What PSIB is, and where it sits in federal procurement
PSIB sits inside the broader federal procurement framework as a permitted carve-out from open competition. Trade agreements like the Canadian Free Trade Agreement, CETA, and the CPTPP allow set-asides for Indigenous businesses as a recognized exception to non-discrimination rules. That permission is what makes set-aside contracts legally possible. PSIB is the federal program that uses the permission.
You will see PSIB show up two ways in a Canadian federal tender:
- As a set-aside. The tender notice explicitly limits competition to Indigenous businesses registered on the IBD. Non-Indigenous bidders cannot submit.
- As an unrestricted competition with Indigenous considerations. Open to all bidders, but with rated criteria that award points for Indigenous content, or with subcontracting plans that count Indigenous spend toward the buying department's 5 percent target.
For the broader picture of how federal procurement works (CanadaBuys, trade agreements, evaluation methods, recourse), the federal procurement process pillar is the parent piece. PSIB is one specific tool inside that system.
The federal 5 percent mandatory minimum target
The headline policy that gave PSIB renewed weight is the 5 percent mandatory minimum Indigenous procurement target, requiring federal departments and agencies to ensure that at least 5 percent of the value of their contracts is awarded to Indigenous businesses. The target was announced in 2021 and phased in:
| Phase | Fiscal year | Organizations covered |
|---|---|---|
| Phase 1 | 2022 to 2023 | 32 organizations |
| Phase 2 | 2023 to 2024 | 20 additional organizations |
| Phase 3 | 2024 to 2025 | 44 additional organizations (full implementation) |
As of fiscal year 2024-2025, all in-scope federal organizations are required to meet or exceed the 5 percent target. In 2023-2024, the federal government as a whole awarded approximately $1.24 billion in contracts to Indigenous businesses, representing about 6.1 percent of eligible contract value. The federal aggregate cleared the bar. Performance by individual department, however, varied substantially, with some falling well short of the 5 percent.
For a Canadian contractor, the practical effect of the 5 percent target is straightforward: federal buyers have real incentive to award contracts to Indigenous-owned firms and to count Indigenous subcontracting toward their targets. Indigenous-owned contractors have more opportunities than they did before 2022. Non-Indigenous primes have more reason to find genuine Indigenous partners.
Qualification: the 51 percent and 33 percent rules
Two thresholds determine PSIB eligibility, one for the business and one for the specific contract.
| Rule | What it means |
|---|---|
| 51% ownership and control | The business must be at least 51 percent owned and controlled by one or more Indigenous persons (First Nations, Inuit, or Métis ordinarily resident in Canada). "Ownership" is beneficial ownership, the people who ultimately control and benefit. |
| 33% Indigenous content | On any specific PSIB contract, at least 33 percent of the contract value must be performed by the Indigenous business awarded the contract or by a combination of that business and other qualifying Indigenous businesses (typically Indigenous subcontractors). |
| Documented proof | Self-identification is not accepted. Proof of Indigenous status (Indian registration, recognized Métis or Inuit citizenship) and proof of ownership and control are required at IBD registration and may be re-verified. |
| Workforce composition (where applicable) | For businesses with 6 or more permanent full-time employees, at least 33 percent of the workforce must be Indigenous to qualify in some PSIB contexts. The transformed framework expected in 2027 may revise this; check current ISC guidance. |
The 33 percent content rule is the one that catches teams off guard. The IBD-registered prime cannot win a PSIB set-aside, subcontract 100 percent of the work to non-Indigenous firms, and clip a fee. Real Indigenous performance is required. Audits enforce this.
The Indigenous Business Directory: how to register
The Indigenous Business Directory (IBD) is the public registry of verified Indigenous-owned businesses, maintained by Indigenous Services Canada. Federal buyers and many private-sector primes use the IBD as the authoritative source for identifying Indigenous suppliers. Registration is free.
The application requires:
- Proof of Indigenous status for each Indigenous owner: Indian registration in Canada, citizenship with a recognized Métis organization or settlement, Inuit beneficiary status, or other ISC-recognized evidence.
- Corporate ownership documentation showing at least 51 percent Indigenous beneficial ownership: share registers, articles of incorporation, shareholder agreements, or partnership agreements.
- Governance documentation demonstrating Indigenous control of the business, not just paper ownership.
- Business operating information: products and services offered, NAICS codes (see our NAICS for Canadian contractors guide), geographic coverage, contact details.
ISC reviews each application. Expect to engage with reviewers if any documentation is unclear. Once approved, the business profile is public and searchable on the IBD at services.sac-isc.gc.ca/REA-IBD. Federal buyers searching for Indigenous suppliers for a specific NAICS or commodity code find your business through this search.
Self-identification does not work. The current ISC verification regime requires documented proof. Applications without proper documentation are returned or rejected. Misrepresentation has consequences including removal from the IBD and ineligibility for future federal contracts.
Set-aside types: mandatory, voluntary, unrestricted
Three categories cover how Indigenous procurement shows up on federal tenders.
Mandatory set-asides apply to federal contracts above a defined dollar threshold that are intended to serve primarily Indigenous populations or are otherwise designated. Competition is restricted to IBD-registered Indigenous businesses. The tender notice and Part 4 of the RFP will say so explicitly.
Voluntary set-asides are decisions by individual federal organizations to limit a specific competition to Indigenous businesses where capacity exists, even when the contract is not subject to a mandatory set-aside. These are the most common path the 5 percent target is being met through. The tender notice will identify the set-aside clearly.
Unrestricted competitions with Indigenous considerations are open to all qualified bidders. They may include rated criteria that award points for Indigenous content, mandatory subcontracting plans with Indigenous targets, or scoring preferences for Indigenous-owned bidders. Read Part 4 carefully to see whether Indigenous content is mandatory, rated, or absent.
The same NAICS code can produce contracts in all three categories depending on the buyer's choice. Indigenous-owned bidders win set-asides; non-Indigenous bidders compete in the unrestricted ones with Indigenous content as a scored element where applicable. For the language patterns that distinguish mandatory from rated requirements in any of these, see mandatory vs desirable criteria in Canadian federal RFPs.
Is this tender PSIB-restricted or just preference?
Paste any CanadaBuys URL. BidFit pulls the set-aside status, mandatory criteria, and bonding in 30 seconds so you know what's required before you commit.
Joint ventures and Indigenous-prime relationships
Joint ventures between Indigenous and non-Indigenous businesses are common in federal procurement. They are also where most of the integrity issues have appeared, so the rules are strict.
For a joint venture to qualify as Indigenous under PSIB:
- The JV as a whole must be at least 51 percent owned and controlled by Indigenous business(es) or persons.
- At least 33 percent of the contract value must be performed by the Indigenous JV partner(s).
- The Indigenous partner must have genuine control, not just signature authority on documents. Decision-making, financial control, and operational involvement are evaluated.
- The arrangement should have a clear business purpose beyond eligibility. Shell or "pass-through" arrangements set up to claim Indigenous status without genuine Indigenous participation do not qualify and risk removal from the IBD if discovered.
Subcontracting is the other path. A non-Indigenous prime can subcontract significant work to qualifying Indigenous businesses on any federal contract, restricted or not. That subcontracting counts toward the buying department's 5 percent target. The prime keeps the prime contract; the Indigenous sub earns the work and the credit. Many departments now explicitly ask for Indigenous subcontracting plans in unrestricted RFPs.
Integrity and the program transformation underway
This part of the program has been under unusual public scrutiny. The ArriveCAN controversy raised concerns about contractors claiming Indigenous status without proper qualification, and triggered broader review of how PSIB verifies eligibility. The Office of the Procurement Ombud completed a full review of Indigenous procurement in March 2026, and the federal government announced a transformation of the framework.
The current rules (51 percent ownership, 33 percent content, IBD registration, documented proof) remain in force. The transformed policy and strategy are expected to be finalized in winter 2026 and fully implemented by April 1, 2027. Expected areas of change include verification procedures, audit and enforcement, joint-venture rules, and how Indigenous status is documented and challenged. Specific final rules will be published by Treasury Board and ISC when the transition completes.
For contractors, the practical takeaway is simple. Build the relationship and the registration on substance, not paperwork. The new framework is being designed to make false claims harder and genuine participation cleaner. Either is good for honest contractors.
If you are an Indigenous-owned contractor
Four steps to use PSIB well.
1. Get on the IBD now. Registration takes time and is the prerequisite for any PSIB set-aside bid. Start before the right tender appears, not after. Self-identification is not enough; have your documentation ready.
2. Set up CanadaBuys alerts that include set-aside flags. Most federal opportunities, including set-asides, post on CanadaBuys. Configure saved searches by NAICS or commodity and by set-aside status so the relevant opportunities reach your inbox.
3. Treat PSIB tenders as normal federal procurements, not easy wins. A set-aside still requires a compliant bid that meets every mandatory criterion. The competition is just narrower. Bonding, certifications, past-project evidence, and a compliant proposal all still apply. The 5-question bid/no-bid framework is the same fit-check you would run on any tender.
4. Be ready for audit. ISC and PSPC audit ownership, control, and the 33 percent content rule. Keep clean records of who owns what, who controls decisions, and which work was actually performed by Indigenous staff or partners. Audit-readiness is just bookkeeping done in advance.
If you are a non-Indigenous prime seeking partners
Three points for primes who want to participate honestly.
1. Build relationships before tenders. A genuine partnership with an Indigenous business is a multi-year relationship. Cold-calling an IBD-listed firm two weeks before a tender close to ask for a JV signature does not work and increasingly does not qualify even on paper. Identify Indigenous firms in your trade and geography, talk to them, do small work together first.
2. Use the IBD as a discovery tool. The directory at services.sac-isc.gc.ca/REA-IBD is searchable by NAICS, location, and services. Use it the way you would any procurement directory: to find qualified partners in your category, not as a list of names to attach to bids.
3. Subcontracting is real. If a federal opportunity is unrestricted but the buying department is chasing its 5 percent target, a credible Indigenous subcontracting plan in your proposal is competitive. Real plans, real subcontract values, real Indigenous-performed work. Token line-items get noticed and increasingly do not get credit.
PSIB done right is procurement infrastructure, not a paperwork dodge. The contractors and primes who treat it that way are the ones whose participation survives the program transformation coming in 2027.