Indigenous Business (IB)

An Indigenous Business (IB) is a business that meets the eligibility requirements of the Procurement Strategy for Indigenous Business (PSIB). The central test is that the business is at least 51% Indigenous-owned and controlled. A business can also qualify by being recognized on an applicable Modern Treaty business list, as described in Indigenous Services Canada briefing material and related parliamentary question period notes.

In Canadian federal procurement, the term refers to businesses owned or controlled by First Nations, Inuit or Métis interests. Buyers use IB status to restrict certain solicitations, to count contract value toward the federal Indigenous procurement target, and to set subcontracting and benefit requirements. CanadaBuys publishes the buyer-facing guidance on how PSIB is applied.

The PSIB and the 51% ownership and control test

PSIB was launched in 1996 and was formerly called the Procurement Strategy for Aboriginal Business, according to Indigenous Services Canada and the 2021 PSPC minister transition book. It limits certain federal procurements to Indigenous businesses that meet its eligibility criteria.

The federal Indigenous Business Directory (IBD) is the list used to identify businesses eligible for PSIB-limited procurements. A business seeking to register must complete an eligibility assessment and demonstrate that it is 51% Indigenous-owned and controlled, as set out in the ISC briefing note.

Set-asides, Indigenous content and subcontracting

CanadaBuys states that procurements designated as PSIB set-asides are restricted to qualified Indigenous businesses (CanadaBuys PSIB page). For a PSIB-limited opportunity, a bidder must generally be listed in the IBD or on an applicable Modern Treaty business list.

Winning a set-aside carries a performance obligation. A successful PSIB contractor must satisfy a 33% Indigenous-content requirement during the life of the contract, either directly or through Indigenous subcontractors, as noted in the ISC question period note.

IB status also appears in solicitations that are not set-asides. Public Services and Procurement Canada describes Indigenous Benefits Plans that create employment, training and subcontracting opportunities for Indigenous Peoples and businesses. One federal tender on CanadaBuys defines Indigenous Business Subcontracting as subcontracting work to a qualified Indigenous business as defined under PSIB (Appendix I, Indigenous Participation).

The federal 5% Indigenous procurement target

The federal procurement framework sets a mandatory minimum target that 5% of the total value of contracts be awarded to Indigenous businesses each year. The requirement is set out in the Treasury Board procedures and applies to federal departments and agencies, which must report against it.

This target is why IB status matters beyond set-asides. Each contract awarded to a qualified Indigenous business counts toward a department's result, and PSPC uses PSIB and other measures to increase opportunities for these businesses, as outlined in its 2021 announcement of federal-wide measures.

What Indigenous Business status means for a supplier

If you are bidding on a PSIB-restricted opportunity, confirm before the closing date that your business can meet each condition:

• Demonstrate the required Indigenous ownership and control, which is at least 51% for IBD registration.
• Complete the eligibility assessment and be listed in the Indigenous Business Directory or on an applicable Modern Treaty business list.
• Plan for the 33% Indigenous-content requirement where the solicitation specifies it, whether you deliver it yourself or through Indigenous subcontractors.
• Provide the Indigenous Benefits Plan or Indigenous participation information the solicitation requires.
• Maintain the ownership, control, listing and performance conditions throughout the contract.

If you are not an Indigenous business, IB status still affects you. Some solicitations require you to subcontract part of the work to a qualified Indigenous business, so teaming arrangements with listed businesses can form part of a compliant bid. Read the clauses of each solicitation closely, because the specific requirements are set by the solicitation.