A voluntary set-aside lets contracting authorities limit competition to Indigenous businesses when they determine there's sufficient Indigenous capacity to meet their needs. Unlike mandatory set-asides, which kick in automatically for procurements destined to areas where Indigenous people make up at least 51% of the population, voluntary set-asides give you discretion. You decide when to use them.
How It Works
The voluntary approach sits within the broader Procurement Strategy for Indigenous Business (PSIB), specifically outlined in Annex 9.4 of PSPC's Supply Manual. You can apply this method when Indigenous capacity exists and you can still meet operational requirements, achieve best value, and maintain sound contracting management. The Office of the Procurement Ombud notes that voluntary set-asides require assurance of "prudence, probity and sound contracting management" alongside these other factors.
Here's where things differ from the other two PSIB set-aside types. Mandatory set-asides aren't optional—they apply automatically when your procurement targets specific geographic areas or communities. Conditional set-asides take a different approach entirely: you open the competition to all bidders, but if two or more qualified Indigenous businesses respond, you then restrict the award to Indigenous bidders only. With voluntary set-asides, you're restricting competition right from the start based on your own assessment.
For a business to bid on any set-aside under PSIB, they must appear on the Indigenous Business Directory or relevant modern treaty lists. This verification step ensures the business meets the definition of an Indigenous business under the program. The Supply Manual's Annex 9.4 contains the detailed requirements for businesses seeking to qualify for set-aside opportunities, and you should review these criteria when planning your procurement approach.
Key Considerations
- The $40,000 threshold mentioned in some contexts relates to general contracting flexibility, but the actual decision to use a voluntary set-aside depends on market assessment and capacity analysis, not just dollar value. Always verify current thresholds in the Supply Manual.
- You need to conduct proper market research before choosing the voluntary route. Can Indigenous suppliers actually deliver what you need, when you need it, at fair value? Document your rationale because you're exercising discretion, not following an automatic rule.
- Don't confuse voluntary with conditional. A conditional set-aside starts open and becomes restricted based on response. A voluntary set-aside restricts competition from the outset based on your assessment.
- The mandatory threshold dropped from 80% to 51% Indigenous population, significantly expanding where mandatory set-asides apply. This means fewer situations where you'd need to rely on voluntary set-asides for geographically-focused procurements.
Related Terms
Procurement Strategy for Indigenous Business (PSIB), Mandatory Set-Aside, Conditional Set-Aside
Sources
- Supply Manual - Annex 9.4: PSIB Set-Aside Program, Public Services and Procurement Canada
- Learn how federal Indigenous procurement works, Indigenous Services Canada
- Procurement Practice Review of Contracts Awarded to Indigenous Businesses, Office of the Procurement Ombud
The voluntary set-aside gives you flexibility, but that flexibility comes with responsibility. Document your assessment of Indigenous capacity and maintain the same standards of value and delivery you'd apply to any procurement method.