Policy on Prioritizing Canadian Suppliers and Canadian Content in Strategic Federal Procurements – CanadaBuys

By GovPrepare News Desk – December 17, 2025

Standfirst: The Government of Canada has updated its federal procurement strategy to prioritize Canadian suppliers and content in strategic purchases. This policy aims to build economic resilience, strengthen domestic industries, and support national security.

Key Highlights

• New policy mandates prioritization of Canadian suppliers in federal strategic procurements.
• Applies to key sectors such as defense, infrastructure, emergency response, and cybersecurity.
• Introduced under the “CanadaBuys” modernization platform.
• Implements an “economic benefits” test favoring Canadian-owned companies.
• Aligns with national security, innovation, and sustainability objectives.
• Effective immediately, with compliance mechanisms overseen by Public Services and Procurement Canada (PSPC).

Background and Context

Canada’s federal procurement system historically prioritized open competition and compliance with international trade agreements. However, global disruptions such as the COVID-19 pandemic, supply-chain bottlenecks, and rising geopolitical tensions have emphasized the need for supply chain security and domestic industrial capacity.

The Government of Canada procures over $20 billion annually in goods and services. In recent years, the Treasury Board and PSPC have studied ways to modernize public procurement with a focus on inclusivity, economy building, and climate accountability. The CanadaBuys platform, introduced in 2022, represents an integral shift toward a more transparent and accessible procurement process.

According to the 2023 “Strengthening Canada’s Supply Chains” report, over 60% of Canadian businesses expressed concern about foreign competition in critical sectors. This new policy directly responds to those concerns.

The New Development

On December 14, 2025, Public Services and Procurement Canada (PSPC) formally issued a new procurement policy directive under the CanadaBuys digital procurement system. The directive establishes a clear obligation for federal departments and agencies to prioritize Canadian suppliers and Canadian content in strategic federal procurements.

This change affects procurements deemed “strategic,” including sectors related to public safety, defense, health infrastructure, space technology, advanced manufacturing, and cybersecurity. The policy introduces an economic impact assessment encouraging departments to evaluate whether a domestic supplier can provide comparable goods or services, even at a slightly higher cost.

According to PSPC, the policy will apply to any contract valued over $5 million and categorized as “strategically significant.” Contracts under this threshold may also be considered if they meet criteria such as regional economic impact or innovation potential.

The updated policy includes the following key criteria:

• Prioritize goods and services that contain 80% or more Canadian content.
• Evaluate Canadian ownership and control of bidding entities.
• Formally consider long-term economic benefits such as job creation in Canada.
• Apply Net Benefit Assessments previously used in foreign takeovers to procurement awards.

The directive takes immediate effect and has been communicated to all contracting authorities. Oversight will be handled jointly by PSPC, Innovation, Science and Economic Development Canada (ISED), and the Treasury Board Secretariat.

Expert and Industry Reaction

Industry experts and labor unions have largely welcomed the move. The Canadian Manufacturers & Exporters (CME) praised the policy, calling it “a necessary evolution that supports domestic productivity in a complex global environment.”

The Canadian Labour Congress (CLC) noted that prioritizing local suppliers strengthens job security and builds industrial resilience. “This is a win for working families across the country and a step toward better economic sovereignty,” said CLC President Bea Bruske.

However, some trade law analysts are advising caution. “Canada must ensure this policy remains consistent with obligations under agreements like the Canadian-European Union Comprehensive Economic and Trade Agreement (CETA) and the WTO’s Agreement on Government Procurement (GPA),” said Daniel Leblanc, trade analyst at the University of Ottawa.

To mitigate trade risks, Canada has inserted exemption clauses for national security-related procurements in most of its international agreements.

Alignment with Global or National Standards

The policy follows global trends where countries are reassessing supply chain risks and emphasizing self-reliance. The United States, for example, expanded its “Buy American” Act to prioritize American suppliers in federal spending, and the European Union passed similar guidance for critical infrastructure.

Domestically, this procurement shift aligns with Canada’s National Security Policy, the Innovation and Skills Plan, and the updated Federal Sustainable Development Strategy (2022–2026). The policy also supports Canada’s commitments under the United Nations Sustainable Development Goals (SDGs), particularly Goal 9 (Industry, Innovation and Infrastructure) and Goal 12 (Responsible Consumption and Production).

Impact on Stakeholders

For Canadian businesses: The policy opens new federal contracting opportunities, especially for SMEs, Indigenous-owned firms, and advanced manufacturers. It also encourages firms to invest in domestic production capacity to meet eligibility requirements.

For Government Agencies: Procurement officers will need to apply new decision criteria, document Canadian-content assessments, and consult economic impact frameworks. This may initially extend procurement timelines but is expected to increase strategic value.

For Consumers and Taxpayers: Over time, the policy is intended to improve resilience and reduce dependence on fragile overseas supply chains, particularly in emergencies. While short-term costs may increase slightly, long-term benefits could include enhanced national preparedness and economic diversification.

Official Guidance

• Government of Canada Newsroom
• CanadaBuys Procurement Policy Manual
• Public Services and Procurement Canada – Policies and Tools
• Canada’s Trade Agreements and Compliance Guide
• Innovation, Science and Economic Development Canada

Conclusion

The updated procurement policy reflects Canada’s growing priority on economic resilience, domestic capacity, and strategic independence. By embedding Canadian preferences into federal procurement criteria, the policy is expected to support social and economic objectives, especially in vital sectors.

The government has committed to monitoring its implementation and providing quarterly updates through the CanadaBuys portal. Businesses seeking to participate in future procurements should consult CanadaBuys and proactively align their services with the new Canadian content criteria.

For ongoing procurement updates, GovPrepare.com will continue to provide policy insights, implementation tools, and analysis across all levels of government.

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Excerpt (Meta Description): Canada updates its federal procurement policy to prioritize Canadian suppliers in strategic sectors, boosting domestic industry and supply chain security.

Tags: Canadian suppliers, public procurement, CanadaBuys, federal contracts, PSPC, Canadian content policy, supply chain, domestic industry, economic resilience, trade compliance, government procurement, national security