The investigators will be deployed across Canada to find those who have been accused by former residential school students of abusing them, according to officials.
Those identified as alleged abusers and who are then found will be invited to participate in court hearings where they can defend themselves and promote reconciliation.
The search for alleged abusers is part of the federal government's Indian Residential Schools Settlement Agreement, which has an Independent Assessment Process (IAP) that provides compensation to former students who claim serious sexual, physical or any form of abuse that caused psychological damage.
"Canada is obligated to make an effort to locate and contact persons named as alleged perpetrators in claims filed in the Independent Assessment Process," a spokesperson for the Aboriginal Affairs Department told CBC News in an email Friday.
"In order to fulfil this obligation, Canada initiated a request for proposals for private investigators to assist in locating these individuals."
'A waste of money,' says survivor
However, the federal government notes that "it is the choice of the alleged perpetrator to participate or not in the IAP process."
That has some former students, like Ray Mason of Manitoba, wondering what the point is of hiring the private investigators if the alleged abusers can't be brought to justice.
"I think the whole exercise is useless. It's a waste of money," he said.
"If you go to court and you're found guilty, you go to jail. And that's what should happen to them."
But Niigaan Sinclair, an indigenous studies professor at the University of Manitoba, said inviting the alleged perpetrators into the process is important.
"Everyone has their opportunity to defend themselves, to speak to charges that have been levied against them," he said.
"But at the same time, it's also important to gain a broader knowledge of the full story."
Mason said he wants to see his former school principal held to account for what he said were years of sexual and physical abuse.
"He pulled my pants down in front of everybody and just whipped me with a strap until I passed out and I bled on the back end," Mason recalled.
Mason said he's wanted that principal brought to justice, even decades after his residential school experience.
"I was going to attack him physically and I heard he was in Winnipeg one time," he said, recalling an incident from his distant past.
"I went looking for him. Apparently I was pretty close, but I never did get to catch up to him."