Indigenous Procurement & PSIB

The Government of Canada has committed to awarding a minimum of 5% of the total value of federal contracts to Indigenous businesses. This commitment is implemented through the Procurement Strategy for Indigenous Business (PSIB) — formerly the Procurement Strategy for Aboriginal Business (PSAB) — administered in partnership with Indigenous Services Canada. For Indigenous entrepreneurs, the target represents a substantial and growing share of purchasing by one of the largest buyers in the country. For non-Indigenous firms, it changes how teams are built and how bids are evaluated across a meaningful slice of federal work. Either way, understanding how PSIB works is now part of the basic literacy of selling to the Government of Canada.

This guide explains what PSIB is and how the 5% minimum target operates, who qualifies as an Indigenous business, how to register in the Indigenous Business Directory, how mandatory and voluntary set-asides work, and how joint ventures and partnerships between Indigenous and non-Indigenous firms fit in. Like the Buy Canadian policy, PSIB is a policy-driven procurement preference: government is deliberately using its purchasing power to advance economic goals — in this case, Indigenous economic reconciliation — and the suppliers who understand the policy landscape are the ones positioned to benefit from it.

What PSIB Is and How the 5% Target Works

The Procurement Strategy for Indigenous Business, or PSIB, is the federal government's flagship program for increasing Indigenous participation in government contracting. It evolved from the earlier Procurement Strategy for Aboriginal Business (PSAB), which had been in place since 1996, and it is administered in partnership with Indigenous Services Canada (ISC). Under the current policy, federal departments and agencies are required to work toward awarding at least 5% of the total value of their contracts to Indigenous businesses. Departments plan for and report on their progress against this target, which has made Indigenous procurement a measured, accountable priority across the federal government rather than an aspirational statement.

Two features of the target matter for suppliers. First, it is a minimum, not a ceiling — 5% is the floor departments must meet, and many buyers actively look for opportunities to exceed it. Second, it is measured against the total value of contracts, not the number of contracts, which means large procurements directed to Indigenous businesses count heavily toward departmental results. The practical effect is a steady, structural flow of federal demand toward Indigenous suppliers: buyers across departments are looking for qualified Indigenous businesses to contract with, and the firms that are registered and visible are the ones that benefit.

Who Qualifies as an Indigenous Business

The core eligibility rule is well established: to qualify as an Indigenous business under PSIB, a business must be at least 51% Indigenous owned and controlled. Both parts of that test matter. Ownership refers to the equity of the business — who actually holds the shares or partnership interests — while control refers to who makes the decisions that direct the business, both day to day and over the long term. A business where Indigenous shareholders hold a majority of the equity but decision-making authority effectively rests elsewhere may not qualify, because the policy is designed to ensure that the economic benefits of federal contracting genuinely flow to Indigenous people and communities.

Eligible businesses take many forms: sole proprietorships, corporations, partnerships, cooperatives, and community-owned economic development corporations all participate in federal Indigenous procurement. Eligibility for set-aside purposes is verified rather than simply self-declared — businesses register in the Indigenous Business Directory, may be asked to document their ownership and control structure, and audits do occur. The detailed criteria and verification procedures are maintained by Indigenous Services Canada, so if your structure is complicated — holding companies, trusts, community ownership, or joint ventures — review the current requirements on the ISC website or contact them directly before assuming you qualify.

Registering in the Indigenous Business Directory

The Indigenous Business Directory (IBD) is the federal registry of verified Indigenous businesses, maintained by Indigenous Services Canada. Registration is the practical gateway to PSIB: to bid on contracts that are set aside for Indigenous businesses, you generally need to be registered in the directory, and registration is what tells federal buyers your business has been through the eligibility process. Applying involves providing information about your business and evidence of Indigenous ownership and control — proof of Indigenous identity for the owners, corporate documents showing the ownership structure, and similar records. Registration is free, and ISC provides guidance for applicants throughout the process.

Registration matters well beyond set-aside eligibility. The directory is searchable, and federal procurement officers use it to find Indigenous suppliers when planning purchases — being listed makes you discoverable to buyers who are actively trying to meet their 5% targets. Prime contractors also search the directory when they need Indigenous subcontractors or joint-venture partners to strengthen their bids. In other words, an IBD listing works as passive business development: it puts your business in front of the exact audience that has a policy mandate to buy from you. If you qualify, registering should sit near the top of your government-contracting to-do list.

Set-Asides: Mandatory and Voluntary

Set-asides are the sharpest tool in the PSIB toolkit. When a procurement is set aside under the strategy, the competition is restricted to businesses registered in the Indigenous Business Directory — non-Indigenous firms cannot bid as primes. Set-asides come in two forms. Mandatory set-asides apply in defined circumstances, most notably where a procurement serves a population or area that is primarily Indigenous; in those cases the buyer is required to restrict the competition to Indigenous businesses where capacity exists. Voluntary set-asides are applied at the discretion of the contracting department, and they have become far more common as departments work to meet and exceed the 5% target.

For registered Indigenous businesses, set-asides meaningfully change the competitive dynamics: the field of eligible bidders is smaller, which improves win rates for firms with strong capabilities and well-prepared bids. That said, a set-aside is not a guarantee — you still need to meet the mandatory requirements of the solicitation, score well against the evaluation criteria, and price competitively, so treat set-aside competitions with the same discipline as open ones. For non-Indigenous firms, set-aside notices are still worth reading: they signal where subcontracting and partnership opportunities exist, since Indigenous primes frequently build teams to deliver larger contracts.

Joint Ventures and Partnerships

Joint ventures are a common and legitimate way for Indigenous and non-Indigenous firms to combine strengths — one partner brings community relationships, Indigenous ownership, and local knowledge, while the other brings technical capacity, certifications, or bonding capacity that a smaller firm may not yet have. An Indigenous-led joint venture can qualify for set-aside competitions under conditions set by the policy, which are designed to ensure that the Indigenous partner holds genuine ownership and control of the venture and that a meaningful share of the work and the benefit flows to the Indigenous business. The specific requirements for joint-venture eligibility, including how the Indigenous partner's role is assessed and verified, are defined by Indigenous Services Canada — review the current rules there before structuring a venture.

The best partnerships are built for the long term, not for a single bid. Strong Indigenous and non-Indigenous partnerships typically include a real transfer of skills and capacity — training, mentorship, and progressively larger roles for the Indigenous partner across successive contracts — along with transparent governance and a fair split of profit and risk. Partnerships assembled purely to access set-asides, where the Indigenous partner has little actual involvement in the work, are exactly what verification processes are designed to catch. Beyond the compliance risk, they squander the real opportunity: a genuine partnership builds a track record that both firms can draw on for years.

Opportunities for Non-Indigenous Businesses

Non-Indigenous firms have real, honourable roles to play in Indigenous procurement. Subcontracting to Indigenous primes on set-aside contracts is the most direct: as set-asides grow, Indigenous prime contractors increasingly need specialized subcontractors, suppliers, and service providers. Mentorship and capacity-building partnerships — helping an Indigenous firm develop certifications, management systems, or trade skills — build relationships that translate into teaming opportunities over time. Some federal solicitations outside the set-aside stream also include Indigenous participation requirements or rated criteria, where bidders earn evaluation credit for Indigenous subcontracting or employment in their delivery plans, making Indigenous partnerships a competitive asset even in open competitions.

One caution belongs at the centre of your planning: partnerships must be genuine. Misrepresentation of Indigenous ownership and shell arrangements designed to capture set-aside contracts have drawn intense public and governmental scrutiny in recent years, and the consequences — losing contracts, removal from the directory, reputational damage, and potential legal exposure — are serious. Verification and audit activity has increased accordingly. The ethical path is also the profitable one: firms known for authentic, respectful partnerships with Indigenous businesses and communities win repeat work, while firms that treat Indigenous participation as a checkbox eventually get found out.

Beyond the Federal Target: Provincial, Territorial, and Corporate Programs

The federal 5% target is the best-known Indigenous procurement commitment in Canada, but it is far from the only one. Several provinces and territories maintain their own Indigenous procurement policies and preferences, and in the North, modern treaty and land claim agreements include contracting provisions that give preference to businesses owned by beneficiaries — a significant factor for anyone bidding on work in Yukon, the Northwest Territories, or Nunavut. Many municipalities and public institutions have also adopted Indigenous procurement goals as part of their response to the Truth and Reconciliation Commission's call to action on business and reconciliation. The details vary by jurisdiction, so check the policies of the specific buyers you sell to.

The corporate sector has moved in the same direction: major resource, financial, and infrastructure companies have adopted Indigenous procurement targets and supplier-diversity programs of their own, and organizations such as Indigenous chambers of commerce and supplier-diversity councils certify Indigenous suppliers and connect them with corporate buyers. For an Indigenous business, this means the addressable market extends well past CanadaBuys — provincial portals, northern land-claim organizations, and corporate supply chains all represent demand. It mirrors the broader trend you can see in initiatives like the Buy Canadian policy: across Canadian procurement, governments and large buyers are increasingly using purchasing power to advance policy goals, and suppliers who position themselves early capture the advantage.

Finding Indigenous Set-Aside Opportunities

Federal set-aside opportunities are published on CanadaBuys like any other solicitation, and tender notices indicate when a procurement is limited to Indigenous businesses under PSIB. You can filter and search CanadaBuys to surface these notices, and reviewing them regularly gives you a feel for which departments buy what you sell and how often set-asides appear in your category. Provincial and territorial opportunities live on their respective portals, which multiplies the number of places you need to watch — a real burden for a small business development team with bids to write and work to deliver.

This is where monitoring tools earn their keep. A tender monitoring service like TenderScan watches multiple procurement portals continuously and matches new notices against your keywords, so a set-aside in your industry lands in your inbox instead of depending on someone remembering to run searches. Whichever approach you take, speed matters: seeing an opportunity early leaves more time to prepare a strong bid, arrange teaming, and ask clarification questions before the deadline. Combine directory registration, targeted monitoring, and disciplined bid preparation, and the 5% target stops being an abstract policy commitment and becomes a pipeline for your business.