Indigenous Business

In Canadian federal procurement, an Indigenous business is a business that is at least 51% Indigenous-owned and controlled and is eligible under the Government of Canada's Procurement Strategy for Indigenous Business (PSIB). Eligibility is verified through the Indigenous Business Directory or, where applicable, a Modern Treaty business list, as described in Indigenous Services Canada's parliamentary question notes.

The term is used primarily in Canadian government procurement, and it replaced the older federal terminology "Aboriginal business" in the PSIB. The Government of Canada states that no single definition applies to every federal Indigenous-procurement initiative, so the exact meaning can depend on the program, solicitation or contract. The CanadaBuys page on the PSIB is the starting point for the federal procurement meaning.

The 51% ownership and control test

The core test is ownership and control. A business seeking registration in the Indigenous Business Directory must demonstrate that it is 51% Indigenous-owned and controlled, according to Indigenous Services Canada's published notes. A business that cannot show this does not qualify as an Indigenous business for PSIB purposes.

Modern Treaty business lists are a related route. Businesses on those lists may be relevant to Indigenous procurement requirements, but Comprehensive Land Claims Agreements must not be confused with the PSIB. They are separate instruments.

PSIB set-asides and the Indigenous Business Directory

The PSIB was launched in 1996 and limits some federal procurements to eligible Indigenous businesses, as set out in the departmental notes on the strategy. Public Services and Procurement Canada uses PSIB set-asides to restrict competition to qualified Indigenous businesses. A set-aside can cover an entire contract or a portion of one.

PSIB-designated requirements are restricted to qualified Indigenous businesses. The strategy can apply across goods, services and construction, according to the CanadaBuys guidance on determining a sourcing strategy. That guidance also tells buyers that Indigenous businesses may be identified through the Government of Canada's Indigenous Business Directory when they develop a sourcing strategy.

For a supplier, this makes the directory the practical gateway. A business that wants to bid on a PSIB-restricted federal opportunity must be registered and active in the directory.

Indigenous participation, benefits plans and contract performance

Indigenous business status also matters in contracts that are not fully set aside. A federal solicitation can require an Indigenous participation component, including subcontracting to a qualified Indigenous business as defined under the PSIB. One example is the Indigenous participation appendix in a CanadaBuys tender notice.

PSPC may also include Indigenous Benefits Plans. These create opportunities involving competition, employment, training and subcontracting, as outlined on the PSPC page on reducing barriers for Indigenous businesses.

For PSIB contracts, the successful contractor must meet the applicable Indigenous-content requirement. The federal material describes a requirement that at least 33% of the total contract value be performed by the Indigenous contractor or Indigenous subcontractors, as noted in the Indigenous Services Canada notes.

The federal 5% target

The federal government is implementing a target that at least 5% of the value of government contracts go to Indigenous-led or Indigenous-owned businesses. PSPC describes the commitment in its briefing for the Standing Committee on Indigenous and Northern Affairs and in its 2021 minister transition book. PSPC, Indigenous Services Canada and the Treasury Board of Canada Secretariat administer or support these measures.

What it means for a supplier bidding on Canadian public contracts

If your business is at least 51% Indigenous-owned and controlled, register in the Indigenous Business Directory and keep the listing active. Without an active listing, you cannot bid on PSIB-restricted opportunities.

If your business is not Indigenous-owned, read each solicitation for Indigenous participation requirements. You may need to subcontract work to a qualified Indigenous business under the PSIB, and you should check how the solicitation defines that term. Because definitions vary by program and contract, confirm the wording in each tender document before you commit to a teaming arrangement.