Economic NegotiationsTamara Napoleon & Merle Alexander

First Nation LNG SummitTreaty 8 Territories, Fort St. John, BC

Intersection between G2G & IBA negotiations and the need for First Nation-Contractors Collaborative Business Ventures

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Outline

1.LNG Timelines Generally2.G2G – Government to Government3.IBA – Impact Benefits Agreements4.CV – Collaborative Ventures5.Critical Timelines to Maximize First Nations’ leverage6.Collaborating to Maximize IBA Opportunities7.How to Make Contracting Opportunities Meaningful8.Options to Maximize Contract Opportunities9.How to Ensure Sustainable Development10.Is Monitoring and Enforcement Required11.What do Proponents want from CVs12.How to Meet the Needs of the Nation and the Proponent13.Sustaining Momentum14.What are the Challenges Facing CVs15.Strategies to Reach CVs

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LNG Timelines

G2G

IBA

CV

Feb. 2015Feb. 2014

Feb. 2015Feb. 2014

Feb. 2015Feb. 2014

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G2G

G2G Contribution

Funding Agreement

Framework Agreement

LNG Reconciliation

Agreement

Feb. 2015Feb. 2014

• 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

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IBA

IBALetter

AgreementMemorandum

of Understanding

Project Agreement

Traditional Knowledge

Protocol

Feb. 2015Feb. 2014

• 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

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Collaborative Ventures

CV Letter of

IntentBusiness

FrameworkAgreement

Limited Partnership Agreement &

Management Agreement

Feb. 2015Feb. 2014

• 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

CV LOI BFA LP

IBA

LA MOU PATKP

G2G CFA FA LNG RA

Feb. 2015Feb. 2014

Critical Leverage Point

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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

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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

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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

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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

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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

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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

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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

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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

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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

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Thank You

Tamara NapoleonTel: 604-891-2288Email: tamara.olding@gowlings.com

Merle AlexanderTel: 604-891-2271Email: merle.alexander@gowlings.com