by Jack Turner, winner of the 2025 Atrium Law Student Essay Contest
I. Introduction
In 2021, Prime Minister Trudeau pledged to close the First Nation Infrastructure Gap (“FNIG”) by 2030.1 The FNIG refers to the amount of capital expenditure required to bring Indigenous community infrastructure on par with infrastructure readily available to non-Indigenous communities.2 At the time of the Prime Minister’s pledge, experts estimated that $30 billion in investment was required to close the gap.3 However, a 2023 Indigenous Services Canada (ISC) report recently raised the estimate to $349.2 billion.4
Closing the FNIG is imperative as access to high-quality infrastructure is a critical determinant of societal, health, and economic outcomes.5 The lack of on-reserve infrastructure and stark socioeconomic statistics reflecting Indigenous life on reserves confirm this basic connection. For instance, almost half of on-reserve First Nation students do not have access to a high school on reserve.6 Due to inadequate educational opportunities, the inequalities between the median income of Indigenous people living on reserve – $20,357 – and non-Indigenous people – $42,930 – is unsurprising.7
Infrastructure gaps also appear to have a detrimental impact on Indigenous health. Indigenous people living on reserves are more likely to experience chronic mental and physical conditions compared to Indigenous living off-reserve and the general Canadian population.8 Considering the impacts on Indigenous health, resolving the FNIG gap should be viewed as a public health matter. Delaying the establishment of fundamental infrastructure to provide education, employment, and healthcare services will result in a further decline in Indigenous well-being.
While closing a $349.2 billion gap in less than seven years is improbable, recent public law developments have begun to remove a historic source of the FNIG – the regulatory environment. The enactment of the First Nations Fiscal Management Act (“FMA”)9 and the Framework Agreement on First Nations Land Management Act (“Framework”)10 enables First Nation communities (“FNCs”)11 to “opt out” of select provisions of the Indian Act.12 The combined effect of the two optional statutes is to provide FNCs with enhanced jurisdiction to manage their infrastructure affairs.13 While restoring legislative authority paves the way for FNCs to take agency in closing the gap, multiple systemic challenges still confront First Nation infrastructure projects (“FNIPs”).
This paper aims to critically analyze the sources of the FNIG, the efficacy of current project delivery models (“PDMs”), and dispute resolution (“DR”) methods in order to recommend legal solutions for FNIPs. Ultimately, the paper advocates for a First Nation-tailored public-private partnership delivery model. The model’s design considers the financial and access to justice limitations of FNCs.
The paper will proceed in five sections. First, the paper diagnoses sources of the gap and analyzes how the FMA and Framework enable FNCs to overcome specific challenges. Next, the paper evaluates the ability of current PDMs and DR methods to address the sources of the FNIG.
The paper concludes with recommendations for the First Nation-tailored public-private partnership model.
II. Sources of the Gap
This section evaluates four systemic challenges, or gaps, perpetuating the larger FNIG. These gaps include: (1) the regulatory gap; (2) the financial gap; (3) the capacity gap; and (4) the remoteness gap.14
A. The Regulatory & Financial Gap
The largest impediment to closing the FNIG is the regulatory and bureaucratic environment created by the Indian Act (“the Act”). Specifically, two separate streams of the Act have stripped the ability of FNCs to implement infrastructure on their reserve lands. First, forty-four land-related sections of the Act prevent FNCs from managing their land.15 For example, FNCs require Minister of ISC approval to designate use of lands (sections 18-19), grant or expropriate interests or rights in lands (sections 20-28), and exercise control and management of lands (section 60).16 Thus, in contrast to non-Indigenous municipalities, FNCs are unable to enter into partnerships with other entities “to plan, design, construct, operate, and maintain infrastructure on their reserve lands.”17
The second stream severely limits FNCs’ abilities to finance infrastructure projects. Section 83 grants FNCs the power to levy property taxes, subject to Minister approval.18 Yet, there exist practical and legal impediments to raising sufficient revenues to fund FNIPs. On a practical level, the tax base of many reserves does not provide the required capital to fund projects without access to outside financing.19 Legislatively, however, FNCs are unable to access satisfactory long-term credit or raise equity due to the Act. Regarding credit, section 83 prevents FNCs from pledging taxation revenues to access financing, while section 89 prevents the use of reserve property as collateral.20 Further, the forty-four land sections prevent FNCs from granting equity interests in projects. Thus, most FNCs can only access short-term high-interest loans from private institutions.
The combined effect of the two streams is to limit the majority of FNCs to a “pay-as-you-go” (“PAYG”) financing model.21 PAYG is a cash management approach to financing infrastructure projects.22 Under the PAYG model, FNCs finance projects up-front through a combination of fiscal revenues and government budget allocations, as opposed to leveraging financing throughout the project lifecycle.23
Since reserve fiscal powers are severely limited, FNCs are almost entirely dependent on budget allocations from the ISC and other government departments. However, the budget allocation process is a key cause of FNIP systemic failure. For example, while the Treasury Board can enter into funding agreements of up to ten years, the standard term agreement with FNCs is one year due to lack of confidence in their financial management abilities.24 Further, the ISC only allocates payments when they have “cash on hand” from unspent budget allowances.25 As a result, FNCs cannot begin key stages of project planning and implementation until they receive ISC project approval.26
According to the First Nations Financial Management Board, ISC approvals are usually issued in the spring or summer and come with stipulations that construction must be complete by March 31st of the following year.27 Thus, FNCs are often left with less than a year to procure contractors and construct a facility.28 In turn, contractors price in the short-construction time frame and complexities of working over the winter months.29
The Act’s confines result in regulatory and financial gaps that quantifiably result in FNIP inefficiencies. For example, a 2016 Federal Government study revealed that bureaucratic control over reserve lands resulted in delays and cost overruns in 50% of projects sampled on reserve lands.30 The additional 40% of projects were downsized due to regulatory funding allowances.31
In contrast to the PAYG model, most non-Indigenous municipalities finance infrastructure projects through a monetization model – municipalities borrow on security of debentures, bonds, and other long-term credit arrangements that fund projects throughout the life cycle.32 This enables municipalities to fund projects beyond their current fiscal capabilities. Further, credit is available to municipalities on favourable terms based on the strength of their tax revenues and their ability to securitize such revenues.33
B. The Capacity Gap
The capacity gap refers to the lack of on-reserve expertise needed to plan and manage infrastructure assets.34 For example, on-reserve academic and labour participation in science, technology, engineering, and math fields is a mere 40% of the national rate.35 Thus, FNCs are almost entirely reliant on outside expertise to develop infrastructure projects leading to multiple inefficiencies and risks.36 A 2016 Federal Government assessment of FNIPs found that consultants and contractors consistently overdesigned and overpriced projects to exploit the diminished oversight capacity of FNC leaders.37
Insufficient access to data, statistics, and other information necessary to plan projects and manage assets effectively also perpetuates the capacity gap.38 Access to data on comparable projects and industry standards is essential for project planning and enforcing contractual rights and claims. For example, critical path methodology relies on previous project data and industry standards to establish a baseline schedule for infrastructure projects that is used to manage productivity and enforce delay claims through disruption analysis.39 However, FNCs lack sufficient access to industry and project data, inhibiting their oversight abilities.40
C. The Remoteness Gap: Resiliency, Cost & Access to Justice
The remote northern location of 600 of Canada’s reserves works against the success of FNIPs on three levels.41 First, remoteness is a major contributor to the “cost gap” – the tendency for FNIPs to cost more than comparable scale non-FNIPs.42 A 2016 National Aboriginal Economic Development Board report found that infrastructure costs on Northern reserves are approximately 150% higher than projects in the rest of Canada due to harsh climates, short construction seasons, low access to building supplies, and lack of transportation infrastructure.43 In terms of transportation, Ontario alone is home to thirty-four reserves accessible only by air or winter roads.44
Second, remoteness is also a contributing factor to the “resiliency gap” – the tendency for on- reserve infrastructure to be less durable than infrastructure in non-Indigenous communities.45 In addition to faulty design, harsh northern environments accelerate the depreciation of infrastructure assets, resulting in shorter operational lifecycles.46 Climate change is also presenting resiliency challenges. A 2022 Health Canada report signals that changing temperature, precipitation, and the increased frequency of severe weather events pose immediate and future threats to northern reserve infrastructure.47 In particular, the effects of permafrost degradation and increased flooding are accelerating depreciation, damaging on-reserve infrastructure, and adding complexities to construction and maintenance.48 For example, from 2006 to 2016 approximately 100 floods significantly damaged infrastructure across sixty-seven FNCs.49
Third, remoteness serves as a significant barrier to justice for FNCs. Approximately 30% of construction projects end in dispute in Canada, costing approximately $50 billion annually in dispute resolution costs.50 However, FNCs, especially rural communities, are severely dispositioned to resolve project-related disputes.51 A key finding of a May 2023 report published by the Department of Justice reveals that Northern Indigenous communities suffer from diminished access to legal professionals, institutions, ancillary support services, and legal technology.52 For example, the average ratio of lawyers per resident in rural Saskatchewan is 1:5,559 versus 1:818 for the wider province.53
III. The Legislative Path to Infrastructure Self-Determinacy
The enactment of the FMA (2006) and Framework (2022) have provided FNCs a legislative path toward addressing the regulatory and financial gaps created by the Act.54 The FMA addresses the financial gap by providing FNCs financing authority over infrastructure development.55 Similar to section 83 of the Act, the FMA enables FNCs to fund infrastructure projects through raising property taxes and other local revenues.56 However, in contrast to the Act, the FMA enables FNCs to pledge those revenues as security for financing.57 As a result, First Nation governments can break out of the burdensome ISC budget approval process and employ a monetization strategy.
The FMA formally establishes three First Nation-governed institutions to facilitate FNCs in exercising their enhanced fiscal authority.58 For example, the First Nations Finance Authority (“FNFA”) facilitates monetization by permitting qualifying FNCs to co-operatively raise capital through issuing bonds and debentures to capital markets that are secured by pooling members fiscal revenues.59 The FNFA then lends the capital generated by the bonds and debentures to FNCs through low rate, long-term funding agreements.60.
The Framework provides the second piece of the puzzle by enabling FNCs to opt-out of the Act’s forty-four land-related sections.61 The Framework enables participant FNCs to “re- establish their lands governance via a land code and, pursuant to that land code, establish laws respecting many aspects of infrastructure development such as local service provision, subdivision control, land use regulation, and user fee systems.”62 Additionally, the Framework enables FNCs to grant interests in land without Ministerial approval.63 Thus, like other municipalities, the path is paved for FNCs to enter into public-private partnerships that grant private entities interests in land to facilitate project finance and development.
Restoring legislative authority over infrastructure to FNCs is a positive step toward addressing the regulatory and financing gaps; however, barriers persist. To date, the FNFA’s inaugural bond has facilitated only $1.8 billion in loans, spread across 85 FNCs.64 This figure does not come close to approaching the necessary $349.2 billion. Further, the amount of money FNCs can borrow from the FNFA is “limited by the amount of stable, secure, ongoing revenue the Nation has to repay the loan.”65 Thus, the borrowing capacity of the most poverty-stricken reserves will remain severely restricted. The limitations signal that FNCs are still locked into the PAYG model.
Further, the public law changes do little to address the other systemic infrastructure development gaps discussed. FNCs still require fiscal, operational, and legal assistance in planning and managing critical infrastructure projects. Thus, further solutions are still required to close the FNIG.
IV. Current Construction Law Frameworks
To provide solutions, it is first necessary to evaluate the ability of existing construction law frameworks to overcome FNIP challenges. This section analyses (1) traditional infrastructure PDMs, (2) collaborative construction models, and (3) DR methods.
A. Contractual Considerations
i. Traditional Project Delivery Models
For each project, FNCs must decide on an appropriate PDM—the structure of interrelated contractual relations among owners, consultants, contractors and sub-contractors that govern the completion of the project.66 Traditional PDMs for infrastructure projects include:
- Engineering, Procure and Construct (“EPC”): Under an EPC model, the owner enters into a contract with a single entity – an EPC contractor – that agrees to carry out each stage of the project up to and including final project commissioning.67 The owner has one point of contract with the EPC contractor, while the EPC contractor executes all other necessary agreements with suppliers, subcontractors, and consultants.68
- Engineering, Procurement and Construction Management (EPCM): Unlike the EPC model, all points of contract under an EPCM model are “arranged for and on behalf of the owner.”69 The owner hires an EPCM contractor to serve as their agent, manage the procurement and construction of the project and provide general advice and services.70
- Public-Private Partnership (“PPP”): Under the PPP model, a government entity contracts with a private entity (“PE”) to design, build, operate, and maintain an infrastructure facility.71 Specifically, the PE finances the project in exchange for a concession72 – an exclusive right to operate and collect revenue from the facility for a period of time, following which ownership is usually transferred back to the government.73 The PE negotiates the concession so its term is long enough for it to realize a return on its investment.74 Alternatively, it can stipulate a specific rate of return that must be achieved prior to returning ownership.75
Given the unique characteristics of each project, there is no one-size-fits-all model. Thus, FNCs must adhere to a formal decision-making analysis that evaluates prospective PDMs against a list of quantitative and qualitative criteria weighted for each project. Nonetheless, the unique needs and challenges of FNIPs offer a general set of criteria to evaluate PDMs against. For brevity, general observations are made in the below table.
Table 1 – Traditional PDMs
| FNIP Criteria: | EPC | EPCM | PPP |
|---|---|---|---|
| Speed: | Time allowances are generally higher to account for the risk assumed by the EPC contractor.76 | The dual expertise of owner and EPCM contractor results in fast-tracked construction.77 | PEs are incentivized to complete the project efficiently.78 |
| Financing: | EPC projects are usually delivered under stipulated price arrangements.79 The EPC contractor commits to perform the work for a pre-determined amount and bears all risk of cost escalation.80 Typically, payment schedules involve an upfront sum, with additional fixed payments based on time or project milestones.81 This necessitates access to traditional long-term financing arrangements, which poses problems to financially limited FNCs. |
The owner may enter different forms of pricing arrangements with various contractors and suppliers.82 Nonetheless, payment schedules will typically follow the EPCM model, requiring access to long-term financing arrangements.83 |
PPPs are well suited to the financing limitations of FNCs as the project is primarily paid for through revenue generated by the asset during the concession.84 See section 5 for a review of the PPP financing model. |
| Capacity: | EPC models address the capacity gap by shifting risk to the EPC contractor. However, FNCs face a “moral hazard” problem. In other words, they risk selecting a predatory EPC contractor. | EPCM models require large and expert owner teams.85 | The PE takes on project delivery responsibility and is incentivized to build a well-functioning facility capable of offering a sufficient rate of return. Thus, it encapsulates the benefit of the EPC model without the associated “moral hazard” problem. |
| Remoteness Factors: | Cost: The EPC contractor’s risk is priced in, resulting in generally higher costs.86 | Cost: The owner’s risk is priced in, resulting in lower project costs. | Cost: PPPs will attach a price to assuming risk; however, FNCs do not have to service the entire cost monetarily.87 |
| Resiliency: The owner’s limited role presents difficulty in detecting “latent recurrent operational or maintenance problems.”88 | Resiliency: The owner is positioned to detect latent problems. | Resiliency: Concession periods last an average of 20 to 30 years.89 Thus, the PE is incentivized to build and maintain a durable asset.90 | |
| Access to Justice:Tradition PDMs follow a “fault-based mentality, where claims and litigation are common.”91 | Access to Justice: See EPC. | Access to Justice: Research demonstrates a higher probability of dispute occurrence in PPPs than in traditional models.92 |
Overall, the PPP model performs better than the EPC and EPCM models at addressing FNIP systemic challenges. However, there are major impediments to implementing PPPs on reserves. For example, Canada’s average PPP project size is $56 million, with many government entities setting threshold size requirements at $50 million.93 Given that most FNIPs have an estimated value range of $1 to $25 million, there is likely low private sector demand.94 Further, given the extended length of contractual relations under the PPP model, an extensive body of statistics and research reveals that PPP projects result in a higher number of disputes than traditional PDMs.95
ii. Collaborative Contracting Methods
In addition to traditional PDMs, various collaborative PDMs have risen in popularity. The underlying rationale of each collaborative method is to increase efficiencies and decrease disputes through collaborative contracting.96 This section provides an overview and evaluation of two of the most popular models: (1) the Alliance Model and (2) the Integrated Project Delivery (“IPD”) Model.
Alliance Model: Under the Alliance Model, all major project stakeholders create and enter into a Project Alliance Agreement (“PAA”) – a contractual framework that governs the project.97
Key parts of the PAA include the owner’s Value for Money Statement (“VFM Statement”), the Alliance Charter, the risk-reward compensation framework, and a no-liability-clause (“NLC”).98
- VFM Statement: The VFM establishes project governance in addition to the owner’s project deliverables and key performance indicators which guide the project’s completion.99
- Alliance Charter: The Alliance Charter serves as a code of conduct for each contracting party. Part of this code of conduct is an “open book” policy, which requires participants to provide mutual access to their accounting and other key documentation.100 The rationale is to facilitate best-for-project decision-making and collaboration.101
- Risk and Reward Regime: While various compensation methods are combined, the essence of the Alliance compensation model is a risk and reward regime governed by a pre-determined “pain-gain” formula.102 In essence, profits above the project’s target costs are distributed and shared among non-owner participants (NOPs). Likewise, costs that exceed targets are shared by NOPs.103
- NLC: Finally, participants agree to an NLC which legally prevents participants from initiating claims against other Alliance members. The purpose of the NLC is to engrain a no-fault-no- blame philosophy to project implementation.104
IPD: While IPD projects take various forms, they are typically executed through a multi-party contract that brings together the owner, consultant, and major contractor(s) as the management team for the project.105 IPD projects follow a very similar framework as the Alliance method; however, the compensation method notably differs. Typically, the owner pays each contracting party their individual costs, and parties do not share responsibility for cost-overruns.106 However, profit is pooled and distributed among NOPs according to a pre-determined formula.107
Table 2 – Collaborative Methods
| FNIP Criteria: | Collaborative Methods |
|---|---|
| Speed: | Collaborative methods require large up-front time investments to develop projects. However, the up-front investment pays off. A 2009 Infrastructure Australia study of 46 Alliance projects revealed that 94% of projects were completed on time or ahead of schedule.108 The study confirmed the adaptability of the Alliance Model to “projects where an urgent start is required.”109 |
| Financing: | The innovative financing methods still require large up-front investments from the owner. |
| Capacity: | Collaborative methods require sophisticated, well-resourced owners capable of bringing together an experienced Alliance or IPD team.110 Further, Alliance and IPD methods are best suited for large, complex projects valued well above $50 million.111 |
| Remoteness Factors: | Cost: Both IPD and Alliance models result in “higher initial start-up costs” but are proven to reduce cost-overruns.112 The Infrastructure Australia report revealed that 85% of Alliances met or came below target costs.113 Further, multiple studies reveal that use of IPD results in cost efficiencies.114 |
| Resiliency:A 2013 study by Asmar et al. of 35 projects demonstrated that IPDs resulted in high-quality facilities.115 | |
| Access to Justice:Both models are specifically designed to reduce disputes through the incorporation of NLCs and other “no fault and no blame” commitments.116 |
At first instance, collaborative methods are highly attractive for FNIPs as they pose solutions to the cost, timing, and access to justice challenges. However, the methods are best suited for projects “where the owner has superior knowledge or capability in the development and delivery of the project.”117 Further, the scale of most FNIPs is well below $50 million.118
B. Dispute Resolution
Beyond negotiation, there are four primary DR processes available in the construction context: (1) litigation, (2) arbitration, (3) mediation, and (4) dispute resolution boards (“DRBs).119 The table below evaluates each method along FNC access to justice limitation criteria.
Table 3 – DR Methods
| Method | Definition | Access to Legal Professions | Access to Legal Institutions |
|---|---|---|---|
| Mediation: | A non-binding, voluntary process whereby a neutral third party assists parties to reach a settlement.120 | Mediation does not require access to legal professionals.121 Parties to the dispute have full discretion to select a non- legal professional mediator. | Mediation does not necessitate access to courts or other legal facilities. |
| Arbitration: | Arbitration is a process whereby a neutral third party renders a decision that is legally binding on parties.122 | “There are currently no uniform national arbitration qualification standards in Canada.”123 However, many Arbitrators are accredited through the ADR Institute of Canada, are legal professionals, or have a high level of technical expertise in the subject matter.124 |
The various provincial arbitration acts require access to courts for a variety of reasons.125 For example, disputes over selecting an arbitrator are usually resolved through application to the courts.126 Further, most arbitration acts provide a right to appeal to courts on questions of law.127 |
| Litigation: | Formal court proceedings. | Litigation requires access to legal professionals. | Litigation requires access to courts. Many small, northern communities rely on circuit courts that visit communities 2-6 times per year.128 Further, technological limitations of many Northern reserves prevent the use of video- conferencing court hearings.129 |
| Dispute Resolution Boards: | Contracting parties agree to establish a DRB – a panel of neutral experts that resolve ongoing disputes during the lifecycle of the project.130 DRB decisions are non-binding.131 Panels usually consist of three members: one selected by the owner, the other by the contractor, and the third selected by the two other board members.134 |
DRBs select board members based on subject matter expertise.132 “Only rarely are highly experienced construction lawyers chosen as panellists.”133 |
Like mediation, DRBs do not necessitate access to legal institutions. |
The above observations imply that FNIPs should specifically contract for the use of mediation and DRBs to resolve disputes. Methods that necessitate access to legal professionals and institutions, such as litigation and arbitration, should be reserved as a last resort.
V. Solution: The First Nation PPP Model
The Canadian Government, construction lawyers, and First Nation-led institutions should work together to develop a First Nation PPP Model (“FN-PPP Model”). This section first establishes a rationale for prioritizing the PPP model over traditional and collaborative models. Next, this section recommends a First Nation-specific design that (1) overcomes the market demand challenges and (2) incorporates elements of collaborative contracting and ADR methods to resolve access to justice concerns. The section concludes by raising limitations concerning the proposed solution.
A. Prioritizing the PPP Model
The rationale for prioritizing the PPP model is its unique financing structure, which overcomes the regulatory and financing gaps. The PPP model offers FNCs a third financing model which does not necessitate access to long-term financing or a burdensome regulatory approval process. Under the typical PPP model, the PE establishes a special purpose vehicle (“SPV”) to raise the necessary capital for the project.135 The SPV raises the capital through a combination of debt and equity provided by other private companies or the government entity.136 The SPV then deploys capital raised to design and build the facility. Through the negotiated concession period, the debt and equity holders who form the SPV realize their returns through revenue generated by the facility.137
Thus, by adopting a PPP approach, FNCs do not have to rely on either a PAYG or monetization financing model. Rather, they grant an interest or concession in the facility to the PE for a negotiated period of time. The concession is more than compensated by the benefits received by FNCs. For example, capacity challenges are overcome as all phases of the project – design, build, finance, operation, and maintenance – are transferred to the PE under one contract.138 Additionally, the PE is incentivized via its stake in the project, to build a cost-efficient, resilient facility, within a reasonable timeframe.139
However, significant drawbacks to the PPP model need to be addressed. First, as noted, the average value of prospective FNIPs is substantially below the market standard. Thus, PE market demand for FNIPs may be low or non-existent. Second, projects delivered under PPP models are highly prone to disputes. To overcome such challenges, this paper suggests two innovative solutions.
B. The FN PPP Model: Bundled PPPs
To incite market demand for FNIPs, FNCs should work together with First Nation-led institutions to execute bundled PPP contracts.140 Project bundling is a procurement process where multiple PPP projects are implemented under a single contract.141 Bundled contracts could be used to implement similar infrastructure projects across multiple reserves in close geographic proximity.142 The benefit of bundled PPPs is two-fold. First, they incentivize PE demand to take on small-scale projects for which there is no demand on an individual project basis.143 Second, they result in economies of scale as the PE becomes increasingly efficient at implementing the projects.144
Governments and municipalities in the United States have implemented several successful bundled PPPs “for smaller, low-volume structures located in rural areas.”145 For example, in 2015, the Pennsylvania Department of Transportation (“PennDott”) entered into a 28-year concession to reconstruct 558 small, structurally deficient rural bridges.146 PenDott estimated that it would take eight to twelve years to replace the bridges and cost US$2 million per bridge through a traditional procurement method.147 However, under the PPP model, the estimate was reduced to four years, for US$1.6 million per bridge.148 By 2019, over 500 bridges had been completed under the delivery model.149
Multiple lessons from the PenDott project can be applied to the FNIG context. First, by bundling small-scale projects across multiple jurisdictions, PenDott elicited strong PE demand and delivered the infrastructure cost- and time-efficiently. Similarly, rural FNCs could bundle common infrastructure needs, such as water facilities or schools, into a single package to achieve economies of scale. Second, Pennsylvanians received the needed infrastructure repairs due to the coordination of a strong governmental backstop – PenDott – that secured initial financing and coordinated the bundled contract across jurisdictions. Thus, FNCs could rely on recently formed First Nation-led institutions, like the FNFA, to pool financial resources and coordinate projects across reserves.
C. FN PPP Standard Form Contracts
To decrease the propensity for disputes on PPP projects, First Nation-led institutions could design and demand the use of standard form contracts that incorporate ADR or collaborative contracting components. In terms of ADR, the preceding analysis revealed that mediation and the use of DRBs should be methods of first resort to resolve disputes on FNIPs. There exist multiple standard form contracts that provide for mediation or the use of DRBs that could be utilized as precedents. For example, the Canadian Construction Document Committee’s CCDC-2 provides for a project mediation process in the event of dispute.150 Likewise, the standard form contract could incorporate elements of the collaborative methods, such as NLCs, project charters to govern behaviour, open-book provisions, and no-fault-no-blame provisions.
D. Limitations
In closing, it is important to recognize the limitations of the proposed solution. First, this paper has presented a simplified version of a PPP model that is majority funded through revenue generated by the infrastructure asset. However, World Bank data reveals that approximately 40% of PPPs are financed by the public sector.151 There are multiple reasons why the public sector finances PPP projects. For example, not all required infrastructure assets will generate revenue to pay off the PE. Furthermore, the tax base of many jurisdictions is insufficient to provide the PE with its necessary return. Unfortunately, the impoverished condition of many of Canada’s 3,394 reserves implies that community members cannot service the necessary payments to incentivize PE demand. Thus, for the proposed solution to be successful, the Government of Canada will have to serve as a necessary financial backstop for projects.152
VI. Conclusion
The regulatory change brought on by the FMA and Framework has provided construction lawyers, academics, and infrastructure experts a unique opportunity to assist FNCs in developing innovative solutions to close the FNIG. Specifically, construction lawyers can assist First Nation- led institutions, like the FNFA, in establishing national standards on appropriate project delivery models, contractual relations, financing, and risk management techniques for FNIPs. This paper has attempted to provide initial recommendations for such standards by advocating for a First Nation-tailored PPP model. While the solution has its limitations, its potential lies in its ability to overcome the largest impediments to resolving the FNIG—the regulatory and financial gaps perpetuated by the Indian Act.