Indigenous Procurement in Canada: An Overview
The Government of Canada has committed to increasing participation of Indigenous businesses in federal procurement. This commitment is driven by economic reconciliation goals and is backed by specific policies, programs, and targets that create meaningful opportunities for Indigenous-owned businesses.
As of 2022, the federal government has mandated that at least 5% of the total value of federal contracts be awarded to businesses managed and led by Indigenous peoples. This target, which has been progressively increasing, creates a substantial and growing market for qualified Indigenous suppliers.
Key Programs and Policies
Procurement Strategy for Indigenous Business (PSIB)
The PSIB is the cornerstone policy for Indigenous procurement in Canada. Established by Indigenous Services Canada (ISC) and implemented across all federal departments, the PSIB:
- Sets aside certain federal contracts for competition exclusively among Indigenous businesses.
- Applies mandatory set-asides for contracts serving primarily Indigenous populations, contracts in Indigenous communities, or contracts where Indigenous content is a significant component.
- Voluntary set-asides can be used by departments for any procurement where there is sufficient Indigenous supplier capacity to ensure competition.
To qualify as an Indigenous business under PSIB, your business must:
- Be at least 51% owned and controlled by Indigenous peoples (First Nations, Inuit, or Metis).
- If the business has six or more full-time employees, at least one-third of its employees must be Indigenous.
Businesses are encouraged to register in the Indigenous Business Directory (IBD) maintained by Indigenous Services Canada to facilitate identification by procurement officers.
Procurement Strategy for Aboriginal Business (PSAB)
PSAB is the predecessor policy to the modern PSIB framework. While the terminology has evolved, some government documents still reference PSAB. The core principles remain the same: mandatory set-asides for contracts meeting specific criteria and voluntary set-asides to increase Indigenous participation.
Nunavut Exceptions and Northern Procurement
For procurement related to Nunavut, the Nunavut Land Claims Agreement creates additional obligations. Federal procurement in Nunavut must provide opportunities for Inuit firms in accordance with Article 24 of the agreement. NTI (Nunavut Tunngavik Inc.) maintains a registry of Inuit-owned businesses.
Similar considerations apply in other regions with comprehensive land claims or self-government agreements.
The 5% Target and Beyond
In the 2021 Federal Budget, the Government of Canada committed to ensuring at least 5% of the total value of federal contracts is held by Indigenous businesses. This target has been a catalyst for change across federal departments:
- Departments must report annually on their progress toward the 5% target.
- Procurement officers are encouraged to identify opportunities for Indigenous set-asides in their planning.
- Evaluation criteria in some RFPs now include points for Indigenous participation, even in non-set-aside procurements.
The practical effect is that being an Indigenous business, or having Indigenous business partners, is increasingly advantageous in federal procurement.
How to Register as an Indigenous Business
Step 1: Verify Eligibility
Confirm your business meets the ownership and employment criteria for PSIB:
- At least 51% Indigenous ownership and control.
- At least one-third Indigenous employees (if six or more full-time staff).
Step 2: Register in the Indigenous Business Directory
The Indigenous Business Directory (IBD) is maintained by Indigenous Services Canada. Registration is free and makes your business visible to federal procurement officers looking to meet PSIB requirements.
To register:
- Visit the Indigenous Business Directory on the Government of Canada website.
- Complete the registration form with your business details, ownership information, and commodity codes.
- Provide documentation verifying Indigenous ownership (this may include Articles of Incorporation, shareholder agreements, and declarations of Indigenous identity).
Step 3: Register on BuyandSell.gc.ca
In addition to the IBD, register on BuyandSell.gc.ca as a regular supplier. In your Supplier Registration Information (SRI), indicate your Indigenous business status. This ensures your business appears in searches filtered by Indigenous ownership.
Step 4: Obtain Certifications and Clearances
Like all government suppliers, Indigenous businesses may need:
- Security clearances (Reliability Status at minimum for most contracts)
- Relevant industry certifications
- Insurance coverage appropriate to the contract type
Step 5: Consider Organizational Affiliations
Several organizations support Indigenous businesses in government procurement:
- Canadian Council for Aboriginal Business (CCAB) -- Offers the Progressive Aboriginal Relations (PAR) certification and networking opportunities.
- National Aboriginal Capital Corporations Association (NACCA) -- Provides financing support.
- Indigenous business associations at the regional and sectoral level.
Joint Ventures and Teaming for Indigenous Procurement
If your Indigenous business lacks the capacity to take on large contracts alone, consider teaming arrangements:
- Indigenous-led joint ventures: Two or more Indigenous businesses can form a JV to combine capabilities. The JV qualifies as Indigenous under PSIB if it meets the ownership criteria.
- Indigenous/non-Indigenous partnerships: An Indigenous business can partner with a non-Indigenous firm as prime/sub or through a JV. However, for the contract to count toward PSIB set-asides, the Indigenous partner must maintain controlling interest and management authority.
- Subcontracting to Indigenous businesses: Non-Indigenous prime contractors can include Indigenous subcontractors to strengthen their proposals and help meet the government's 5% target.
Finding Indigenous Set-Aside Opportunities
PSIB set-aside contracts are published on BuyandSell.gc.ca with specific designations indicating they are limited to Indigenous businesses. Look for:
- Solicitations referencing the "Procurement Strategy for Indigenous Business" or "PSIB" in the tender documents.
- Restrictions on eligibility to businesses registered in the Indigenous Business Directory.
- Evaluation criteria that include points for Indigenous content or participation.
TenderIQ flags Indigenous set-aside opportunities in its search results, making it easier to identify relevant tenders without manually reviewing every posting on BuyandSell.gc.ca.
Provincial Indigenous Procurement
Several provinces have their own Indigenous procurement policies:
- Ontario: The Ontario Indigenous Opportunities Directive prioritizes Indigenous businesses for provincial procurement related to natural resources and infrastructure.
- British Columbia: BC's procurement framework includes provisions for Indigenous participation.
- Saskatchewan: The Saskatchewan First Nations and Metis Procurement Initiative.
- Manitoba: The Manitoba Government Indigenous Procurement Initiative.
Municipal governments are also increasingly adopting Indigenous procurement policies, particularly for construction and infrastructure projects.
Building Capacity
The Government of Canada and various organizations offer programs to help Indigenous businesses build their government contracting capabilities:
- Procurement support programs through Indigenous Services Canada.
- Training and mentorship through organizations like CCAB and regional Aboriginal business development corporations.
- Financial support through NACCA member institutions and Indigenous-focused lending programs.
- Government procurement fairs specifically for Indigenous businesses, where you can meet buyers and learn about upcoming opportunities.
Key Takeaways
- The PSIB (Procurement Strategy for Indigenous Business) creates mandatory and voluntary set-asides for Indigenous businesses in federal procurement.
- The federal government has mandated that at least 5% of total contract value go to Indigenous businesses, creating substantial and growing opportunities.
- Indigenous businesses must register in the Indigenous Business Directory and on BuyandSell.gc.ca to access set-aside contracts.
- Joint ventures and teaming arrangements allow Indigenous businesses to pursue larger contracts while maintaining qualifying status.
- Provincial governments increasingly have their own Indigenous procurement programs, expanding opportunities beyond the federal level.