Procurement Strategy for Indigenous Business compliance audit information
Requirements for contracts awarded through the Procurement Strategy for Indigenous Business (PSIB) Set-aside Program.
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PSIB compliance audit
Indigenous Services Canada (ISC) is mandated to verify the eligibility of businesses receiving contracts under the Procurement Strategy for Indigenous Business (PSIB) Set-aside Program and maintaining the integrity of the Indigenous Business Directory (IBD). Compliance audits are one way that ISC ensures businesses registered in the IBD and delivering contracts awarded under the PSIB Set-aside Program meet the policy's criteria.
Every contract that has been limited to bidding under the PSIB Set-aside Program has specific requirements for businesses to follow throughout the contract delivery period. A full list of these requirements and examples of standard clauses applied to PSIB contracts, including bidder certifications, can be found in Annex 9.4: Requirements for the Set-aside Program for Indigenous Business in Public Services and Procurement Canada's Supply Manual.
ISC may conduct compliance audits to ensure that businesses awarded contracts through PSIB meet the program's requirements, including the business's eligibility to be listed in the Indigenous Business Directory. PSIB compliance audits verify that businesses, joint ventures or partnerships registered in the IBD meet the ownership, control and PSIB content criteria.
ISC communicates audit progress and results to the requisitioning department. Commercially sensitive information pertaining to audits is confidential.
Contract takes precedence
No 2 federal contracts need be the same. Whenever a contract has been awarded under PSIB, the specific terms and conditions set out in that contract will take precedence over the information on this web page.
Indigenous ownership and control criterion
The Indigenous ownership criterion requires that an Indigenous person or Indigenous firm has at least 51% ownership and control of the business.
Indigenous content criterion
Indigenous content criterion dictates that at least 33% of the total value of work performed under a PSIB contract is performed by the Indigenous business awarded the contract or by a combination of that business and other businesses that also meet the 51% Indigenous ownership and control criterion.
Types of PSIB compliance audits
For PSIB compliance, ISC conducts 3 types of audits.
1. Pre-award audit
A pre-award audit is mandatory for PSIB contracts at, or greater than, $2 million. However, pre-award audits may be conducted for requirements below the value of $2 million when a need is identified by the requisitioning department, the contracting authority or ISC (ISC is to be notified by the requisitioning authority for all PSIB requirements, regardless of the value of the contract).
A pre-award audit is performed to verify that the business being considered for award of a contract under PSIB meets the 51% Indigenous ownership and control criterion.
When a pre-award audit is conducted, the process can only begin after all bids have been received and evaluated by the contracting authority. The contracting authority will then notify ISC of the 2 best-assessed bidders without disclosing the bid price. The pre-award audit of the 2 best-assessed bidders will be performed before the requirement is awarded.
Mandatory pre-award audits are prioritized as the award of the contract is dependent on the audit results. If the business fails to provide the required documentation to ISC, their bid may be considered non-compliant.
Once the contract is awarded, the contracting authority must provide ISC with the following information:
- name of the business selected
- dollar value of the contract
- description of goods, services or construction
- solicitation number
- closing date
- buyer name and phone or fax numbers
The information listed above and audit requests can be emailed to REA-IBD@sac-isc.gc.ca.
2. Post-award audit
A post-award audit is conducted to verify if the Indigenous business continues to meet the 51% Indigenous ownership and control criterion, and the Indigenous content criterion. Post-award audits are one of several layers of compliance monitoring to ensure businesses adhere to PSIB requirements. Post-award audits are requested by the department responsible for a contract under PSIB when that department suspects that the terms and conditions of the contract related to the participation of Indigenous suppliers are not being met.
3. Discretionary audit
An audit for compliance can be performed on a discretionary basis. It is not related to any pre- or post-awarded requirement. The purpose of a discretionary audit would be to ensure that a business continues to meet the 51% Indigenous ownership and control criterion, and/or when the Indigenous content criterion in cases where an ongoing or past contract that was awarded under PSIB is in question.
51% Indigenous ownership criteria
When a joint venture between an Indigenous business and a non-Indigenous business or a joint venture between 2 Indigenous businesses is to be audited, the Indigenous partners must demonstrate that they meet the 51% Indigenous ownership and control criterion before the joint venture or partnership can be audited.
Audit agreement
As part of the PSIB certification process, the business will declare that it will meet the PSIB criteria throughout the duration of the contract and agrees to provide all documents to verify its compliance when requested by the Government of Canada. Therefore, any registered Indigenous business, joint venture or partnership that has been notified of an audit is obligated to provide the requested documentation to the Government of Canada.
In the case where the Indigenous business, joint venture or partnership does not respond to the auditor's request for information or documents, ISC has the right to remove the Indigenous business, joint venture or partnership from the IBD on behalf of the Government of Canada.
Once the audit is completed
When the audit is completed the results are communicated to the contracting authority where applicable and to the audited business. If the business is deemed compliant with the PSIB, it will continue to be eligible to bid on contracts limited to bidding under the PSIB Set-aside Program.
Consequences of not complying with program requirements
If the business is deemed non-compliant with PSIB, the Government of Canada could apply the following civil consequences:
- business profile removed from the IBD
- forfeiture of the bid deposit
- retention of the holdback
- disqualification from participating in future set-aside requirements
- termination of the contract
In the event the contract is terminated, Canada may engage another contractor to complete the performance of the contract and any additional costs incurred by Canada may be borne by the business.
If ISC or the requisitioning department suspects that the business has committed fraud, ISC and the requisitioning department will report it to law enforcement.