The Buy Canadian Policy: Favouring Canadian Suppliers In Federal Procurement

The federal government's Buy Canadian Policy officially came into effect on December 16, 2025. The policy is a key commitment of the 2025 Budget, seeking to prioritize Canadian businesses and materials amidst the federal government's increased investment in critical minerals and Canadian infrastructure. The broader Buy Canadian Policy framework includes two key supporting policies that outline specific changes to federal procurement: 1) the Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurement; and 2) the Policy on Prioritizing Canadian Materials in Federal Procurement.

As a whole, the Buy Canadian Policy seeks to strengthen Canada's supply chain and encourage self-sufficiency within Canadian industries.

Policy on prioritizing Canadian suppliers and Canadian content in strategic federal procurement

This supporting policy seeks to direct federal purchasing in a manner that advances Canada's economic, industrial and innovation priorities. Departments and agencies of the Government of Canada are to implement the requirements of the policy in their procurement processes. Notably, effective December 16, 2025, Canadian suppliers and Canadian content are to be prioritized in “Strategic Procurements” valued at CA$25 million or more. As of June 15, 2026, this threshold will be reduced to CA$5 million. Such Strategic Procurements under this first supporting policy of the Buy Canadian Policy include goods and services in industries including defence and security, health and pharmaceuticals, infrastructure, transportation and information and communications technology.

Canadian supplier participation

This supporting policy encourages the participation of Canadian suppliers via a price-based evaluation credit in the evaluation of their financial proposal for a Strategic Procurement. Canadian suppliers are notably granted a 10% reduction of the total value of their financial proposal. Eligible Canadian suppliers must have a legitimate Canadian footprint, and are defined as those suppliers that:

• Maintain a place of business in Canada where it conducts activities on a permanent basis;
• Are registered and file taxes in Canada;
• Maintain a registered address in Canada and employ personnel and/or conduct day-to-day business activities in Canada; and
• Do 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.

Canadian content

This supporting policy also prioritizes the use of Canadian content by evaluating offers according to the proposed use of Canadian goods and services. Contracting authorities are to implement the requirements of this policy in the evaluation of solicitations through either a point-rated or a price-based methodology. In both cases, the greater the proportion of goods or services that are produced or provided in Canada, or the “Canadian Value-Added” as defined in the policy, the more the solicitation will be favoured in its evaluation:

• Point-rated methodology: Solicitations are evaluated using a cumulative point system, where individual factors are assigned specific weightings that influence their total score. Under this framework, 25% of the evaluation must be allocated to a solicitation's Canadian Value‑Added points.
• Price-based methodology: If the point-rated methodology is not used, solicitations are evaluated based on their price. In this case, a reduction equivalent to 25% of the proportion of Canadian Value-Added is applied to the price of a solicitation for the purposes of its evaluation. For instance, if a solicitation price is 60% Canadian Value-Added, the price used in its evaluation will be reduced by 15%. 

The contracting authority may impose a mandatory minimum Canadian Value-Added to solicitations, subject to ministerial consent and other policy requirements. The policy also provides for possible exceptions to its implementation, namely where it would result in a cost increase of 25% (or an otherwise unreasonable amount), public interest considerations, lack of capacity or availability of Canadian goods, or undue delays. Once a contract is awarded, it is also possible for the contractor to request a derogation from its Canadian content requirement if it is no longer feasible due to changes in market availability or other substantiated factors.

Policy on prioritizing Canadian materials in federal procurement

The second supporting policy of the Buy Canadian Policy, the Policy on Prioritizing Canadian Materials in Federal Procurement, seeks to promote domestic industry via the integration of locally produced materials. The intent is to reduce dependency on foreign sources and to require the sourcing of Canadian materials for use in the context of federal procurements.

This supporting policy notably requires the use of Canadian‑produced steel, aluminum and wood products in federal construction and defence contracts valued at CA$25 million or more, where at least CA$250,000 of materials are required and a Canadian supply is available. The Government of Canada may apply the policy to otherwise excluded procurements, and federal departments are strongly encouraged to adopt it below the established thresholds if feasible and where a significant use of covered materials is expected.

This supporting policy sets out specific requirements for materials produced in Canada: steel must be melted and poured in Canada, wood products must be solid wood produced in Canada (including finished goods from those inputs) and aluminum must be smelted and cast in Canada. To ensure compliance, bidders on federal construction and defence contracts must certify at the time of their bid that they will use materials produced in Canada. Once a contract is awarded, compliance with the policy requirements may be monitored by the federal authority.

As with the Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurement, exceptions may apply to the policy's rules, in relation to unreasonable costs, public interest, availability and delays.

Is your project covered by the Buy Canadian Policy?

The Buy Canadian Policy and its requirements do not apply to solicitations published, or contracts awarded, prior to December 16, 2025. For existing Supply Agreements, including any solicitations issued from an existing Supply Agreement, the policy will apply at the time of any subsequent renewal.

The application of the policy will be expressly stipulated in solicitation documents. Government departments and agencies are required to integrate the applicable prioritization requirements into procurement planning, including Statements of Work, technical specifications and evaluation criteria.

Takeaway

The Buy Canadian Policy is one of various initiatives of the federal government meant to prioritize and bolster Canadian businesses and the Canadian economy. The policy presents important considerations for businesses contracting with the federal government in the near future; competition for federal contracts will have a greater focus on a demonstrable Canadian footprint, verifiable Canadian value‑added and material origin traceability. Affected businesses should assess their eligibility for advantages offered under the Buy Canadian Policy and integrate necessary changes into bidding strategies for upcoming federal procurements.

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