The First Buy Ontario Act Directives Now in Force: What’s Changing and Why It Matters

In response to the imposition of tariffs by the United States, as well as ongoing trade negotiations including with respect to the Canada-United States-Mexico Agreement, and broader global economic uncertainty, governments have explored measures to support domestic industries and workers. In this context, Ontario has introduced a series of initiatives aimed at supporting domestic producers and adjusting its approach to U.S.-based businesses.

Among these measures are changes to government procurement policies, including the Restrictive Procurement Policy, which limits the ability of U.S.-based or U.S.-controlled businesses to bid on Ontario public sector contracts, and the Buy Ontario Act (Public Sector Procurement), 2025 (the “Act”).

We have previously provided guidance regarding the Restrictive Policy, and the Act.

On April 13, 2026, Ontario brought into force its first set of Directives under the Act. The first, the Municipal Buy Ontario Procurement Directive, extends the scope of the procurement requirements under the Act to municipalities, local boards and prescribed municipal services corporations. The second, and the most significant, the Buy Ontario Procurement Directive, introduces mandatory requirements in two strategic procurement categories: (i) fleet vehicles, including obligations to purchase or lease Ontario-made vehicles or vehicles from Ontario producers; and (ii) capital infrastructure projects, which are broadly defined and for which the Directive establishes preferences for Ontario-or Canada-based suppliers and for domestically sourced goods and services. The Buy Ontario Procurement Directive consolidates and replaces the existing Building Ontario Business Initiatives (“BOBI”) and the Restrictive Procurement Policy, creating a single overarching procurement framework which governs how public-sector purchasers prioritize Ontario- and Canadian-based suppliers and goods.

Scope of Application

The Buy Ontario Procurement Directive is applicable to a wide range of public-sector entities, including all ministries, provincial agencies (including Other Included Entities under the OPS Procurement Directive), broader public sector organizations (“BPS”), Ontario Power Generation (“OPG”), and the Independent Electricity System Operator (“IESO”). As noted above, analogous requirements now also apply to municipalities, local boards and prescribed municipal services corporations with respect to the passenger vehicle and capital infrastructure procurements under the Municipal Buy Ontario Procurement Directive.

The scope of application for each of the sections of the Buy Ontario Procurement Directive is set out below:

Baseline Requirements

The Buy Ontario Procurement Directive is promulgated under the Act and, as such, the requirements of the Act apply. This includes obligations on government and BPS entities to comply with any existing direction on procurements, to retain complete documentation for procurements covered by the Buy Ontario Procurement Directive (including internal decisions and approvals), and to provide information or data upon request to Supply Ontario, the Ministry of Public and Business Service Delivery and Procurement, and/or the Treasury Board Secretariat.

Building Ontario Businesses Initiative (BOBI)

The Buy Ontario Procurement Directive includes the requirement to apply BOBI to procurements of goods and services, except where such procurements fall within the Fleet Vehicle or Capital Infrastructure strategic categories described below, relate to certain treasury operations services, or where procurement is conducted pursuant to an existing vendor of record arrangement.

Under BOBI, government entities are required to give preference to Ontario businesses for procurements below $34,700 for goods and $139,000 for services, and to give preference to Canadian businesses for procurements above those thresholds but below applicable trade-agreement thresholds, currently $368,000. For BPS entities, procurements of both goods and services must give preference to Ontario businesses when valued below $139,000, and to Canadian businesses when valued between $139,000 and $368,000.

For procurements exceeding the applicable trade-agreement thresholds (i.e. above $368,000), government and BPS entities are required to give preference to bidders from Ontario’s trading partners, as set out in Appendix C to the Building Ontario Businesses Initiative – A Guide for Buyers, and may, where permitted, apply a weighted domestic criteria in procurement evaluations, consistent with guidance set out in BOBI and applicable trade obligations.

These requirements largely reflect Ontario’s free trade commitments, to prevent allegations by trading partners that the procurements do not respect the commitments that were made in such free trade agreements. However, it is difficult to square how the use of weighted domestic criteria complies with those same obligations.

Restrictive Procurement Policy

As outlined in our earlier analysis, the Restrictive Policy requires that government and BPS entities exclude U.S. businesses from new procurements, subject to limited exceptions (including extensions of existing agreements and use of vendor of record arrangements). The Buy Ontario Procurement Directive provides that the requirements of the Restrictive Policy prevail in the event of any conflict or inconsistency with the other requirements set out in the Directive.

For the purposes of the Restrictive Policy, a “U.S. business” is defined as a business with its headquarters or main office in the United States and fewer than 250 full-time employees in Canada. In the case of corporate entities, a corporation that is controlled by an entity meeting this definition is deemed to satisfy the headquarters criterion, and if it also has fewer than 250 full-time employees in Canada, will be considered a U.S. business under the policy.

Strategic Categories

The Buy Ontario Procurement Directive identifies two strategic categories: fleet vehicles and capital infrastructure. Procurements falling within these categories are subject to additional restrictions and requirements, which replace the BOBI commitments. As noted above, municipalities, local boards and prescribed municipal services corporations are subject to parallel requirements under the separate Municipal Buy Ontario Procurement directive.

Fleet Vehicles

The fleet vehicles requirements apply to all procurements of new light-duty passenger vehicles, regardless of procurement method or contract value. These requirements do not apply to existing contracts or extensions of existing agreements, short term leases of up to 12 months, customized/physically modified vehicles (such as ambulances, school buses, police cars etc.), covert surveillance vehicles, used vehicles, or vehicles greater than 4,500 kg by gross vehicle weight rating (GVWR).

To support Ontario’s automotive industry, the Buy Ontario Procurement Directive requires that all government and BPS entities purchase or lease Made-in-Ontario fleet vehicles (being a vehicle manufactured in Ontario and which has a “2” as the first digit in its vehicle identification number). Where no Made-in-Ontario vehicles are available or operationally feasible, purchasers may instead acquire a different vehicle from an Ontario Vehicle Producer (defined as an original equipment manufacturer that meets a threshold of at least 1,500 annualized jobs across Ontario of active or planned fully and partially owned vehicle assembly and plants). Only where neither of these options is feasible may an alternative acquisition be considered.

Unlike many other commitments under the Act, the fleet vehicles obligations apply even where procurements are conducted through existing vendor-of-record arrangements.

Capital Infrastructure

All “capital infrastructure procurements” are subject to additional restrictions as set out in section 4.4.2 of the Buy Ontario Procurement Directive. These projects are defined to include:

• 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; and
• transit fleet vehicles, including rolling stock (for example, subways and rail cars) and buses, but excluding light duty passenger vehicles.

These requirements apply to government, BPS, and municipal entities (under their respective directives), but do not apply to OPG or IESO, nor to procurements involving:

• medical equipment;
• information technology;
• fixtures, furniture or equipment acquired solely for ongoing or operational purposes after a facility is operational; or
• routine maintenance, repair and operations of a facility unless those activities involve repairing or renovating the physical structure of that facility.

Procuring entities must identify each major good and service required for the work, and require bidders to submit a Domestic Supply Chain Plan (“DSCP”) identifying the source of those major goods and services. “Major goods” include durable materials, systems, or components essential to ensuring operational readiness or performance, including structural materials (e.g., concrete), building envelope components (e.g., roofing), mechanical and electrical systems (e.g., HVAC), specialty items (e.g., major fixtures), furniture and equipment, and transit fleet vehicles.

The DSCP may be evaluated using one of several permitted approaches, depending on the size and structure of the procurement. The first approach treats the DSCP as an evaluated component of the proposal, either by applying a 10% evaluation advantage to bidders with the highest proportion of Ontario- or Canadian-sourced content (depending on whether the procurement falls below the thresholds set out in the Canadian Free Trade Agreement (“CFTA”)).

Alternatively, for procurements above the CFTA threshold, purchasers may score the DSCP as up to 10% of the total evaluation score, and may select a proponent whose DSCP demonstrates a materially higher level of domestic content than the top-ranked vendor, provided that the bid price is within 10% of the top-ranked vendor and the construction schedule is no more than 10% longer.

Purchasers may also establish minimum DSCP requirements as mandatory eligibility criteria. In such cases, the DSCP is not scored; instead, all proponents must meet the specified minimum standard to be eligible.

In addition, purchasers may apply weighted domestic criteria in evaluations (for example, assessing how vendors meet Ontario’s environmental and labour standards). Where used, these criteria may account for up to 35% of the overall evaluation weighting.

Entities may derogate from this model where they determine that it is not feasible for proponents to supply a DSCP, provided that an alternative approach consistent with the objectives of the Buy Ontario Procurement Directive has been developed and approval has been obtained from the appropriate senior authority of the procuring entity (being the deputy minister, CEO, or equivalent authority as applicable).

The policy may also be waived on a case-by-case basis where strictly necessary to avoid excessive cost. Where a detailed assessment demonstrates a cost premium of more than 25%, a purchasing entity may seek approval from the relevant deputy minister, CEO, or equivalent authority, as appropriate to the entity’s governance structure, to exempt the procurement from the policy requirements.

Conclusion

The Buy Ontario Procurement Directive signals a meaningful shift in Ontario’s procurement framework, placing increased emphasis on supporting Ontario-based economic activity relative to traditional considerations of procurement efficiency and cost. Similar priorities now apply in the municipal context under the related Municipal Buy Ontario Procurement Directive. Purchasing entities must remain attentive to these requirements and be prepared to assess complex and highly detailed DSCPs to ensure compliance. Suppliers, in turn, should carefully review their supply chains and sourcing arrangements to confirm the origin of their goods and services, and to ensure they are positioned to provide accurate and supportable attestations in the bidding process.