Legislation is one mechanism governments could use to change their procurement practices. A piece of legislation could be used to allow what constitutes a certain kind of business (ie Canadian versus American) to be defined in regulation. The BC NDP recently introduced the Economic Stabilization (Tariff Response) Act, which sets up a framework for creating procurement regulations in the future. The regulations could look like those in the Building Ontario Businesses Initiative Act which allows an “Ontario Business” to be defined in regulation which can then apply to procurement practices. Provinces could use a similar mechanism to define what qualifies as an “American” company.

If a government opts to use a legislative approach to restrict procurement to American firms, it will be a relatively drawn-out process. The legislation needs to be introduced, consulted on, (potentially) amended, and passed, and then regulations need to be created. The consultation period would allow impacted businesses to provide input, as the legislative process requires external consultation. Additionally, legislation on procurement would likely be “enabling legislation” which means that the legislation creates the authority, but the authority is exercised through regulations under the legislation. The creation of regulations will also include a consultation process which can allow stakeholders to provide input. The advantage of a legislative and regulatory framework is that definitions can be relatively precise and give clarity to the vendor community. The drawback is that this approach takes time.

Consequently, we will likely see Canadian governments apply ad hoc approaches within existing policy frameworks that allow them to exclude foreign companies from procurement processes. This includes putting language in procurement solicitations that exclude American firms without passing legislation. A recent example of how this could work is language from a recent federal IQT (Invitation to Qualify for a Data Hub Solution). The document indicates that the national security exemptions is being applied, which in this case allowed the federal government to only seek a bid from a Canadian company. This is not an example of retaliation. It shows how a mechanism could be used on an ad hoc basis when decision-makers feel they are needed. In order to see how ad hoc approaches are being applied, vendors should look within procurement documents as they are posted, and input may require a reactive posture

Legislation, regulation and ad hoc language are not the only mechanisms available to governments. For example, Quebec has indicated that it will impose a 25% penalty on U.S. companies that do not have a presence in Canada when these companies are bidding on contracts.

Governments across Canada are still putting their retaliatory plans into action. Each government will create a response tailored to suit its needs, this includes how they change their procurement processes. American companies that do business with the government needs to be ready to make the case that they are a valuable partner.