:
      1. Indian registration in Canada;
      2. membership in an affiliate of the Metis National Council or the Congress of Aboriginal Peoples, or other recognized Aboriginal organizations in Canada;
      3. acceptance as an Aboriginal person by an established Aboriginal community in Canada;
      4. enrollment or entitlement to be enrolled pursuant to a comprehensive land claim agreement;
      5. membership or entitlement to membership in a group with an accepted comprehensive claim;
      6. evidence of being resident in Canada includes a provincial or territorial driver's license, a lease or other appropriate document.

Appendix A Set-aside Program for Aboriginal Business

(Excerpt from Treasury Board Contracting Policy Notice 1996-6, Annex A.)

Factors that may be considered in determining whether Aboriginal persons have at least 51% ownership and control of an Aboriginal business include:

  1. capital stock and equity accounts, i.e., preferred stock, convertible securities, classes of common stock, warrants, options;
  2. dividend policy and payments;
  3. existence of stock options to employees;
  4. different treatment of equity transactions for corporations, partnerships, joint ventures, community organizations, cooperatives, etc.;
  5. examination of charter documents, i.e., corporate charter, partnership agreement, financial structure;
  6. concentration of ownership or managerial control in partners, stockholders, officers trustees and directors-based definition of duties;
  7. principal occupations and employer of the officers and directors to determine who they represent, i.e., banker, vested ownerships;
  8. minutes of directors meetings and stockholders meetings for significant decisions that affect operations and direction;
  9. executive and employee compensation records for indication of level of efforts associated with position;
  10. nature of the business in comparison with the type of contract being negotiated;
  11. cash management practices, i.e., payment of dividends - preferred dividends in arrears;
  12. tax returns to identify ownership and business history;
  13. goodwill contribution/contributed asset valuation to examine and ascertain the fair market value of non-cash capital contributions;
  14. contracts with owners, officers and employees to be fair and reasonable;
  15. stockholder authority, i.e., appointments of officers, directors, auditors;
  16. trust agreements made between parties to influence ownership and control decisions;
  17. partnership - allocation and distribution of net income, i.e., provision for salaries, interest on capital and distribution share ratios;
  18. litigation proceedings over ownership;
  19. transfer pricing from non-Aboriginal joint venture;
  20. payment of management or administrative fees;
  21. guarantees made by the Aboriginal business;
  22. collateral agreements.