Indigenous Considerations

When you're working on federal procurement, here's the reality: Indigenous considerations aren't optional add-ons. They're mandatory requirements baked into how the Government of Canada buys goods and services. The Procurement Strategy for Indigenous Business (PSIB) fundamentally shapes your procurement approach, particularly if you're dealing with contracts in predominantly Indigenous areas or services that primarily benefit Indigenous communities.

How It Works

The framework centers on a clear mandate: at least 5% of the total value of federal contracts must go to Indigenous businesses. This target was announced when the program was renamed from PSAB to PSIB in August 2021, and it means you're expected to actively look for opportunities to engage Indigenous suppliers throughout your procurement planning.

Here's where it gets specific. According to Supply Manual Chapter 10, set-asides become mandatory in two situations: when Indigenous people make up at least 51% of the population in the area where you're procuring, or when they're the primary recipients or end users of what you're buying. That second condition applies even to lower-value contracts—anything over $5,000 triggers the requirement if Indigenous populations are the main beneficiaries.

To qualify under PSIB, a business must be at least 51% owned and controlled by Indigenous peoples and listed in the Indigenous Business Directory (IBD). You can't just take a supplier's word for it. Joint ventures are permissible, but the Indigenous partner must perform at least 33% of the contract's value—not just participate in name only. Treasury Board's Directive on the Management of Procurement, specifically Appendix E, lays out these mandatory procedures in detail.

In practice, this changes how you structure your competitive procurement processes. You'll often be running set-aside competitions restricted to Indigenous businesses rather than open competitions. Sometimes you might even use sole-source procurement with an Indigenous supplier when the conditions are right.

Key Considerations

• Geography matters more than you think. If your procurement serves an area where Indigenous people represent 51% or more of the population, the set-aside isn't discretionary—it's required. This catches many procurement officers off guard during their needs analysis.

• The IBD verification step is non-negotiable. Don't start evaluating bids until you've confirmed that bidders are actually listed in the Indigenous Business Directory. It's a simple check that prevents headaches later.

• Joint ventures need careful monitoring. That 33% work requirement for the Indigenous partner isn't just a checkbox at contract award—you need to track it through contract performance to ensure compliance.

• Start your PSIB assessment early. Waiting until you're ready to post your solicitation is too late. These considerations should be part of your initial procurement strategy, not something you scramble to address when someone from Public Services and Procurement Canada asks why you didn't consider a set-aside.

Related Terms

Set-aside program, Competitive procurement, Sole-source procurement

Sources

• Supply Manual Chapter 10: Procurement Strategy for Indigenous Business (PSIB)

• Learn how federal Indigenous procurement works - Services and Indigenous Canada

• Procurement set-aside programs - Office of the Procurement Ombudsman

The bottom line? Build PSIB considerations into your procurement planning from day one. It's not just good policy—it's a mandatory requirement that shapes everything from market research to how you structure your solicitation.