Buy Ontario Act Takes Effect: What Contractors Need to Know
The Government of Canada, 2025
Despite the Canadian government championing the importance of competitiveness in public procurement, on December 11, 2025, the Buy Ontario Act (Public Sector Procurement) came into force. While laudable, the introduction of this legislation, will almost certainly inhibit healthy competition in public procurement. Specifically, two directives have been issued that directly impact businesses bidding on and working on public sector projects.
The Buy Ontario Act permits the Management Board of Cabinet to issue directives requiring public sector entities to comply with specified procurement policies, procedures, or standards. Two such directives have already been issued: the Buy Ontario Procurement Directive and the Municipal Buy Ontario Procurement Directive. Together, they introduce new requirements affecting how goods and services are sourced for public construction projects.
The stated intent of the Act is not to rewrite Ontario’s existing procurement laws. However, it clearly promotes domestic sourcing and adds an additional layer of complexity to public sector procurement.
The Buy Ontario Procurement Directive
As of April 13, 2026, the Buy Ontario Procurement Directive is in effect. It requires government and broader public sector entities, including hospitals, school boards, universities, and other publicly funded organizations, to prioritize goods and services sourced from Ontario and Canada.
The Directive also introduces new reporting obligations. For capital infrastructure projects, procurement documents must identify the origin of major goods and services. Government entities must also provide procurement-related data to Supply Ontario (an agency operating under the Ministry of Public and Business Service Delivery and Procurement), the Treasury Board Secretariat, or both.
In addition, the Buy Ontario Procurement Directive incorporates a Procurement Restriction Policy that limits access to public sector procurement opportunities in Ontario for “U.S. businesses”. A “U.S. business” is defined as a supplier, manufacturer or distributor headquartered in the United States with fewer than 250 full-time employees in Canada. This restriction indirectly limits the competitiveness of pricing, and reduces the availability of materials.
The Municipal Buy Ontario Procurement Directive
The Municipal Buy Ontario Procurement Directive, also in effect as of April 13, 2026, imposes similar requirements on municipalities, local boards, and municipal service providers.
Like the provincial directive, it prioritizes the Ontario and Canadian sourcing and requires municipal entities to report procurement data to government bodies, including Supply Ontario, the Ministry of Municipal Affairs and Housing, and the Treasury Board Secretariat.
The Municipal Directive also includes specific procurement requirements. For example, municipal entities must prioritize “Made-in-Ontario Fleet Vehicles” and, where such vehicles cannot be procured, document the rationale and seek appropriate approval.
Why This Matters
The Act, through the directives, significantly constrains access to the public sector market for contractors, subcontractors, and suppliers. While the objective of promoting local procurement to grow the local economy is with good intent, the practical reality is that these restrictions negatively impact the free market economy.
A key question for businesses is how far these restrictions apply. For example, can a government entity retain a general contractor based in Ontario if that contractor sources materials primarily from Europe? Similarly, would an HVAC system manufactured in the United States but fabricated using locally sourced steel qualify as a “local good”? Either scenario – or similar circumstances – are not yet clearly addressed and invite uncertainty; uncertainty is a recipe for issues for otherwise well-meaning bidders.
Importantly, under section 6(1) of the Act, the Management Board of Cabinet may withhold funding to government entities that fail to comply with either of the directives. This creates a strong incentive for compliance at the procurement level and increases the likelihood that requirements will be enforced strictly through project documentation. As government entities rarely procure goods and services directly, these obligations are expected to flow down through contract documents, placing the practical burden of compliance on contractors, subcontractors, and suppliers.
Ontario’s approach also differs from other provinces. Saskatchewan implemented strict countermeasures on local procurement in response to the U.S. tariffs imposed in March of 2025, but quietly removed all of these measures a few months later. Ontario remains the only province implementing procurement restrictions of this kind by way of statute.
It remains to be seen whether Ontario’s construction industry can meet increased demand for locally sourced goods and services. Contractors, subcontractors and suppliers can expect to experience supply constraints, delays, and pricing impacts as the market adjusts.
What Can You Do?
Contractors, subcontractors, and suppliers must review government-issued tender documents carefully. The Act and its directives leave the method, thresholds, and weighted criteria to the public sector entities, resulting in requirements for locally sourced goods and services varying from project to project.
Bidders should also expect government entities to rely on sworn attestations. The directives expressly permit such reliance, which means a bidder’s representations carry significant weight. Overstating Ontario or Canadian content to improve an evaluation score or to meet a commitment-based threshold is not a drafting problem, but a misrepresentation that can result in a bidder being disqualified, or worse, a successful bidder being terminated after having been awarded a contract.
Competition is the engine of a productive, innovative economy, and nowhere is this more consequential than in public procurement. When governments at all levels favour open, competitive bidding, Ontarians receive better value for their tax dollars through lower prices, higher quality, and stronger incentives for innovation.
By contrast, limiting competition through procurement restrictions carries real costs to public value, market health, and the long-term competitiveness of the Ontario economy. Competitive procurement is not simply procedural; it is a safeguard against inefficiency, favouritism, and market distortion.
Bottom Line
The Buy Ontario Act will change what it takes to win public construction work. While price and schedule remain important, the ability to source goods and services locally will play an increasingly significant role in determining successful bids.
HOW WE CAN HELP
RAR Litigation advises contractors, subcontractors, and suppliers on procurement disputes, bid compliance, and tender challenges across Ontario's construction industry. If you have questions about how the Buy Ontario Directive affects an upcoming bid or an ongoing dispute, we would be pleased to assist.