02/19/2026
(40) The Future of “Set-Aside” Policies: Expanding, Reforming, or Replacing Quotas in Indigenous Procurement
Canada’s procurement set-aside model, anchored by the 5% Indigenous participation target, is once again at a crossroads. National conversations now revolve around whether quotas should be expanded, reformed, or replaced with new frameworks capable of delivering real reconciliation and measurable results. For sector authorities, the next decade will be defined by how well they interpret these changes and advise on their implementation.
1. Understanding the Current Set-Aside System
- Canada’s Procurement Strategy for Indigenous Business (PSIB) mandates that eligible contracts can be set aside so only Indigenous businesses (51%+ owned and controlled) may submit bids.
- Conditional set-asides allow for procurement to be open to all, but if two or more Indigenous businesses bid, it triggers a PSIB-exclusive assessment.
- Departments must consider set asides in all applicable contracts where Indigenous capacity exists or where the community is the end user.
- Trade agreements both enable and restrict some forms of set-aside, influencing the range of possible reforms in federal policy.
Authority Insight:
Current policy is impactful, but faces scrutiny for complexity, coverage gaps (in small, non-federal, or complex procurements), and the need for stronger enforcement and impact tracking.
2. Emerging Trends: Expansion and Innovation
- Federal discussions include expanding set-asides beyond PSIB for Indigenous businesses to include women-owned, youth-led, and minority SMEs.
- Modern treaties and regional agreements are piloting new incentive-based models alongside or beyond quotas, such as evaluation points for Indigenous participation, local economic multipliers, or community benefit agreements.
- “Micro-contract” exclusive set-asides, written in plain language for Indigenous SMEs, are under consideration for low-value, high-frequency public needs.
Best Practice:
Design iterative pilot programs with third-party evaluation, sector benchmarking, and public reporting to identify the most effective hybrid models for inclusion and value.
Click on the Link to Read More of Blog #40: https://psib.naciaforge.com/future-of-set-aside-policies/