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Given the unstable global business climate, and the ongoing trade negotiations with the United States, governments across the globe are looking for ways to shelter domestic industries and workers. The government of Ontario is no different, and has introduced the Buy Ontario Act (Public Sector Procurement), 2025.
The principal focus of the Buy Ontario Act is to provide a framework to allow the government to set rules and requirements around procurement by certain designated public sector bodies. These directives would effectively require those bodies to provide preference to Ontario and Canadian goods as set out by the Management Board of Cabinet.
The Buy Ontario Act is intended to build on the foundation set up by the Build Ontario Better Initiative Act (BOBI). While different, BOBI remains a key lens through which we can view the Buy Ontario Act, and help predict the likely scope and shape of the directives to be issued.
How it Works – Directives for All
The scheme of the Buy Ontario Act rests on a system of directives. The Management Board of Cabinet will be empowered to pass any directives related to how government entities in Ontario may conduct procurements. The stated intention of these directives is to direct procurement dollars towards Ontario and Canadian based businesses.
The Buy Ontario Act sets out five specific areas that may be covered by directives. Specifically, Cabinet may:
- Require preferences be given to Ontario or Canadian made goods or services.
- Impose requirements to support Ontario businesses and promote Ontario goods/services or protect Ontario businesses by limiting eligibility to participate in public sector entity procurements.
- Require the implementation of vendor performance standards and practices.
- Establish reporting requirements and procedures.
- Require public sector entities to use specified compliance and enforcement measures.
The Ontario government has not yet published any draft directives to give a sense of what is contemplated. It will therefore be important to stay engaged with the legislation as it moves through the House and as directives are promulgated.
Who Is Covered – Everyone (in the Public Sector)!
The second point to consider is who is covered by the new requirements. The answer is, by and large, all public sector entities that are designated by a directive under the Buy Ontario Act. Eligible entities are: any provincial government ministry or entity, any broader public sector (BPS) entities (such as hospitals, school boards, universities), and any other entity that may be prescribed by regulation.
It should also be noted that the Buy Ontario Act derives its definition of "government entity" from the Supply Chain Management Act, 2019. A "government entity" as defined in the Supply Chain Management Act, 2019 would encompass not just ministries but most Crown corporations. We can likely proceed from the basis that essentially any entity connected to the government will be covered by future directives.
Enforcement – It's Not Optional
While BOBI created requirements, it was light on true enforcement mechanisms. This is not the case for the Buy Ontario Act. Under this Act, the government of Ontario has significant policy levers to ensure compliance by purchasing entities, including but not limited to the power to simply withhold funds from entities that fail to comply with directives issued by Cabinet.
In addition, Cabinet may require that these requirements be included in flow-downs to supply chain intermediaries, and be embedded in funding agreements. To better enforce these requirements, Ontario also has extensive audit rights to ensure that all directives are being followed, and to take any necessary remedial actions.
Furthermore, Ontario has anticipated that these Directives may create potential litigation – both in actions for damages and via judicial review. To prevent issues, it has proactively enacted statutory bars to any proceeding (including judicial review proceedings) regarding compliance with the Buy Ontario Act or its directives.
Conclusions
The Buy Ontario Act represents a significant move by the government towards protecting Ontario and Canadian suppliers. It will be important for suppliers to carefully analyze the directives that Ontario issues to determine if they qualify, and to ensure they are adequately situated to bid on government opportunities.
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