Federal Government Rolls Out Its Buy Canadian Policy

Background

As announced in the Canada Strong Budget 2025, the Government of Canada has rolled out its Buy Canadian Policy (Policy) through an overarching framework and several policies that came into force on December 16, 2025. Consistent with messaging prior to the Policy release, the framework is designed to prioritize Canadian goods in strategic sectors, supporting Canadian workers and businesses.

Among the new measures that came into effect is the Buy Canadian Procurement Policy Framework (Framework), which is the core component of the Policy. The Framework provides an overarching foundation for Buy Canadian procurement policies. Section 5.1 sets out that the Framework applies to all departments and agencies as listed in Schedules I, I.1, II of the Financial Administration Act, R.S.C., 1985, c. F-11.

Notably, the Framework introduces the following four policies and programs, each setting out specific requirements that support the implementation of Canadian prioritization measures in federal procurement:

I. Policy on Prioritizing Canadian Materials in Federal Procurement

The Policy on Prioritizing Canadian Materials in Federal Procurement (Prioritizing Canadian Materials Policy) sets out two key requirements:

• The use of Canadian-produced materials, including steel, aluminum and wood products in major federal construction and defence projects, with flexibility to expand to other key materials
• That design and technical specifications support the use of these materials produced in Canada, along with a mandatory certification component in the solicitation or contract

This Prioritizing Canadian Materials Policy applies to projects valued at C$25-million or more, where at least C$250,000 worth of the relevant materials is required and a Canadian source of supply is available.

There are exceptions to the Prioritizing Canadian Materials Policy, which require Ministerial approval, including where the use of materials produced in Canada is expected to result in an increase in cost in excess of 25%, where there is no capacity or availability of supply in Canada, as well as for commercial off-the-shelf and military off-the-shelf products.

II. Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Procurements

The Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurement (Prioritizing Canadian Suppliers and Canadian Content Policy) requires federal procurement processes to prioritize Canadian suppliers and Canadian content by providing an advantage to Canadian suppliers in procurement evaluation. The current measures apply to federal procurements in certain strategic sectors (including infrastructure, construction and transportation) valued at C$25-million or more and will expand to procurements valued at C$5-million or more by June 15, 2026.

A Canadian supplier is defined as, among other things, a supplier that has a place of business in Canada where it conducts business on a permanent basis that is clearly identified by name and accessible during normal business hours. Unlike similar policy frameworks implemented by other levels of government in Canada, the Canadian supplier definition does not impose any minimum levels of employment. Notably, Canadian suppliers are precluded from subcontracting work to non-Canadian suppliers or individuals located outside Canada in a manner that results in minimal value-added activities being performed within Canada.

Similar to the Prioritizing Canadian Materials Policy, there are limited exceptions to the application of the Prioritizing Canadian Suppliers and Canadian Content Policy, which require Ministerial approval.

III. Policy on Reciprocal Procurement

The Policy on Reciprocal Procurement seeks to ensure non-defence contracts are only awarded to Canadian suppliers, goods and services, or to those from trusted partners with reciprocal procurement market access. The full implementation of the Policy on Reciprocal Procurement, which will be based on the current Interim Policy on Reciprocal Procurement that came into force on July 14, 2025, is expected to come into force by Spring 2026.

IV. Small Business Procurement Program

The Small Business Procurement Program (Program), which will help smaller Canadian businesses access federal contracting opportunities, is expected to come into force by Spring 2026. The Program is a joint initiative between the Government of Canada and Innovation, Science and Economic Development Canada (ISED) and will reserve federal procurement opportunities for Canadian small businesses and streamline their access to procurement.

V. Changes to CITT Rules

Concurrently with the introduction of the Framework, amendments have also been made to the Canadian International Trade Tribunal Procurement Inquiry Regulations, effective December 15, 2025, to facilitate the implementation of the Buy Canadian Policy. The amendments modify the scope of matters that the Canadian International Trade Tribunal (CITT) can review with respect to federal procurement processes to exclude consideration of matters relating to Canadian suppliers and content. These amendments to the rules effectively preclude a challenge to the CITT related to Canadian suppliers or content, including measures that restrict participation to Canadian suppliers or favour the use of Canadian goods or services, or that limit eligibility in a procurement to small businesses.

Key Takeaways

The Framework and its associated policies introduced on December 16, 2025, set a clear direction for federal departments and agencies in procurement processes. The two current policies emphasize the prioritization of Canadian-produced materials (steel, aluminum and wood products), Canadian suppliers and Canadian content, setting out clear scopes of applicability as well as specific requirements and instructions for solicitation and evaluation processes. As well, further guidance on reciprocal procurement and the Small Business Procurement Program is slated for Spring 2026. Together, the Framework and these policies represent a significant departure by the federal government from traditional open access to contracting opportunities, reflective of their stated policy objective of strengthening Canada’s economic resilience and industrial capacity and supporting domestic businesses and workers by prioritizing Canadian suppliers.

Our team is closely monitoring developments, and we will provide updates when more details are made available. For more information, please contact the authors or any other member of our Procurement or Infrastructure groups.