The Buy Canadian Policy represents the most significant shift in federal procurement rules in over a decade. Announced in late 2025 and rolling out in two phases, the policy creates new set-aside opportunities for Canadian suppliers, imposes domestic content requirements on goods, and signals a broader move toward prioritizing Canadian businesses in government purchasing.
For proposal writers, procurement specialists, and business development teams at Canadian firms, this policy changes the competitive landscape. Below-threshold procurements that were previously open to international bidders are now reserved for qualified Canadian suppliers. Understanding the rules, thresholds, and compliance requirements is essential to winning these set-aside contracts.
This page provides general information about the Buy Canadian Policy and is not legal advice. Consult Treasury Board guidance documents and legal counsel for compliance-specific questions.
What Is the Buy Canadian Policy?
The Buy Canadian Policy is a Government of Canada procurement directive that prioritizes domestic suppliers for federal contracts below international trade agreement thresholds. The policy was introduced as part of a broader initiative to strengthen Canadian supply chains, support domestic industry, and retain more government spending within the Canadian economy.
The policy creates a framework of “set-asides” — procurements that are restricted to Canadian suppliers — and establishes Canadian content requirements for goods purchased by the federal government. It operates alongside existing programs such as the Procurement Strategy for Aboriginal Business (PSAB) and the Canadian Content Policy that has historically applied to defence procurement.
The policy is administered by Treasury Board of Canada Secretariat and enforced through Public Services and Procurement Canada (PSPC) as the primary federal buying authority. Departments and agencies are expected to apply the policy to all applicable procurements within its scope.
Policy Timeline
Phase 1: Goods
Phase 1 takes effect, establishing set-asides for goods procurements below $101,100 CAD. Federal departments must restrict these procurements to qualified Canadian suppliers. Canadian content requirements apply to goods, requiring suppliers to certify domestic content thresholds.
Phase 2: Services and Construction
Phase 2 expands the policy to cover services contracts below $101,100 CAD and construction contracts below $252,700 CAD. This is the more consequential phase for consulting, IT, engineering, and professional services firms. It creates significant new set-aside opportunities in categories where international competition was previously the norm.
Monitoring and Threshold Adjustments
Treasury Board has indicated that thresholds may be reviewed periodically and adjusted based on trade agreement renegotiations, economic conditions, and policy outcomes. Suppliers should monitor Canada Gazette publications and PSPC notices for any changes.
Key Provisions
Canadian Content Value Test
For goods procurements, suppliers must demonstrate that a defined percentage of the product's value originates in Canada. This includes raw materials sourced in Canada, manufacturing and assembly performed in Canada, and Canadian labour content. The specific percentage varies by commodity category but is generally aligned with the thresholds used in the existing Canadian Content Policy for defence procurement (often in the range of 60–80% Canadian content by value).
Domestic Price Preference
Where a procurement is not fully set aside but Canadian suppliers are competing against international bidders, the policy introduces a domestic price preference. Canadian suppliers receive a price preference margin, meaning their bid can be up to a specified percentage higher than a foreign bid and still be considered the lowest compliant offer. This mechanism supports Canadian firms that may face cost disadvantages compared to suppliers in lower-cost jurisdictions.
Set-Aside Thresholds by Category
| Category | Set-Aside Threshold | Effective Date |
|---|---|---|
| Goods | Below $101,100 CAD | December 2025 |
| Services | Below $101,100 CAD | June 2026 |
| Construction | Below $252,700 CAD | June 2026 |
Thresholds are aligned with the Canadian Free Trade Agreement (CFTA) and are subject to periodic revision.
Exceptions
The Buy Canadian Policy does not override Canada's international trade agreement obligations. Key exceptions include:
- Trade agreement procurements: Contracts above trade agreement thresholds (CETA, CUSMA, CPTPP, WTO GPA) remain open to international suppliers.
- National security: Procurements involving national security may be exempt from both trade agreements and the Buy Canadian Policy, or may be subject to enhanced Canadian content requirements.
- Sole source: Sole-source procurements follow their own justification requirements and are not subject to set-aside rules.
- Emergency procurement: Urgent operational needs may be exempt from set-aside requirements where delay would compromise public safety or government operations.
Who Qualifies as a Canadian Supplier?
To participate in Buy Canadian set-aside procurements, a supplier must meet all of the following criteria:
Registered and Operating in Canada
The supplier must be incorporated, registered, or otherwise authorized to carry on business in Canada under federal or provincial law. A foreign subsidiary registered in Canada may qualify, but the registration must reflect genuine Canadian operations, not merely a shell entity.
Canadian Operations and Workforce
The supplier must maintain operations in Canada with a Canadian workforce that performs a substantial portion of the contract work. This requirement is intended to ensure economic benefit remains in Canada, not just legal registration. Suppliers should be prepared to document office locations, employee counts, and the proportion of work performed in Canada.
Canadian Content Requirements for Goods
For goods procurements, suppliers must certify that the product meets Canadian content value thresholds. This is calculated as a percentage of the total contract value and includes materials, manufacturing, labour, and overhead costs incurred in Canada. Services procurements under Phase 2 are not subject to the same content value calculation but must demonstrate Canadian delivery and workforce.
What This Means for Proposal Writers
The Buy Canadian Policy has direct implications for how proposals are structured, staffed, and priced. Here is what proposal teams should consider:
More Set-Aside Opportunities for Canadian Firms
Set-aside procurements mean reduced competition. Where you previously competed against international firms on below-threshold contracts, those opportunities are now reserved for Canadian suppliers. Track set-aside opportunities on CanadaBuys and in federal contract databases to identify these openings early.
Compliance Requirements in Proposals
Expect to see new mandatory requirements in solicitation documents asking bidders to certify Canadian supplier status. Your proposals will need to include Canadian content declarations, workforce certifications, and evidence of Canadian operations. Build these into your proposal templates and boilerplate content so they are ready for every bid.
Demonstrating Canadian Content
For goods procurements, you will need to document the Canadian content value chain: where materials are sourced, where manufacturing occurs, and where labour is performed. For services, emphasis shifts to demonstrating that the team delivering the work is based in Canada and that project management, delivery, and intellectual property creation occur domestically.
Impact on Joint Ventures with Foreign Firms
If your firm operates joint ventures or teaming arrangements with foreign partners, review these structures carefully. For set-aside procurements, the joint venture must meet Canadian supplier requirements as a whole. This typically means the Canadian partner must hold a majority interest and the majority of work must be performed in Canada. Consider restructuring teaming arrangements for below-threshold opportunities to ensure compliance.
Standing Offers and Supply Arrangements
The policy also affects call-ups against existing standing offers and supply arrangements. Where individual call-up values fall below the set-aside thresholds, procuring departments may be required to give preference to qualified Canadian suppliers on the standing offer. This creates additional opportunity for Canadian firms already holding standing offer positions.
Old Rules vs. New Rules: What Changed
The following table summarizes the key differences between the procurement framework before and after the Buy Canadian Policy.
| Area | Before (Pre-2025) | After (Buy Canadian Policy) |
|---|---|---|
| Below-threshold goods | Open to all suppliers, including international | Set aside for Canadian suppliers (below $101,100) |
| Below-threshold services | Open to all suppliers | Set aside for Canadian suppliers (below $101,100, from June 2026) |
| Below-threshold construction | Open to all suppliers | Set aside for Canadian suppliers (below $252,700, from June 2026) |
| Canadian content certification | Required only for defence procurement | Required for all set-aside goods procurements |
| Domestic price preference | Not applied broadly | Applied to qualifying procurements where set-aside does not apply |
| Supplier qualification | General eligibility (registered to do business) | Must demonstrate Canadian registration, operations, and workforce |
| Joint ventures | No specific domestic ownership requirement for below-threshold | Canadian-majority interest required for set-aside eligibility |
Frequently Asked Questions
Does the Buy Canadian Policy apply to all federal procurement?
No. The Buy Canadian Policy applies to federal procurement below certain trade agreement thresholds. Procurements that exceed the thresholds set by agreements such as CFTA, CETA, or CUSMA remain subject to those treaty obligations, which require open competition among signatory nations. The policy primarily affects procurements that fall under the set-aside thresholds where the federal government has the discretion to limit competition to Canadian suppliers.
What are the value thresholds for Buy Canadian set-asides?
Under Phase 1 (effective December 2025), goods procurements below $101,100 CAD are set aside for Canadian suppliers. Phase 2 (effective June 2026) extends set-asides to services contracts below $101,100 CAD and construction contracts below $252,700 CAD. Above these thresholds, procurements generally fall under international trade agreement obligations unless a specific exception applies.
Does the Buy Canadian Policy affect trade agreement obligations?
The policy is designed to operate within Canada's existing trade commitments. Procurements above trade agreement thresholds (such as those under CETA, CUSMA, CPTPP, and CFTA) remain open to international competition as required. The Buy Canadian Policy applies in the space below those thresholds where Canada has discretion over procurement rules. Some procurements may also qualify for national security or other treaty-based exceptions.
How do I prove I am a Canadian supplier?
Suppliers must demonstrate that they are registered and carry on business in Canada, maintain operations and a workforce in Canada, and can meet Canadian content requirements for goods where applicable. In practice, this means having a Canadian business registration, a physical Canadian presence, and the ability to certify that a defined percentage of a product's value originates in Canada. Treasury Board guidance documents provide detailed checklists for certification.
When does Phase 2 of the Buy Canadian Policy take effect?
Phase 2 takes effect in June 2026. It expands the policy from goods-only set-asides (Phase 1, December 2025) to include services and construction procurements. This is a significant expansion that brings professional services, IT consulting, engineering, and construction contracts under the domestic preference framework for the first time.
Does the Buy Canadian Policy apply to Crown corporations?
The policy applies to federal departments and agencies subject to the Treasury Board procurement framework. Crown corporations that follow federal procurement directives are expected to align with the policy, though some Crown corporations with independent procurement authorities may adopt it on a phased or voluntary basis. Suppliers should verify whether a specific Crown corporation is bound by the policy when preparing bids.
How does the Buy Canadian Policy affect joint ventures with foreign firms?
Joint ventures can still participate in Buy Canadian set-aside procurements, but the Canadian content and supplier qualification requirements must be met by the joint venture as a whole. Typically, the Canadian partner must hold a majority interest and the work performed in Canada must meet or exceed the Canadian content threshold. Foreign-majority joint ventures are unlikely to qualify for set-aside procurements below the trade agreement thresholds.
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