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NNI's extreme makeover begins

GN boosts contract breaks for Inuit firms

JIM BELL

The Government of Nunavut will change its Nunavummi Nangminiqaqtunik Ikajuuti, or "NNI" business incentive policy to give a bigger helping hand to local and Inuit-owned firms than even an NTI-GN report has urged.

The 103-page report, the first comprehensive review of the NNI since its birth in 2000, was tabled in the legislature last week.

But by Dec. 2, Nunavut cabinet members had already approved their first set of changes to the policy.

On that day, cabinet announced the NNI bid adjustment formula will now provide a seven per cent bid-price adjustment to Inuit firms, a seven per cent break to "local" firms, and a seven per cent break to Nunavut firms.

Under the old scheme, Inuit firms got a bid adjustment of three per cent. Local firms got three per cent, and Nunavut firms got 14 per cent.

The new scheme means a company owned by Inuit residents of Nunavut, based in the community where the work is to be done, could get a 21 per cent price advantage.

So if a non-Inuit, non-Nunavut and non-local firm bid $1-million for a contract, a local-Inuit-Nunavut company could still win the job with a bid of $1.2 million.

The oft-criticized NNI is the Nunavut government's attempt to comply with Article 24 of the Nunavut land claims agreement, which requires that governments help Inuit-owned firms win government contracts.

At public hearings held during the NNI review, some Nunavut business people said such policies are a poor use of the government's scarce resources and encourage the growth of inefficient businesses - especially when they're applied to multi-million-dollar construction contracts.

Critics also say Nunavut and Inuit companies don't need such a big break to compensate for the cost of operating in the North.

But the NTI-GN review team disagreed. "[I]t is possible for a non-Nunavut firm to achieve quite high levels of bid adjustments through the use of Inuit and Nunavut sub-contractors," the report says.

The current policy also gives price adjustments based on the proportion of Inuit workers that companies promise to hire.

The NNI review team recommends the GN pay even higher bonuses to companies that meet required Inuit hiring targets, and at the same time assess higher penalties to companies that fail to meet them.

But the NNI review team dodged the question of what to do with the Norterra family of companies, which includes the Northern Transportation Company Ltd. and the Canadian North airline.

The Norterra firms are owned 50 per cent by the Inuit of Nunavut, and 50 per cent by the Inuvialuit. But the GN doesn't accept them as being eligible for bid adjustments, since they don't meet the 51 per cent ownership criteria used to define who is and who isn't Inuit- or Nunavut-owned.

The review team's report also includes these recommendations:

• The NNI policy should apply consistently to municipal governments and Crown corporations.
• The government and NTI should take a second look at their lists of "Inuit" and "Nunavut" companies to weed out bogus firms.
• The government should bring in measures aimed at preventing contractors from inflating their Inuit hiring targets to improve their bids.
• Where there's enough competition, the government should issue invitational tenders to Nunavut businesses only.
• The government should do more to "unbundle" contracts - which means to break them up into smaller pieces so that local companies can bid for them.
• The government and NTI should set up their long-awaited NNI appeals board immediately.
• Over the long-term, the government should do more to subsidize apprenticeships and trades training, and to bring trades courses back to the school system.

The team says the GN should implement these and other measures over the next five years.

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