Indigenous Business Set-Aside (IBSA)

An Indigenous Business Set-Aside (IBSA) is a procurement arrangement in which bidding is restricted to qualified Indigenous businesses. In current Government of Canada terminology, the arrangement is described as the Set-Aside Program for Indigenous Business, which operates under the Procurement Strategy for Indigenous Business (PSIB).

The Government of Canada states that requirements designated as set aside under the PSIB are restricted to qualified Indigenous businesses. The term belongs to Canadian public procurement. You will see it in federal solicitations, standard clauses and departmental guidance, and the federal framework is set out on the CanadaBuys page on the Procurement Strategy for Indigenous Business.

Mandatory and conditional set-asides under the PSIB

Federal requirements designated under the PSIB take one of two forms. A mandatory set-aside restricts the competition to qualified Indigenous businesses from the start. A conditional set-aside restricts the competition only if enough qualifying Indigenous bids come in.

In a conditional set-aside, the buyer evaluates only Indigenous bidders when at least two compliant Indigenous bids are received. One CanadaBuys solicitation states that when two or more compliant Indigenous-business bids are received, the competition is limited to those businesses and non-Indigenous bids are not considered. See the television services solicitation for an example of this wording. Indigenous Services Canada has also issued a request for proposals stating that the procurement would be primarily set aside under the PSIB if two or more qualifying bids from Indigenous businesses were received.

Who qualifies and when the program applies

To be considered for a federal contract limited under the PSIB, a business generally must be listed in the Government of Canada's Indigenous Business Directory or on an applicable modern-treaty business list or directory. Indigenous Services Canada sets out this eligibility channel.

The same source explains when buyers must consider the program. The Set-Aside Program is considered for procurements destined for an area where Indigenous people make up at least 51% of the population, or where Indigenous people will be the recipients of the good, service or construction. Modern-treaty considerations apply.

Where IBSA language appears in federal solicitations

Several federal organizations use the mechanism. A defence-related CanadaBuys solicitation states that the procurement is set aside under the PSIB and directs bidders to the Indigenous-business requirements in Annex 9.4 of the Supply Manual. The request for proposals contains that wording. A Parks Canada solicitation amendment describes the conditional process. Defence Construction Canada also identifies the Set-Aside Program for Indigenous Business as relevant to its procurement activities.

Older federal material may use the terms Aboriginal business or Set-aside Program for Aboriginal Business. The Standard Acquisition Clauses and Conditions Manual contains examples of this earlier terminology. It describes the same type of Indigenous-business restriction.

Certification, records and Indigenous content

Bidders on a set-aside requirement must certify that they qualify as an Indigenous business under the PSIB and will comply with its requirements. The federal standard clauses require the contractor to warrant that the certification is accurate and complete. The contractor must keep records supporting the certification and provide information or evidence to Canada when requested.

Indigenous Services Canada states that at least 33% of the total value of work under a PSIB contract must be performed by the awarded Indigenous business or by qualifying Indigenous businesses that meet the ownership-and-control criterion. This is set out in its PSIB guidance.

What IBSA means for a supplier bidding on Canadian public contracts

• Check whether the solicitation is a mandatory or conditional set-aside before you invest in a bid.
• Confirm that your business meets the PSIB definition of an Indigenous business.
• Make sure you are listed in the Indigenous Business Directory, or on an applicable modern-treaty list or directory.
• Complete the Indigenous-business certification the solicitation requires.
• Keep records of ownership, control, certification and compliance for the period the contract specifies.
• Plan delivery so the Indigenous-content requirement is met.

Non-Indigenous suppliers should read the set-aside wording closely. Under a conditional set-aside, a non-Indigenous bid is not considered once the required number of compliant Indigenous bids is received.