Buy Ontario: Key Impacts For Public Sector Procurement

Co-authored by articling student Amanda Morana.

After much anticipation and months of uncertainty, Ontario has announced that the Buy Ontario Procurement Directive (the “Directive”) will come into effect on April 13, 2026.

Below is a summary of the key information and implications for provincial government and broader public sector entities:

1. Buy Ontario Act executive summary

On December 11, 2025, the Buy Ontario Act (Public Sector Procurement), 2025 (the “Act”)received royal assent and came into force.¹ The Act aims to use public sector procurement to favour Ontario businesses and is part of Ontario’s $220 billion plan to build using Ontario’s goods and services. While the Act itself does not impose obligations, it enables the government to create regulations and directives thereunder.

The Act stipulates that a directive made under the Act may impose requirements on a public sector entity engaging in the procurement of goods and/or services. The directive may either:

1. Require that preference be given to Ontario- or Canadian-made goods or to services provided in Ontario or Canada.
2. Impose requirements intended to:
   1. Support Ontario businesses and promote Ontario-made goods or services provided by Ontario businesses, or
   2. Protect Ontario businesses by limiting eligibility to participate in public sector entity procurements.
3. Require the implementation of vendor performance standards and practices.
4. Establish reporting requirements or procedures, including by authorizing specified persons to require that a public sector entity report on certain matters when and as the person determines.
5. Require public sector entities to use specific compliance and enforcement measures and to impose those measures on vendors.²

The Directive touches upon several of these possible requirements.

2. Scope of the Directive

The Directive applies to both government entities, defined as ministries, provincial agencies, the Independent Electricity System Operator (“IESO”) and Ontario Power Generation (“OPG”), as well as designated public sector organizations (“BPS Entities”) within the meaning of the Broader Public Sector Accountability Act, 2010.

The purpose of the Directive is to promote local businesses, while simultaneously restricting United States businesses and establishing requirements for fleet and capital infrastructure.

The Directive does not apply to procurements that address situations that are both urgent and unforeseen, such as emergencies.

3. Requirements

The Directive requires government and BPS Entities to continue to comply with previous procurement directives that apply to them. In essence, the Directive consolidates the Building Ontario Businesses Initiative (“BOBI”), which sets out the procurement monetary thresholds triggering the requirements to give preference to either Ontario³ or Canadian⁴ businesses, or Ontario’s trading partners, in the procurement of goods and services.

The Directive also continues the application of the Procurement Restriction Policy (“PRP”), which prohibits government and BPS Entities from procuring goods and services from United States businesses who meet the applicable definition. Limited exceptions are set out in the Directive permitting procurement from a United States business. One exception is where a U.S. business is the only viable source for the good or service and the procurement cannot be delayed.

There is also a new exception which permits procurements for services where the U.S. business commits to having at least 90 percent of the required staff to deliver the contracted services located in Canada.⁵ Additionally, the Directive updates procurement monetary thresholds to align with Ontario’s commitments vis-à-vis international trade agreements.

4. Strategic categories

The Directive sets out requirements for Ontario’s approach to procurements in two key strategic categories.

i. Fleet vehicles

In an effort to support the domestic automotive industry, the Directive also requires government and BPS Entities to purchase or lease vehicles manufactured in Ontario for all new procurements of new light-duty passenger fleet vehicles with a Gross Vehicle Weight Rating (“GVWR”) at or less than 4,500 kg. This requirement exists regardless of the procurement value, method or type, including vendor of record arrangements.

In the event that a Made-in-Ontario Fleet Vehicle is unavailable or it is not operationally feasible to purchase or lease said vehicle, the entity is required under the Directive to purchase or lease a new vehicle from an Ontario Vehicle Producer.⁶ If neither a Made-in-Ontario Fleet Vehicle nor a vehicle from an Ontario Vehicle Producer is available or operationally feasible, an entity may only then consider alternative acquisition strategies after they have documented the rationale and sought the appropriate approval.

However, there are exceptions to this section of the Directive. Specifically, the Directive exempts: (i) existing contracts; (ii) short-term leases up to 12 months; (iii) physically modified vehicles (such as school buses and emergency response vehicles); (iv) contract extensions included in the original agreement; (v) vehicles purchased for surveillance purposes; (vi) vehicles with a GVWR greater than 4,500 kg; and (vii) used vehicles. Additionally, the BOBI requirements of the Directive do not apply to fleet vehicles.

ii. Capital infrastructure

The Directive also sets out new requirements for procurements of capital infrastructure, which includes construction⁷ and fixtures, furniture and equipment that are included in and incidental to construction, and transit fleet vehicles. Government and BPS Entities, excluding OPG and IESO, engaging in the procurement of capital infrastructure must do the following:

1. Include in the procurement documents:
   1. A list of each major good and each service required for the deliverables being procured.
   2. A requirement for vendors to submit a Domestic Supply Chain Plan that identifies the source of each of the listed major goods and services.
2. Use one of the applicable methods for Domestic Supply Chain Plans set out in the Directive,⁸ or an approved alternative method.
3. Apply Weighted Domestic Criteria worth no more than 35% of the overall weighting of the procurement evaluation for procurements with a value above $368,000.
4. Refer to the Ministry’s operational guidance for direction on how to apply any of these requirements.

Similar to the treatment of fleet vehicles, the requirements surrounding capital infrastructure are also subject to exceptions. Specifically, the requirements do not apply to procurements for (i) medical equipment; (ii) information technology; (iii) fixtures, furniture or equipment acquired solely for ongoing or operational purposes after the facility is operational; or (iv) routine maintenance, repair and operations unless for the repair or renovation of the physical structure.

Additionally, the Directive offers a value for money exclusion, which allows government or BPS Entities to exclude a procurement from the aforementioned requirements if: (i) a detailed market assessment indicates that applying the requirements could increase the procurement’s estimated cost by 25% or more; and (ii) except where the OPS Procurement Directive requires a higher level or procurement approval, deputy minister or CEO approval is obtained.

The regulations surrounding capital infrastructure replace the applicable BOBI requirements set out in Section 4.2 of the Directive.

Key takeaways

The Directive, taking effect April 13, 2026, requires that Ontario and Canadian businesses be given preference in public sector procurements while restricting procurement from U.S. businesses. The Directive applies to government ministries, OPG, the IESO and BPS Entities, and consolidates existing initiatives such as BOBI and the PRP. It introduces specific requirements in two strategic categories: fleet vehicles, and capital infrastructure.

The Directive does not have any exemptions and does not prevail over legislation.

Conclusion

While the Directive consolidates existing procurement directives, it introduces significant new requirements for two strategic categories concerning fleet vehicles and capital infrastructure that will have practical implications for affected organizations. Provincial government and BPS entities conducting procurements should take proactive steps to understand how the Directive applies to their operations and procurement processes.

Given the complexity of these regulatory changes, it is advisable to consult with a legal professional specializing in procurement law to assess which provisions of the Directive are relevant to your organization, determine what amendments, if any, may be required to your existing procurement documents to ensure compliance, and develop a strategy for implementing any necessary changes in a timely and effective manner.

Footnotes

1. Bill 72, Buy Ontario Act, 2025, Legislative Assembly of Ontario (Bill 72, Buy Ontario Act, 2025 - Legislative Assembly of Ontario)

2. Buy Ontario Act (Public Sector Procurement), 2025, SO 2025, c 27, Schedule 1, s 3(2).

3. Ontario business means a supplier, manufacturer or distributor of any business structure that conducts its activities on a permanent basis in Ontario. The business either has: its headquarters or main office in Ontario, or at least 250 full-time employees in Ontario at the time of the applicable procurement process. Buy Ontario Procurement Directive, s.6, (Buy Ontario Procurement Directive | ontario.ca).

4. Canadian business means a supplier, manufacturer or distributor of any business structure that conducts its activities on a permanent basis in Canada. The business either has: its headquarters or main office in any province or territory within Canada, or at least 250 full-time employees in any one province or territory within Canada at the time of the applicable procurement process. Ibid.

5. Buy Ontario Procurement Directive, s.4, (Buy Ontario Procurement Directive | ontario.ca)

6. Ontario Vehicle Producer means an Original Equipment Manufacturer that sells vehicles and would meet the threshold of 1,500 annualized jobs across their Ontario footprint of active and/or planned fully and partially owned vehicle assembly and plants. Buy Ontario Procurement Directive, s.6, (Buy Ontario Procurement Directive | ontario.ca).

7. Construction means construction, reconstruction, demolition, repair or renovation of a building, structure or other civil engineering or architectural work and includes site preparation, excavation, drilling, seismic investigation, the supply of products and materials, the supply of equipment and machinery if they are included in and incidental to the construction, and the installation and repair of fixtures of a building, structure or other civil engineering or architectural work, but does not include professional consulting services related to the construction contract unless they are included in the procurement. Ibid.

8. See the Buy Ontario Procurement Directive, s.4.4.2, Table 1, (Buy Ontario Procurement Directive | ontario.ca)

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