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How the Buy Ontario Act and Buy Canadian Policy will reshape construction procurement in Canada

February 2026

Ontario’s newly enacted Buy Ontario Act and the federal[1] Buy Canadian Policy together mark a significant shift requiring contractors and suppliers to spend at home – if they are going to work for the government – to strengthen domestic industries, stabilise supply chains, and protect local workers.

The construction industry stands at the intersection of both policies and is poised to experience the most immediate operational impacts. The federal material‑sourcing requirements will reshape procurement processes for major infrastructure and defence projects by compelling contractors to rely on Canadian steel, aluminium, and wood, while maintaining detailed documentation to demonstrate compliance. Suppliers who rely on international material inputs may need to adjust their sourcing models or restructure supply chains.

At the provincial level, while directives under the Buy Ontario Act have not yet been published, construction firms should anticipate future local‑preference requirements, vendor eligibility restrictions, or additional performance reporting obligations.

Across many jurisdictions worldwide, governments are rethinking how public procurement can be used as a strategic lever for economic resilience. The United States, the United Kingdom, Mexico, and Australia have all adopted forms of buy-at-home procurement, and Canada has now firmly moved in that direction at both the provincial and federal .

Buy Ontario Act

The Act

Ontario’s Buy Ontario Act (the “Act”), which passed on 11 December 2025, replaces the 2022 Building Ontario Businesses Initiative Act. It sets out a framework that allows the Province to issue directives requiring public sector entities to favour Ontario or Canadian-made goods and Ontario-based services. The Act is designed around two core objectives: transforming public procurement practices to support economic development and supply chain resilience, and leveraging public sector procurement to promote, protect, and build Ontario’s economy.

At the time of writing this article, directives under the Act continue to be developed and have not yet been published. This leaves many operational details to be determined. The government has been working with its public sector partners to develop procurement policies and directives under the legislation. Individuals who wish to provide input may submit their comments through the Ontario Regulatory Registry until 2 March 2026.

Application

The Act applies broadly to public sector entities, including government ministries, public sector organisations, and municipalities. Importantly, it also extends to third-party supply chain managers in contracts with public sector entities, insofar as the public sector entity must ensure that the contract requires the supply chain manager to comply with the Act’s requirements.

Scope

The scope of potential directives is wide: they may mandate preference for Ontario-made goods, restrict certain procurements to Ontario businesses, introduce reporting obligations, or establish vendor performance standards with enforceable consequences for non-compliance.

Issues

The extent to which Ontario can adopt such measures remains constrained by Canada’s domestic and international trade commitments. Under the Canadian Free Trade Agreement (CFTA) and the Comprehensive Economic and Trade Agreement (CETA), discriminatory procurement practices against EU suppliers are prohibited, meaning a substantial portion of procurements may remain outside the reach of Buy Ontario unless specific exemptions apply.

Buy Canada

The Framework

At the federal level, the Government of Canada effected the Buy Canadian Procurement Policy Framework (the “Framework”) on 16 December 2025. The Framework provides the foundation for additional Buy Canadian policies and measures in the context of federal procurements. These include the following:

• Policy on Prioritising Canadian Materials in Federal Procurement: This requires the use of Canadian-produced materials – steel, aluminium, and wood – in major federal construction and defence projects, with flexibility to expand on other key materials.
• Policy on Prioritising Canadian Suppliers and Canadian Content in Strategic Federal Procurements: This encourages the participation of Canadian suppliers by giving them a price-based evaluation credit in the bid evaluation process and incentivises the use of Canadian content by evaluating bids based on the inclusion of Canadian goods, Canadian services, and/ or Canadian value-added (i.e., proportion of service / good performed/produced in Canada).
• Interim Policy on Reciprocal Procurement: Canadian suppliers and those from countries that provide Canada with equivalent procurement market access through trade agreements are prioritised for federal contracts.
• Small and Medium Business Procurement Program: This is anticipated to create tailored streams for SMBs by providing them with dedicated support to navigate the federal system and ensure they can effectively compete for federal contracts.

The purpose of these polices are to strengthen economic resilience by reinforcing domestic supply chains and reducing dependency on foreign suppliers at a time of global market volatility and geopolitical tension.

Impacts on the construction industry

One of the most consequential elements of the federal policy is the requirement that certain major construction and defence procurements – including those valued at $25 million or more – must use Canadian-produced steel, aluminium, and wood when the quantity of such materials exceeds $250,000. These materials must be manufactured or processed in Canada, not merely distributed by Canadian firms. The policy also introduces certification and record-keeping obligations on suppliers, signalling a more structured and scrutinised compliance environment.

How we can help

For Canadians more broadly, these developments signify a realignment of public spending toward national and provincial priorities. Both policies aim to support domestic jobs, strengthen growth across strategic industries, and insulate supply chains from international disruptions.

With expertise in procurement law, construction, and public sector contracting, Beale & Co can assist clients in interpreting new regulatory requirements, assessing how forthcoming Ontario directives or federal mandates may affect operations, and advising on compliance strategies.

Should you have any questions on this article or require tailored advice in respect of projects in Canada, please contact Andrés Durán, Karina Alibhai, or Sherry Hussain.

 

[1] “Federal” refers to the Government of Canada at the federal level, and as distinct from lower levels of government such as the Provinces in Canada. Provincial governments and the Government of Canada (aka “Federal Government”) have separate jurisdictional powers under the Canadian federal structure.

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