Indigenous Business Definition

In Canadian federal procurement, an Indigenous business is a business that meets the eligibility definition set by the Procurement Strategy for Indigenous Business (PSIB). Federal supplier briefing material identifies 51% Indigenous ownership as the core qualification requirement, as set out in the Public Services and Procurement Canada seminar notes on doing business with the Government of Canada.

The term is used to advance economic reconciliation and to increase opportunities for First Nations, Inuit and Métis businesses, as described in Treasury Board procurement policy material. It is a Canadian procurement term. It is not a NATO procurement term.

The PSIB definition and the ownership test

The PSIB was formerly called the Procurement Strategy for Aboriginal Business. It is the Government of Canada program used to set aside contracts, or portions of contracts, for competition among Indigenous businesses, as the PSPC minister transition book explains.

The PSIB definition decides who qualifies. The briefing material cited above describes 51% Indigenous ownership as the requirement. The Government of Canada has also worked to broaden and modernize the definition, so suppliers should read the eligibility wording in each solicitation and in the current CanadaBuys page on the strategy.

How PSIB set-asides restrict who can bid

When a procurement is designated as a PSIB set-aside, it is restricted to qualified Indigenous businesses. CanadaBuys guidance in the Supply Manual annexes states that only suppliers meeting the PSIB definition of an Indigenous business may submit bids or statements of capabilities for a procurement set aside under the strategy.

A set-aside can cover an entire contract or only a portion of one. Some solicitations start open to both Indigenous and non-Indigenous businesses and become PSIB set-asides if two or more Indigenous businesses submit bids. One such federal request for proposals on CanadaBuys used this approach. It also required suppliers to certify that they meet the PSIB definition and will comply with PSIB requirements.

The 5% target and Indigenous participation requirements

The Government of Canada has introduced a mandatory requirement for federal departments and agencies to ensure that at least 5% of the total value of contracts is held by Indigenous businesses. The 2021 federal announcement sets out this measure. The target is a main reason the Indigenous business definition matters across federal buying.

Some solicitations also ask bidders to subcontract part of the work to a qualified Indigenous business or to submit an Indigenous Participation Plan. A CanadaBuys tender notice, Appendix I on Indigenous participation, required subcontracting to a qualified Indigenous business as defined under the PSIB. In these cases the PSIB definition applies to your subcontractor, not to you.

What the definition means for a supplier bidding on Canadian public contracts

• Check the solicitation to see whether it is a PSIB set-aside, an open procurement that may convert to one, or a procurement with Indigenous participation requirements.
• If you are bidding as an Indigenous business, be ready to certify that you meet the PSIB definition and will comply with PSIB requirements.
• If you are not an Indigenous business, you cannot bid on a PSIB set-aside. You can still pursue work that requires subcontracting to a qualified Indigenous business, and you should confirm that your partner meets the PSIB definition.
• Fully or partially Indigenous-owned businesses can join the federal Indigenous business directory, as noted on the CanadaBuys page on preparing to sell to government.