Procuring An Edge: Inuit Firms And Nunavut Procurement

Procurement in Nunavut is not ordinary federal Indigenous procurement with a northern label. It operates within a treaty-based framework created by Article 24 of the Nunavut Land Claims Agreement (the “Nunavut Agreement”), with distinct rules for federal and territorial buyers and a central role for Nunavut Tunngavik Incorporated (NTI).

For businesses, the practical questions are broader than whether 51% of the shares are held by Inuit. The parties must identify the right procurement regime, establish and maintain Inuit firm status, preserve genuine Inuit ownership and participation across the full commercial arrangement, and deliver the Inuit benefits promised in the bid.

The 51% threshold matters, but it is only the first step.

Article 24 is the legal starting point

The Nunavut Agreement is a constitutionally protected Modern Treaty. Article 24 requires Canada and the Government of Nunavut to provide reasonable support and assistance to Inuit firms so they can compete for government contracts. Its objectives include increased participation by Inuit firms in the Nunavut economy, stronger capacity to compete, and Inuit employment at a representative level.

Article 24 defines an Inuit firm to include a limited company with at least 51% of its voting shares beneficially owned by Inuit, a cooperative controlled by Inuit, or an Inuk sole proprietorship or partnership. The word “beneficially” is important. The inquiry is directed to those who genuinely own and benefit from the business interest, not simply whose name appears on the share register.

NTI does more than maintain the Inuit Firm Registry. As the Designated Inuit Organization, it represents Inuit in the development, implementation, and review of Article 24 procurement policy. Canada must develop and maintain its Article 24 policies in close consultation with NTI, and NTI participates in the federal review structures that monitor whether the policy is achieving its intended results.

The Procurement Strategy for Indigenous Business (PSIB) may also apply to a federal opportunity, but it does not replace the Nunavut-specific analysis. A PSIB set-aside does not by itself satisfy Article 24 or the federal Nunavut rules. Where a general procurement policy conflicts with the Modern Treaty obligation, the treaty obligation governs.

Federal and territorial buyers use different mechanisms

Article 24 is implemented differently depending on the government buyer. For federal contracting, the principal instrument is the Directive on Government Contracts, Including Real Property Leases, in the Nunavut Settlement Area (the “Nunavut Directive”), which took effect in December 2019. It applies to federal contracts and real property leases with final deliverables or performance in or into the Nunavut Settlement Area.

For Government of Nunavut contracting, Article 24 is implemented through the Nunavummi Nangminiqaqtunik Ikajuuti Policy and Regulations, commonly called the NNI Policy. The Nunavut Directive can limit competition to Inuit firms and places substantial weight on Inuit and Nunavut benefits. The NNI Policy uses preferential bid adjustments, Inuit labour requirements, and territorial enforcement mechanisms.

Both regimes rely on the Inuit Firm Registry, but they do not use identical procedures or remedies. Inuit firm status should also be distinguished from the NNI category of a Nunavut Business, which is based on Nunavut ownership, resident management, and a real operational presence in the territory. A business may qualify in both categories, but each status must be established separately.

Federal competitions can be limited to Inuit firms

Under the Nunavut Directive, the starting point is that bids for government contracts in the Nunavut Settlement Area are limited to qualified Inuit firms on the Registry where Inuit-firm capacity exists. For contracts estimated from $5,000 to $25,000, the restriction applies if at least one Inuit firm is registered for the relevant commodity or service. For contracts over $25,000, at least two registered Inuit firms are required. For real property leases, the corresponding capacity tests are one registered Inuit firm where the estimated total consideration is $100,000 or less, and at least two where it is over $100,000.

Article 24 also requires federal and territorial buyers to create reasonable opportunities for Inuit firms to compete. Depending on the requirement, that may mean dividing large packages into smaller components, allowing bids on a defined portion of the work, structuring construction contracts so smaller firms can participate, and avoiding unnecessary employment-skill requirements.

The Nunavut Directive also addresses limited circumstances in which a contract must be sole-sourced. These include a pressing emergency and situations where the nature of the work makes it contrary to the public interest to invite bids, including certain national security circumstances. In those cases, Canada must make best efforts, consistent with its operational needs, to sole source to a qualified Inuit firm. The particular solicitation remains critical because it identifies how the capacity assessment and any exception have been applied to that procurement.

Federal evaluation looks beyond eligibility

Limiting who can bid is only one part of the federal regime. For competitive goods, services, and construction procurements over $100,000, the Nunavut Directive requires bid criteria addressing Inuit employment, training and skills development, participation by Inuit firms as the prime contractor or subcontractors, and offices or facilities in the Nunavut Settlement Area. Similar criteria are mandatory for real property leases with total consideration over $1 million.

The criteria carry significant weight. For a competition limited to Inuit firms, Inuit and Nunavut benefits account for 30% of the available evaluation points. Where the competition is not limited to Inuit firms, they account for 35%.

In practice, federal solicitations often collect these commitments through an Inuit Benefits Plan. The plan may address Inuit employment, training, Inuit firm subcontracting, and local presence. Once accepted, those commitments can form part of the contract and be supported by progress reports, payroll and subcontracting records, and audit rights.

The practical lesson is to design the delivery model before the bid is submitted. A bidder should promise only benefits that can realistically be delivered, measured, and documented throughout the contract.

The Registry tests substance, not just percentages

Registration on the Inuit Firm Registry is central to both federal and territorial procurement. The Registry identifies three ownership classes: 51% to 75%, 76% to 99%, and 100% Inuit ownership. The classes matter particularly under the NNI bid-adjustment system.

NTI’s registration policy requires more than a share register. Depending on the structure, an applicant may need to provide its articles, bylaws, directors and officers, ownership information through the corporate chain, a shareholders’ agreement, and any management or service agreements with third parties. NTI can request further information at any stage.

For a corporation, Article 24 requires beneficial Inuit ownership of at least 51% of the voting shares. It does not say that every governance right held by a non-Inuit shareholder defeats eligibility. Ordinary minority protections, information rights, and consent rights over genuinely exceptional transactions may be compatible with Inuit firm status.

The analysis is nevertheless substantive. Under the NNI Policy, NTI may consider Inuit ownership, control, management, and retention of profits together. No single factor is necessarily decisive. The articles, shareholders’ agreement, financing, service arrangements, and actual operation of the business should all tell a consistent story about who owns, directs, manages, and benefits from the enterprise.

Mixed ownership and joint ventures require careful design

A non-Inuit investor or commercial partner can bring financing, technology, and operational expertise without necessarily defeating Inuit firm status. The concern arises when the combined rights given to that partner allow it to control ordinary operations rather than protect a minority investment.

Arrangements that may attract scrutiny include the ability to determine the operating budget, control day-to-day cash, appoint or remove key management, direct material contracting decisions, or override the Inuit-controlled board. Management and service agreements require the same scrutiny. Their scope, reporting lines, fees, and termination rights should not make the non-Inuit participant the practical operator or divert the economic benefit associated with Inuit ownership.

Joint ventures are not a shortcut around those requirements. An incorporated joint venture is assessed as a corporation: Inuit must beneficially own at least 51% of the voting shares and the overall arrangement must preserve substantive Inuit ownership and participation. Article 24.1.1 itself also includes an “Inuk sole proprietorship or partnership” within the definition of an Inuit firm. An unincorporated joint venture therefore requires a threshold legal-form analysis: if it is structured as a partnership, that treaty category may be available, but a contractual joint venture should not be assumed to qualify simply because the parties call it a joint venture. The proposed structure should be confirmed against NTI’s current Registry requirements before the bid structure is settled.

The parties should also identify which entity must be registered, trace beneficial ownership through any corporate partner, and review the joint venture, shareholders’, financing, management, and service agreements as one arrangement. A compliant percentage in one document will not cure practical control placed elsewhere.

The entire commercial arrangement, not merely the share register, must reflect genuine Inuit beneficial ownership and participation. Arrangements in which a non-Inuit partner retains effective control despite holding a minority equity position, or in which profit-sharing, fees, or service agreements do not reflect the stated ownership proportions, are likely to attract scrutiny.

The NNI Policy turns participation into an evaluated advantage

For Government of Nunavut procurement, the current NNI Policy provides a 5% price adjustment for Inuit firm status, an additional 5% where Inuit ownership is at least 76%, and a further 5% at 100% Inuit ownership. Where Inuit labour is identified, the qualifying Inuit labour component receives a 15% adjustment. Separate 5% Nunavut Business and local adjustments may also apply. The NNI Policy limits cumulative percentage adjustments on an adjusted price component to 25%, and separate dollar caps apply to certain categories of procurement.

These are evaluation adjustments, not reductions to the contract price. For example, ignoring other adjustments and caps, a $1 million construction bid that identifies $400,000 of qualifying Inuit labour would receive a $60,000 labour adjustment. The bid’s evaluated price would be $940,000, although the successful contractor would still be paid the contract price of $1 million.

The NNI Policy also requires contracting authorities to set mandatory minimum Inuit labour levels where they can reasonably be calculated. The level is informed by the skills required, available Inuit labour, apprentices and students in training, competing projects, and other labour-market conditions. A bidder that commits to more than the stated minimum may make that higher commitment contractually binding.

Subcontracting to non-Inuit businesses is not generally prohibited, but only qualifying work performed by Inuit firms, Nunavut Businesses, local businesses, or Inuit labour attracts the corresponding adjustment. Some restricted procurements may also require subcontract work to be performed by Inuit firms. Workshare and subcontracting should therefore be mapped before the bid is priced.

Ongoing compliance and enforcement

Eligibility does not end at award. Registered firms must report material changes within 30 days, renew their status annually, and cooperate with NTI compliance reviews. NTI retains the authority to look through ownership structures and assess whether an arrangement substantively satisfies the beneficial ownership requirements. A firm that no longer qualifies, fails to provide required information, or misrepresents relevant facts can be removed from the Registry.

Loss of Registry status may affect eligibility for NNI adjustments and, depending on the applicable procurement regime and contract terms, expose the contractor to additional remedies. The consequences for an existing contract are not automatic and should be determined from the particular solicitation and contract.

Separately, contracting authorities monitor performance of the Inuit and Nunavut benefits committed in the bid. Under the NNI Policy, repeated non-compliance can lead to loss of adjustments for 12, 18, or 24 months depending on severity and frequency, a finding that the contractor is not responsible for future procurements, and, where circumstances and the contract permit, termination.

Because both tracks can be triggered independently, businesses should maintain a standing compliance file containing current Registry records, governance documents, related-party agreements, and the project records needed to support their performance commitments.

Challenges and other procurement rules still matter

For Government of Nunavut procurements, the NNI Tribunal provides a specific bid-challenge route. An unsuccessful bidder must first challenge the award in writing to the contracting authority within five business days of the award notice, and may then complain to the Tribunal within a further five business days. The Tribunal may recommend re-evaluation, a new solicitation, or bid-preparation costs.

Federal recourse depends on the procurement’s trade-agreement coverage. The Nunavut Directive contemplates using Indigenous set-aside provisions to remove a procurement from otherwise applicable trade agreement obligations. Where trade-agreement coverage applies, the Canadian International Trade Tribunal hears complaints, generally subject to a 10-working-day filing period running from the date the complainant knew or reasonably ought to have known the grounds. The Office of the Procurement Ombud has jurisdiction over certain lower-value complaints. A bidder should identify the applicable recourse route immediately when an issue arises.

Article 24 preferences do not displace the Government of Canada’s supplier-integrity requirements. The former Integrity Regime has been replaced by the Office of Supplier Integrity and Compliance framework, including the Ineligibility and Suspension Policy, effective May 31, 2024. Inuit firm status does not overcome requirements relating to security, integrity, or vendor performance. Registry eligibility and procurement integrity are separate gates to award.

The Nunavut Directive is under review

The Nunavut Directive already has a review committee co-chaired by Treasury Board of Canada Secretariat (TBS) and NTI to monitor results and identify improvements. In 2026, TBS also commissioned the first comprehensive independent review of the Nunavut Directive following its first five years of implementation. The review covers implementation from December 20, 2019 to March 31, 2025.

According to publicly available contract information, the review contract was awarded on June 1, 2026 and runs through September 30, 2027. The review plan must include an approach to engagement with other partners and relevant parties, and the review is to produce a comprehensive report with findings and recommendations. The procurement materials published to date do not identify a general open consultation process for individual businesses.

The review may lead to changes, but the current Nunavut Directive, NNI Policy, and Registry requirements remain in force. This five-year Nunavut Directive review is separate from the six-month progress reporting that the Office of the Procurement Ombud committed to in connection with its 2026 Procurement Practice Review of the federal Procurement Strategy for Indigenous Business, which is discussed in our companion article. Businesses should work from the current solicitation and current registration requirements rather than anticipate the outcome.

What Inuit firms and their partners should do now

Before pursuing a significant Nunavut procurement opportunity, the parties should consider six questions:

• Procurement regime:

  Is the buyer federal or territorial, where will the work be delivered or performed, which of Article 24, the Nunavut Directive, the NNI Policy and PSIB apply, and what trade-agreement or bid-challenge rules govern the solicitation?

• Registry status:

  Is the bidder and each qualifying subcontractor registered on the correct list, is that registration current, and are any separate federal supplier-integrity requirements satisfied?

• Beneficial ownership:

  Does the full ownership chain and economic arrangement support genuine Inuit beneficial ownership?

• Governance and services:

  Do minority protections, financing, management, service, and deadlock arrangements preserve meaningful Inuit authority over ordinary business decisions?

• Bid readiness:

  Have the bonding, insurance, and other security requirements been identified early, and can the bidder satisfy them before committing resources to the competition?

• Performance and evidence:

  Can the bidder deliver and document the Inuit employment, training, Inuit-firm participation, subcontracting, and local-presence commitments made in the bid?

Article 24 creates meaningful procurement opportunities through a substantive compliance model. The strongest structures align ownership, governance, management, economics, and contract performance from the outset. For Inuit firms and their commercial partners, that alignment is what turns Registry status into a durable platform for competing in Nunavut procurement.

Read the original article on GowlingWLG.com