Indigenous set-asides and the PSIB, explained

Set-asides come in three forms, and the difference matters when you decide whether to bid:

• Mandatory. A department must consider a set-aside when Indigenous people make up at least 51 percent of the population in the area a procurement will serve, or when Indigenous people or communities will be the primary recipients of the goods, services, or construction. There is no upper dollar limit, so a mandatory set-aside can apply to a contract of any size above a low minimum value. These set-asides are exempt from Canada's free trade agreement obligations, which is the legal basis for restricting bidding to Indigenous suppliers.
• Voluntary. A department may choose to reserve a procurement for Indigenous-only bidding outside the mandatory trigger, as long as it judges there is enough Indigenous capacity, which it checks against the Indigenous Business Directory, and can still meet its operational and best-value requirements.
• Conditional. A procurement can open to both Indigenous and non-Indigenous bidders and automatically convert to an Indigenous-only set-aside if two or more Indigenous businesses submit compliant bids.

How to spot one on a notice

A Notice of Proposed Procurement for a set-aside carries a mandatory statement: "This procurement has been set aside under the federal government's Procurement Strategy for Indigenous Business (PSIB). In order to be considered, a business must certify that it qualifies as an Indigenous business as defined under PSIB and that it will comply with all requirements of PSIB." Advance Contract Award Notices carry a similar statement. Behind the scenes, buyers select a specific PSIB agreement type when they post to CanadaBuys, which is what lets a set-aside be filtered out from everything else.

The Procurement Ombud's review, March 2026

On March 26, 2026, the federal Office of the Procurement Ombud released a Procurement Practice Review of how PSIB contracts are administered. It examined Indigenous Services Canada's guidance plus the practices of four departments, Employment and Social Development Canada, Correctional Service Canada, Shared Services Canada, and Public Services and Procurement Canada, across 27 PSIB set-aside contracts. Four findings stand out:

• The headline numbers overstate real benefit. The government reported awarding over $1.24 billion to Indigenous businesses in 2023-24, or 6.1 percent of eligible contracts, above the 5 percent target. The Ombud found the tabulation does not separate out the portion of contract value performed by non-Indigenous subcontractors, so a contract can count fully toward the target even when much of the work is done by non-Indigenous firms. The review states outright that the reported figure overstates the actual benefit to Indigenous businesses, and that one department would not have met its target for 2023-24 if non-Indigenous-performed value were excluded.
• The 33 percent content rule is essentially unenforced. Across the reviewed files where subcontracting had started, the Ombud found no evidence that the departments verified during contract administration that the required 33 percent of contract value was actually performed by an Indigenous business. Indigenous Services Canada told the Ombud it does not give departments guidance on monitoring the 33 percent criterion and has no guidance documents on it, and no standard contract clauses exist to enforce it.
• There is no centralized policy. The absence of a single Indigenous procurement policy has left fragmented, inconsistent guidance across departments and no clear owner accountable for oversight.
• Indigenous suppliers have less recourse. For set-aside disputes, Indigenous suppliers currently cannot use the Canadian International Trade Tribunal or the standard Procurement Ombud complaint process that other suppliers rely on. Their only route today is Federal Court litigation.

The response: three recommendations, all accepted

Indigenous Services Canada accepted all three of the Ombud's recommendations and published a timeline. This table is the current state of the reform for 2026 and beyond.

What the internal audit found

Separately, Indigenous Services Canada's own internal audit of the PSIB, with fieldwork from May 2024 to February 2025 covering activity from April 2022 to March 2024, found that 68 percent of a sample of verification files had missing or incomplete Indigenous-ownership documentation. It also found no standardized eligibility-verification procedure, no formal staff training, no fraud-detection mechanism, and that post-award compliance audits were rare, with none in 2022, two in 2023, and none in 2024. Management agreed with all four of the audit's recommendations. Notably, the audit stated it never found evidence of fraud in the files it sampled, which is a distinct finding from the missing-documentation problem it did identify.

The longer horizon

A parallel, longer-term track called the Transformative Indigenous Procurement Strategy is co-developing changes with Indigenous partners. Its "what we learned" report found the current system was widely perceived as complex, colonial, and exclusionary, with strong sentiment among participants that Indigenous communities, not the federal government, should define and certify who counts as an Indigenous business. A co-development table formed in April 2024 is working toward policy recommendations for Cabinet consideration. Nothing there is decided or scheduled yet, but it signals the direction: verification and, potentially, certification moving toward Indigenous-led bodies.

Getting listed on the directory, building bid capacity, and growing an Indigenous business all cost money before a contract pays out. Canadian funding programs can help. Explore Indigenous business grants across Canada and Indigenous grants in Ontario, or take our free two-minute quiz below to see which programs you may qualify for. You can also find grants for your business and browse the full funding catalog.