Voluntary Set-Aside

A voluntary set-aside is a procurement opportunity that a Government of Canada department or agency elects to reserve, in whole or in part, for qualified Indigenous businesses. The buyer applies it where Indigenous supplier capacity exists and where operational requirements, best value, prudence, probity and sound contracting management can be assured, according to the Treasury Board policy notice.

The defining feature is discretion. Unlike a mandatory set-aside, a voluntary set-aside is a decision the federal buyer makes for a given requirement. The term comes from the Procurement Strategy for Aboriginal Business, now called the Procurement Strategy for Indigenous Business (PSIB), which includes both mandatory and voluntary set-aside processes.

What a set-aside does to the competition

A set-aside restricts bidding to eligible Indigenous businesses for the designated requirement. Federal guidance describes a set-aside contract as one for which only Aboriginal businesses are acceptable bidders. A business that does not meet the eligibility requirements cannot compete where the whole requirement is reserved.

A buyer can also reserve only part of a requirement. The wording "in whole or in part" means the set-aside can cover an entire contract or a defined component, depending on how the buyer structures the work.

Conditions a buyer must be able to assure

The archived Treasury Board notice states that departments and agencies were authorized and encouraged to set aside procurements voluntarily where this was practical and cost-effective. The buyer has to be satisfied that the following can be assured:

• operational requirements are met
• the Crown receives best value
• prudence and probity are maintained
• the contract can be managed soundly

PSIB guidance adds that voluntary set-asides may be used when sufficient Indigenous business capacity has been identified. This includes procurements where Indigenous peoples are not the primary recipients of the goods or services, as the PSIB program page explains.

Who qualifies as an eligible Indigenous business

The PSIB audit describes eligible businesses as those that are at least 51% Indigenous-owned and controlled. It also describes a requirement that at least 33% of the contract work be performed by Indigenous businesses, as set out on the PSIB program page. Suppliers should confirm their eligibility against the solicitation's own set-aside conditions before they bid.

Examples from Public Services and Procurement Canada

Public Services and Procurement Canada (PSPC) has used voluntary set-asides for competitively tendered requirements. In one approach, it limited competition under a supply arrangement to Indigenous holders rather than inviting all holders. PSPC described voluntary set-asides for project-management support, informatics professional services, and administrative and human-resources support in its briefing material.

The approach has also been used on major acquisitions. The Government of Canada applied a voluntary set-aside to the Aboriginal participation component of the contract for four naval large tugs. That component represented 1% of the contract value, as stated in the contract award announcement.

The VS reporting code

Federal contract-disclosure guidance uses "VS: Voluntary Set-Aside" as a reporting code, alongside "MS: Mandatory Set-Aside." The code is set out in the proactive disclosure guidance. Suppliers reviewing published contract data can use it to see which awards were reserved for Indigenous businesses.

What it means for a supplier

If you are an eligible Indigenous business, watch for solicitations that state a set-aside condition, since competition for those requirements is limited to businesses like yours. If you are not eligible, you cannot bid on a fully reserved requirement. You may still find work through partial set-asides or as a partner in a way that meets the stated Indigenous participation conditions. Read each solicitation's eligibility language closely, because the buyer decides when to apply a voluntary set-aside.