Procurement Strategy for Aboriginal Business

The Procurement Strategy for Aboriginal Business—now officially called the Procurement Strategy for Indigenous Business (PSIB) since August 2021—is a federal initiative that's been creating opportunities for Indigenous entrepreneurs since 1996. If you're working with federal contracts, you need to understand this program because it fundamentally shapes how departments approach their procurement planning and supplier selection.

How It Works

PSIB isn't just about good intentions. It has real teeth. Federal departments and agencies must ensure a minimum of 5% of the total value of their contracts goes to qualified Indigenous businesses—a mandatory requirement that applies across government.

The program operates through several mechanisms outlined in Supply Manual Chapter 10. Set-asides are mandatory for contracts under certain thresholds—$100,000 for goods and services, $200,000 for construction—when the work primarily serves Indigenous populations or is located in Indigenous communities. Voluntary set-asides can be used more broadly when they make sense for the procurement at hand.

In practice, any department spending over $1 million annually on goods, services, or construction must establish annual PSIB targets and report on their progress. This means procurement officers need to actively consider Indigenous suppliers during their planning phase, not as an afterthought. The Treasury Board Directive on the Management of Procurement backs this up with clear requirements, and departments like PSPC, DND, and SSC have built internal processes to track their Indigenous procurement performance.

Key Considerations

• Verification matters. Suppliers must be listed in the Indigenous Business Directory to qualify. Don't assume a business meets the criteria without checking—this trips up contracting authorities regularly.

• The 5% target is calculated on total contract value, not number of contracts. This means your department's strategy needs to look beyond small purchases to include substantial opportunities where Indigenous businesses can genuinely compete.

• Set-aside obligations changed significantly in 2021. If you're working with older guidance or templates, verify they reflect current PSIB requirements rather than the previous PSAB framework.

• Regional considerations play a role. Some procurements naturally align better with PSIB objectives based on geography or the nature of the work, and your strategy should reflect this during market research.

Related Terms

Set-Aside, Indigenous Business Directory, Aboriginal Business Set-Aside, Indigenous Procurement, Trade Agreements

Sources

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

• Office of the Procurement Ombud: Procurement set-aside programs

• Indigenous Services Canada: Learn how federal Indigenous procurement works

Whether you're planning a solicitation or reviewing your department's annual procurement strategy, understanding PSIB requirements isn't optional—it's part of your compliance framework under the Financial Administration Act. Factor it in early.