Canada provides details on Buy Canadian Policy
Overview
On December 16, 2025, the Government of Canada announced its long-awaited definition of a ‘Canadian Supplier’.
While doing so, the government introduced two new policy instruments:
- The Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurement; and
- The Policy on Prioritizing Canadian Materials in Federal Procurement
Policy drives procurement, so let’s take a closer look to see where this is going, with a focus on the Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurement (the Policy).
Let’s start with some definitions.
Canadian Supplier means:
- a supplier that has a place of business in Canada where it conducts activities on a permanent basis that is clearly identified by name and accessible during normal business hours; or, a joint venture where each member of the joint venture has a place of business in Canada where it conducts activities on a permanent basis that is clearly identified by name and accessible during normal business hours; and
- is registered and files taxes in Canada (e.g., GST/HST, corporate income tax);
- maintains a registered address in Canada and employs personnel and/or conducts day-to-day business activities in Canada; and
- will not subcontract work to non-Canadian suppliers or individuals located outside Canada, in a manner that results in minimal value-added activities being performed within Canada.
So, ThinkON Canadian? Yes.
AWS? Also, yes.
But the final bullet in the definition is what will count for firms both domestic and foreign. Where is your supply chain, including services, sourced from?
Going forward, the contracting authority, in collaboration with the business owner, can set a minimum mandatory Canadian Value-Added requirement as part of the evaluation.
Take note that Canadian Value-Added (and Canadian Content) means:
- in relation to services, a Canadian Service or the proportion of the service contract performed by natural persons based in Canada; and
- in relation to goods, a Canadian Good or the value of the portion of the good produced in Canada or the difference between the dutiable value of the imported goods and the selling price, taking into account any value added by manufacturers and distributors, and including any costs incurred in Canada related to:
- research and development,
- sales and marketing,
- communications and manuals,
- customization, modifications, installation, and support,
- warehousing, distribution, and logistics,
- training and after-sales service.
Canadian Good means:
- a good wholly manufactured or originating in Canada; or, a product containing imported components that has undergone sufficient change in Canada in a manner that satisfies the definition specified under the Canada-United-States-Mexico Agreement (CUSMA) Rules of Origin. For the purposes of this definition, the reference to “territory of the Parties” in the CUSMA Rules of Origin is to be replaced with “Canada”.
While Canadian Service means:
- a service wholly provided by (natural persons/individuals) based in Canada.
- services include construction services.
When does it start?
The policy takes effect December 16, 2025, is issued pursuant to the Buy Canadian Procurement Policy Framework and supersedes the Canadian Content Policy and the Interim Policy on Reciprocal Procurement that was announced in September and is set to take full effect this spring.
It will apply immediately to all competitive Strategic Procurements of $25M and up, and starting June 15, 2026, all competitive Strategic Procurements of $5M and up.
The use of the term competitive is important here. As most procurements are competitive, with a few exceptions.
Under current rules, the contracting authority may enter a contract without soliciting bids where:
(a) the need is one of pressing emergency in which delay would be injurious to the public interest;
(b) the estimated expenditure does not exceed
- (i) in the case of a goods contract, $25,000,
- (ii) in the case of a contract to be entered into by the Minister for International Development for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of an international development assistance program or project, $100,000,
- (iii) in the case of a contract for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work, $100,000, and
- (iv) in the case of any other contract to which these Regulations apply, $40,000;
(c) the nature of the work to be contracted for is such that it would not be in the public interest to solicit bids; or
(d) only one person is capable of performing the contract (patents, copyright requirements, or technical compatibility factors and technological expertise suggest that only one contractor exists).
As well, Canada maintains the right to limit competition for reasons of national security. Since 2007, Treasury Board Secretariat has provided policy direction to departments that national security exceptions (NSE), properly applied, can be a criterion for invoking (c). An NSE also excludes the procurement from some or all of the obligations under relevant trade agreements.
On a case-by-case basis, where strictly necessary, and only with the approval of the relevant Minister, the Policy allows for departments and agencies to exclude procurements otherwise subject to the Policy.
This can be done when application of the Policy is expected to result in a cost increase of 25% or more above current market rates, where the application of the Policy would otherwise be inconsistent with the public interest, where the Canadian good is not produced in Canada in sufficient and reasonably available quantities and/or of a satisfactory quality, where the application of the Policy would result in delays to the procurement of critical defence or national security equipment, which could negatively impact Canadian defence or national security operations, and when the government is purchasing commercial off-the-shelf and military off-the-shelf products.
It would not be a stretch to suggest that ICT and Defence procurements, with all these caveats, could find themselves excluded from the application of this policy. But again, with the definition of a Canadian supplier including reference to supply chain, this will really come down to how much of the work is being done within our borders.
What is meant by the strategic procurements ?
Finally, what is meant by the strategic procurements the policy will apply to is found in Appendix A: Strategic Procurement – List of Sectors and Commodities. They include:
- Defence and Security
Goods and services that support Canada’s national defence, military readiness, and security operations, including systems and capabilities essential for sovereignty and protection. Examples include, but are not limited to: weapons, vehicles, aircraft, ships, naval systems, electronic warfare, logistics, training, security services
- Health and Pharmaceutical
Goods and services related to healthcare delivery, medical treatment, and to ensure public health resilience and emergency preparedness and response. Examples include, but are not limited to: medical and surgical equipment, healthcare services, nursing care, medical waste, drugs, vaccines and biologicals
- Infrastructure, Construction, and Transportation
Physical assets and systems essential for public and economic activity; services and materials involved in constructing, renovating, or demolishing buildings and structures; and goods and services enabling the movement of people and property. Examples include, but are not limited to: buildings, transportation infrastructure, mobility, utilities, environmental cleanup, facilities management, aerospace, shipbuilding, motor vehicles
- Information and Communications Technology (ICT)
Digital systems, hardware, software, network infrastructure, and related services that enable government functions. Examples include, but are not limited to: digital infrastructure, data centers, cloud, networks, telecommunications, 5G, connectivity, software and hardware
- Consumer and Industrial Goods and Materials
Commercial products and materials intended for personal use and consumption or industrial production and operations. Examples include, but are not limited to: clothing, textiles, furniture, fuel, chemicals and plastics, scientific and testing equipment, fire suppression, machinery.
Keep in mind that professional services directly supporting the above-listed sectors and commodities are also included.