Economic Negotiations
Tamara Napoleon & Merle Alexander
First Nation LNG Summit
Treaty 8 Territories, Fort St. John, BC
Intersection between G2G & IBA negotiations and the need
for First Nation-Contractors Collaborative Business Ventures
Outline
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LNG Timelines Generally
G2G – Government to Government
IBA – Impact Benefits Agreements
CV – Collaborative Ventures
Critical Timelines to Maximize First Nations’ leverage
Collaborating to Maximize IBA Opportunities
How to Make Contracting Opportunities Meaningful
Options to Maximize Contract Opportunities
How to Ensure Sustainable Development
Is Monitoring and Enforcement Required
What do Proponents want from CVs
How to Meet the Needs of the Nation and the Proponent
Sustaining Momentum
What are the Challenges Facing CVs
Strategies to Reach CVs
2
LNG Timelines
Feb. 2014
Feb. 2015
G2G
Feb. 2014
Feb. 2015
IBA
Feb. 2014
Feb. 2015
CV
3
G2G
Feb. 2014
Feb. 2015
G2G
Contribution
Funding
Agreement
Framework
Agreement
LNG
Reconciliation
Agreement
• Minimal DTC fulfilled = First Nation leverage increasing
• Added value for downstream, midstream and upstream
First Nations’ coordination
• Revenue Sharing of LNG Tax critical, but will take joint
First Nations solidarity
• Requirement that Contractors have material Aboriginal
content in procurement & bidding critical
4
IBA
Feb. 2014
Feb. 2015
IBA
Letter
Agreement
Traditional
Knowledge
Protocol
Memorandum
of
Understanding
Project
Agreement
• Proponents want support through negotiated agreements
• First Nation leverage at maximum before EA completes
• Negotiate for first preference on all contracting opps.
• Negotiate capacity/skills training funds
• Negotiate for Aboriginal hiring and business
subcontracting as a “material term” of all contracts
5
Collaborative Ventures
Feb. 2014
Feb. 2015
CV
Letter of
Intent
Business
Framework
Agreement
Limited Partnership
Agreement &
Management Agreement
• First Nation-Contract collaborative ventures treated
secondary in negotiations and often left out
• Critical to run contractor negotiations in parallel
• Task Economic Development Officer with negotiations
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Critical Timelines
Critical Leverage Point
Feb. 2014
Feb. 2015
G2G
CFA
FA
LNG RA
IBA
LA
CV
LOI
TKP
MOU
BFA
PA
LP
7
How to Make Contracting Opportunities Meaningful?
• Conduct due diligence on existing First Nation
businesses and entrepreneurs
• Determine an inclusive and flexible definition of “First
Nation Business”
• Accommodate operating challenges
• Capacity development to participate more broadly
• Tax planning
8
Collaborating to Maximize IBA Opportunities
• Popular forms - joint ventures, partnerships and
alliances
• Can be set up alongside and integrated into IBA
• Industry gains preferential access to major contracts
• Assist to fulfill project proponents’ obligations to
consult and accommodate
• Fosters capacity building for First Nation businesses
and citizens
9
Options to Maximize Contract Opportunities
• Direct award contracts
• First preference processes
• Open book negotiations
• Appropriate tendering criteria (eg bonding)
• Define role of primary contractor
• Size contracts to allow participation
• Business development assistance
10
How to Ensure Sustainable Employment?
• Facilitate training opportunities – transferable education
and skills
• Fixed targets or quotas
• Human resource inventory and strategy
• First Nation hire as material term of contracts awarded
11
Is Monitoring and Enforcement Required?
• Yes – critical element to ensure IBA commitments are
realized
• Role of advisory/implementation committee members
• Periodic reviews
• Project liaisons
• Dispute resolution mechanisms
• Employment and business inventories
12
What do Proponents want from Collaborative Ventures?
• Local and skilled suppliers/employees
• Contractors to share risks & profits
• Return on investment
• Market credibility
• Project approvals
• A “social licence” to operate
13
How to Meet the Needs of the Nation and the Proponent?
• Due diligence on the project and the Nation
• Identify inclusive and flexible scope for the businesses
who will participate
• Plan to accommodate operational change:
• Stepped/phased approach
• Re-openers
• Monitoring
14
Sustaining Momentum
• Monitoring performance
• Reporting out
• Branch out to new projects/areas
• Conduct periodic reviews to assess what’s working
• Set targets
• Retain project liaisons for continuous communication
• Tailor dispute resolution processes to manage conflict
efficiently and effectively
• Ensure employment and business inventories are
compiled and current
• Provide adequate resources for implementation
15
What are the Challenges Facing Collaborative Ventures?
• Ensure all parties are informed throughout negotiation
and execution
• Exercise due diligence prior to negotiating management
fee’s
• Consider exclusivity carefully
• Balance certainty and flexibility in drafting termination
clauses
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Strategies to Reach Collaborative Ventures
• Clear understanding of goals and objectives
• Demonstrated business skills and capacity
• Credibility
• Listening to the signals
• Flexibility as the project changes
• Pilot projects or stepped commitments
• Understanding the deal
• Understanding the risk/reward relationship
• Solid business partners
17
Thank You
Tamara Napoleon
Tel: 604-891-2288
Email: tamara.olding@gowlings.com
Merle Alexander
Tel: 604-891-2271
Email: merle.alexander@gowlings.com
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