Procurement Strategy for Aboriginal Businesses (PSAB): Eligibility Guide

Many Indigenous-owned businesses want to sell to the federal government but are unsure where to start. The Procurement Strategy for Aboriginal Businesses (PSAB) is one of the main ways Ottawa sets aside contracts specifically for Indigenous suppliers. PSAB is not a grant, but it can lead to steady, long-term revenue through federal procurement.

What Is the Procurement Strategy for Aboriginal Businesses (PSAB)?

PSAB is a federal procurement program run by the Government of Canada. It requires certain federal contracts to be set aside for Indigenous-owned businesses or to include Indigenous participation requirements.

Instead of providing cash funding, PSAB gives eligible businesses access to government contracts across departments such as Public Services and Procurement Canada, Indigenous Services Canada, and National Defence.

Key facts to know:

PSAB applies to federal procurement only
It covers contracts for goods, services, and construction
Some contracts are mandatory set-asides, while others are voluntary

PSAB Eligibility Requirements

To qualify for PSAB opportunities, your business must meet all eligibility requirements and continue to meet them for the full contract period.

1. Indigenous Ownership and Control

Your business must be:

At least 51% owned and controlled by Indigenous peoples
Indigenous owners must be First Nations, Inuit, or Métis

For partnerships or joint ventures:

Indigenous partners must own and control at least 51% of the business
Profits and decision-making authority must reflect that ownership

2. Registration in the Indigenous Business Directory (IBD)

Your business must be registered in the Indigenous Business Directory (IBD) to be considered PSAB-eligible.

You must:

Complete the online registration
Provide ownership and control details
Keep your profile up to date

Federal buyers rely on the IBD to confirm eligibility before awarding contracts.

3. Ongoing Compliance and Audits

By participating in PSAB, you agree to:

Maintain eligibility throughout the entire contract
Provide documentation if requested
Submit to eligibility audits

If your business is found ineligible at any point, civil consequences may apply, including contract termination.

How PSAB Contracts Are Awarded

PSAB works in a few different ways:

Mandatory set-asides: Certain federal contracts must be awarded only to PSAB-eligible businesses
Voluntary set-asides: Departments may choose to limit a procurement to Indigenous businesses
Indigenous participation requirements: Large contracts may require Indigenous subcontracting or joint ventures

Opportunities are typically posted through federal procurement systems, and eligibility is verified using the IBD.

Tools like GrantHub’s eligibility matcher can help you filter programs by province and business type in seconds, including procurement-related programs that complement PSAB.

Common Mistakes to Avoid

Assuming PSAB is a grant
PSAB does not provide funding. It provides access to procurement opportunities only.
Letting IBD information go out of date
Outdated ownership or contact details can disqualify you during contract review.
Changing ownership during a contract
Dropping below 51% Indigenous ownership can lead to loss of eligibility and penalties.
Ignoring audit requests
Failure to provide documents when asked can result in contract cancellation.

Frequently Asked Questions

Q: Is the Procurement Strategy for Aboriginal Businesses a grant program?
No. PSAB does not provide direct funding. It is a federal procurement policy that creates contracting opportunities for Indigenous-owned businesses.

Q: Do I need to be registered in the Indigenous Business Directory to qualify?
Yes. Registration in the Indigenous Business Directory is required to participate in PSAB set-aside contracts.

Q: Can my business be audited under PSAB?
Yes. Businesses must be willing to provide proof of eligibility and may be audited at any time during the contract.

Q: What happens if my business no longer meets PSAB eligibility?
If you no longer meet the criteria, you may face civil consequences, including contract termination, as outlined in your certification and contract terms.

Q: Does PSAB apply to subcontractors?
In some cases, yes. Large federal contracts may include Indigenous participation requirements that apply to subcontractors.

How to Qualify for Government Procurement Opportunities in Canada
A Founder’s Guide to Indigenous-Led Funding Programs in Canada
How to Combine Indigenous Business Financing with Bank Loans

Next Steps

PSAB can be a powerful growth tool if your business is eligible and prepared for federal procurement. GrantHub tracks hundreds of active government programs across Canada, including Indigenous-focused procurement and funding options. Checking which programs match your business profile helps you focus your time where you’re most likely to qualify.

Procurement Strategy for Aboriginal Businesses (PSAB): Eligibility Guide