Last week, the Ontario government introduced Bill 72, Buy Ontario Act, 2025 which would be applicable to all public sector organizations including municipalities, contractors, sub-contractors, and third-party supply chain managers involved in the Province’s plan to use Ontario goods and services. The Act prioritizes Ontario goods and services in public procurement. While we are appreciative of efforts to support Ontario and Canadian businesses and the broader economy, at a first glance of the proposed legislation, there are several gaps to be addressed.
While many municipalities have passed resolutions and have been reviewing local procurement policies since the beginning of the US tariff scheme this year, this legislation formalizes requirements to do so.
The Bill sets a framework for regulating procurement in the Ontario public sector. Management Board of Cabinet (MBC) may issue directives requiring compliance with specified procurement policies, the scope of which could include:
- Procedure and standards that outline preference to be given to Ontario or Canadian goods and services
- Requirements to support Ontario business
- Requirements to implement vendor performance standards and practices
- The establishment of reporting requirements or procedures
- Requirements that specify compliance and enforcement measures and impose those measures on vendors
Powers to issue directives may be delegated to the Cabinet or any other person employed by ministries, agencies, corporations, boards, commissions etc. Failure to comply with requirements imposed under this Act may result in MBC directing funds to be withheld from an organization. There are also regulation-making authorities to exempt public sector entities from a provision of the Act that may allow for the procurement of goods and services outside of Canada in certain circumstances.
This is of interest as we understand that there are many goods and services procured by municipalities that cannot be purchased locally because there is no Ontario or Canadian-based business that provides a particular good or service or parts of a good or service. Moreover, there may be instances where the market for certain goods and services is not equivalent to those outside of Canada, which can result in increased costs to local taxpayers.
This is particularly relevant for the 2026 Ontario municipal elections as election procurement is already underway, and we understand that some election vendors are US or internationally based.
Adding More Red Tape
From our initial read of the proposed legislation, these requirements may contribute to additional red tape and administrative burden on municipal staff, who may be responsible for providing additional reports on this to the Province. This is especially problematic for smaller municipalities who struggle with staff capacity, to ensure that sub-contractors and third parties that may be engaged by main vendors are in adherence to any future directives. Adherence to certain directives may also dissuade smaller local companies that rely on sub-contractors from bidding on municipal projects of Provincial directives. This is potentially limiting to both Ontario small businesses, municipalities and their residents.
We will continue to monitor the progress of this Bill and engage other associations and interested parties on next steps. In the meantime, if you have feedback or comments, such as what goods or services should be exempt from provisions of the Act or comments on the potential administrative or financial burdens, please contact us.