Ontario Government Procurement Policy Update for U.S. Companies
Background
As part of its broader strategy to protect Ontario’s economic interests, the Government of Ontario has introduced a new procurement policy aimed at restricting access to public sector contracts for U.S.-based businesses. The move is a direct response to ongoing tariffs imposed by the United States under President Trump, which continue to affect Canadian products and services.
The policy, effective as of March 4, 2025, is intended to level the playing field for Ontario-based companies by limiting opportunities for American firms to bid on public procurements within the province. Should the tariffs be lifted or revised, the Ontario government has indicated that the procurement restrictions will be reassessed and may be adjusted or rescinded accordingly.
Application & Scope
This Policy applies to all public sector entities, which means government entities and all designated Broader Public Sector organizations, unless otherwise specified.
Government entities:
- All ministries
- All provincial agencies (including any provincial agencies that are Other Included
- Entities under the OPS Procurement Directive)
- The Ontario Power Generation (OPG)
- The Independent Electricity System Operator (IESO)
Designated BPS Organizations:
Existing procurement direction continues to apply, including the rules to support the Building Ontario Businesses Initiative (BOBI). For government entities this means all applicable procurement directives, including the OPS Procurement Directive. For the BPS this means the BPS Procurement Directive.
In the event of any conflict or inconsistency between any applicable procurement directives and this Policy, this Policy prevails to the extent of the conflict or inconsistency. This Policy does not prevail over legislation.
This Policy applies:
- To all new procurements of goods and services (consulting and non-consulting) at any value.
- Regardless of the method of procurement - invitational, open competitive or non-competitive.
This Policy does not apply when public sector entities use existing Vendor of Record arrangements or other arrangements available to public entities.
A U.S. business means a supplier, manufacturer or distributor of any business structure (includes a sole proprietorship, partnership, corporation or other business structure) that:
- Has its headquarters or main office located in the U.S., and
- Has fewer than 250 full-time employees in Canada at the time of the applicable procurement process.
A public sector entity can rely on a business representation that it does not meet the definition of a U.S. business. See the implementation section for where to find information on how to apply this definition. There are no exemptions to this Policy.
Requirements:
- Public sector entities must exclude U.S. businesses from procurements.
- Procuring from a U.S. business is allowed only when:
a) A U.S. business is the only viable source for the good/service, and
b) The procurement cannot be delayed.
- For clarity, both of these conditions must be met.
- Except where the OPS Procurement Directive requires a level of approval higher than deputy minister, a government entity must obtain deputy minister or CEO approval, as appropriate, to procure from a U.S. business, regardless of the value.
- Designated BPS organizations must require a similar level of approval.
- Public sector entities must continue to use existing Vendor of Record arrangements (VORs) or other arrangements available to public entities.
Conclusion
The Procurement Restriction Policy represents a significant shift in how U.S.-affiliated businesses engage with the province’s public sector. While it creates new opportunities for Ontario-based suppliers, it also introduces new barriers and compliance risks for multinational firms and subsidiaries operating in the province.
While maintaining existing procurement frameworks, the Policy establishes specific conditions under which procurement from U.S. businesses may occur, including strict approval requirements. It emphasizes transparency, accountability, and reporting, while providing the necessary operational tools to support compliance.
Given the policy’s potential impact across a wide range of sectors, and its conditional nature tied to U.S. trade actions, Sussex will continue to closely monitor the implementation and evolution of this policy. Please don’t hesitate to reach out if you have questions about how this policy may affect your procurement strategy or current contracts.
