Conditional Set-Aside

A conditional set-aside is a procurement approach used under the Government of Canada's Procurement Strategy for Indigenous Business (PSIB). The solicitation starts as an open competition, so both Indigenous and non-Indigenous businesses can bid. It then changes depending on how many Indigenous businesses respond with compliant bids.

If at least two compliant bids arrive from eligible Indigenous businesses, the competition is limited to those bidders. If that condition is not met, the non-Indigenous bids can be evaluated. The mechanism appears in notices on CanadaBuys and is applied by a range of federal departments and agencies.

How the two-bid trigger works

The trigger is a count of compliant bids from eligible Indigenous businesses. When two or more Indigenous businesses submit compliant bids, the contracting authority limits evaluation to those bidders and does not consider non-Indigenous bids. This is stated in the RCMP award notice for sod installation at Depot Division in Regina.

The count is taken after compliance review. Where fewer than two compliant Indigenous bids remain, because bids are non-compliant, non-responsive or withdrawn, the submitted non-Indigenous bids can be considered. A bidder cannot rely on the number of Indigenous submissions alone. Each one has to meet the solicitation requirements to count toward the threshold.

Conditional versus mandatory set-asides

A mandatory set-aside is restricted to eligible Indigenous businesses from the outset. A conditional set-aside begins as an open competition and narrows only if the Indigenous-bid response is strong enough. The Office of the Procurement Ombudsman describes the conditional option as one a department can use when it is unsure whether enough Indigenous-business capacity exists to meet the requirement.

Where conditional set-asides appear

• Royal Canadian Mounted Police: the sod installation procurement at RCMP Depot Division in Regina, Saskatchewan, used the designation.
• Canadian Food Inspection Agency: notices of proposed procurement carry a Conditional PSIB Set-Aside designation, including this notice and this one.
• Parks Canada: an amendment to a multi-stage solicitation describes a two-stage process. If at least two Indigenous suppliers qualify at the first stage and at least two Indigenous bids are received at the second stage, only Indigenous bidders are evaluated.

The designation shows up in requests for proposals, notices of proposed procurement and requests for bids, as well as in multi-stage procurements.

Certification and trade agreement treatment

A bidder that wants treatment as an Indigenous business must certify that it qualifies under PSIB and that it will comply with PSIB requirements. A recent notice of proposed procurement sets out this certification requirement.

Some solicitations also state that the conditional PSIB set-aside is excluded from applicable international trade agreements, under provisions concerning Indigenous peoples or small and minority businesses. One CFIA notice states that the Canadian Free Trade Agreement does not apply to that procurement.

What it means for a supplier

Read the solicitation to confirm whether it is a conditional set-aside, since the designation is stated in the notice. Indigenous businesses should make sure their bid is fully compliant and carries the required PSIB certification, because only compliant bids count toward the two-bid threshold. Non-Indigenous businesses can still bid, but should know their bids are evaluated only if fewer than two compliant Indigenous bids remain. Check the trade agreement language in the notice as well, since it affects which rules apply to the procurement.