Buy Ontario Procurement Directive: key requirements for public sector procurements

In late March, Ontario released the Buy Ontario Procurement Directive (the Directive) under its recently enacted Buy Ontario Act (Public Sector Procurement), 2025 (the Act)¹. The Directive consolidates existing procurement initiatives and outlines additional requirements that government and broader public sector (BPS) entities must adhere to when conducting new procurements. With the Directive now in force as of April 13, 2026, public sector entities and suppliers should review their procurement practices and supply chains as the new requirements may materially affect procurement planning, supplier eligibility, and bid evaluations.

What you need to know

• Broad scope. This Directive applies to all ministries, government agencies, Ontario Power Generation (OPG), the Independent Electricity System Operator (IESO), as well as “designated broader public sector organizations” as defined under the Broader Public Sector Accountability Act (which includes hospitals, school boards, universities and colleges, among other provincially funded entities). It applies to new procurements that have not been issued or posted as of April 13, 2026.
• Existing procurement policies and definitions. The Directive consolidates requirements under the Building Ontario Business Initiative (BOBI) and the Procurement Restriction Policy (for US businesses). The Directive also adopts BOBI’s definition of what businesses qualify as an “Ontario business” (i.e., a supplier/manufacturer/distributor that conducts its activities on a permanent basis in Ontario, and has either its headquarters or main office in Ontario or has at least 250 full-time employees in Ontario at the time of the procurement). It similarly adopts the definition of a “US business” from the Procurement Restriction Policy (i.e., a supplier/manufacturer/distributor that has its headquarters or main office in the US, and has fewer than 250 full-time employees in Canada at the time of the procurement).
• Strategic requirements. The Directive outlines two “strategic categories”, addressing procurement requirements relating to fleet vehicles and capital infrastructure:
  • Fleet vehicles: for any new procurement of light-duty passenger fleet vehicles, entities must purchase or lease “made-in-Ontario” fleet vehicles, or purchase or lease a new vehicle from an Ontario Vehicle Producer.
  • Capital infrastructure: for construction activities, associated fixtures, furniture, and equipment required for a facility’s construction and operational readiness following construction completion, and for transit fleet vehicles (excluding light-duty passenger vehicles), procurements must incorporate a Domestic Supply Chain Plan (DSCP) method and, wherever feasible, apply weighted domestic evaluation criteria where the procurement value exceeds $368,000. The capital infrastructure requirements do not apply to OPG or the IESO.
• Municipalities now subject to the Act. In addition to the Directive, Ontario introduced Ontario Reg. 54/26 under the Act, which prescribes municipalities, local boards, and municipal services corporations as public sector entities for purposes of the Act. Ontario has also released the Municipal Buy Ontario Procurement Directive (Municipal Procurement Directive), which directs municipal sector entities to prioritize Ontario and Canadian goods and services in procurement. As a result, these entities must now comply with general procurement reporting requirements, as well as requirements relating to fleet vehicles and capital infrastructure procurements.

The Directive

Scope and applicability

As discussed in our previous bulletin, the Act received royal assent in December 2025, granting Ontario’s Management Board of Cabinet directive-making authority to establish procurement policies for public sector entities to prioritize Canadian and Ontarian goods and services. The Directive clarifies how these requirements are to be implemented and harmonizes them with existing procurement initiatives.

The Directive applies generally to government entities (including all ministries, provincial agencies, OPG and its subsidiaries, and the IESO), and “designated broader public sector organizations” as defined under the Broader Public Sector Accountability Act, 2010 and corresponding BPS Procurement Directive (which includes hospitals, school boards, universities, and colleges, among other provincially funded entities)². However, the Directive specifies it does not apply to procurements needed to address urgent and unforeseen situations (e.g., emergencies).

The Directive’s five categories of requirements

1. General requirements

The Directive requires government and BPS entities to retain documentation on procurements covered by the Directive, and prepare and provide information and data as required by Supply Ontario, the Ministry of Public and Business Services Delivery and Procurement, or the Treasury Board Secretariat.

2. Building Ontario Business Initiative (BOBI)

While the Act repealed the Building Ontario Business Initiative Act, 2022 effective March 30, 2026, the Directive incorporates BOBI guidance into the Directive’s requirements. The table below outlines the strategies that the entity must incorporate into its procurement approach based on the value of the procurement.

Government and BPS entities must use the BOBI strategy specified for the applicable procurement type and value, following the processes set out in the document, “Building Ontario Business Initiative – A Guide for Buyers” (BOBI Guide)³. For instance, Strategy 1 of the BOBI Guide applies where entities “must give preference to Ontario business”. The Strategy outlines that buyers must give such preference by either limiting the eligibility to participate to only Ontario businesses, or applying a 10% evaluation advance to Ontario businesses if eligibility is not limited to just Ontario businesses⁴. These BOBI requirements do not apply to the Directive’s specific requirements relating to fleet vehicles and capital infrastructure (described more below).

The Directive adopts the definitions of Ontario business and Canadian business under BOBI. An Ontario business means a supplier, manufacturer, or distributor of any business structure that conducts its activities on a permanent basis in Ontario and either has its headquarters or main office in Ontario, or has at least 250 full-time employees in Ontario at the time of the applicable procurement process.

The definition of a Canadian business is substantively the same, except that the business must be located in any province or territory within Canada, and employment is measured with respect to all of Canada.

3. Procurement Restriction Policy (for US businesses)

The Procurement Restriction Policy is also now incorporated under the Directive. Announced in April 2025 in response to US tariffs, the policy aims to restrict US businesses from accessing public sector procurement in Ontario. The policy excludes US businesses from all new procurements of goods and services of any value, regardless of the method of procurement (i.e., invitation, competitive, or non-competitive). It does not apply to government or BPS entities using existing vendor-of-record arrangements, or contract extensions under the terms of the original agreement.

For purposes of this policy, a US business means a supplier, manufacturer, or distributor of any business structure that (i) has its headquarters or main office located in the US; and (ii) has fewer than 250 full-time employees in Canada at the time of the applicable procurement process. A Canadian subsidiary controlled by a company with headquarters in the US will be considered a US business unless the subsidiary has 250 or more full-time employees in Canada.

Procurement from US businesses is permitted only in the limited circumstances set forth in the Directive—if it is the only viable source for a good or service and the procurement cannot be delayed, or, in the case of services, where the US business commits to delivering at least 90% of the services through staff located in Canada.

4. Strategic category: fleet vehicles

The Directive establishes two “strategic categories” to advance its public sector procurement goals. The first category supports Ontario’s automotive industry by requiring public sector entities to purchase or lease vehicles manufactured in Ontario or from original equipment manufacturers operating in Ontario. These requirements apply to any new procurement of any light-duty passenger fleet vehicles with a gross vehicle weight rating (GVWR) at or less than 4,500 kg, regardless of procurement value and method (e.g., competitive, non-competitive) or type (purchase or lease).

These fleet vehicle requirements do not apply to, among other things, existing contracts executed before the effective date and permitted extensions, short‑term leases up to 12 months, used vehicles, covert or surveillance vehicles, vehicles that are physically modified or upfitted for operational use (for example, ambulances and police cruisers), and vehicles with a GVWR greater than 4,500 kg.

Under the Directive, entities must purchase or lease “made-in-Ontario” fleet vehicles (defined as a vehicle manufactured in Ontario and containing a “2” as the first digit in the vehicle identification number). Where this is not possible or operationally feasible, the entity must instead purchase or lease a new vehicle from an Ontario Vehicle Producer, defined as an original equipment manufacturer that sells vehicles and meets “the threshold of 1,500 annualized jobs across their Ontario footprint of active and/or planned fully and partially owned vehicle assembly and plants”⁵.

If neither a made-in-Ontario fleet vehicle nor a vehicle from an Ontario Vehicle Producer are available, or the purchase or leasing of such a vehicle is not operationally feasible, the entity may consider alternative procurement strategies, provided that the rationale is documented and appropriate leadership approval is obtained.

5. Strategic category: capital infrastructure

The Directive places new emphasis on maximizing the use of Ontario-made and Canadian-made goods and services in capital infrastructure procurements covered by the Directive. The Directive defines “capital infrastructure procurements” broadly to include construction activities, associated fixtures, furniture, and equipment required for a facility’s construction and operational readiness following construction completion, and transit fleet vehicles (excluding light-duty passenger vehicles). “Construction” covers the full lifecycle of physical works, including “construction, reconstruction, demolition, repair, and renovation”, as well as related preparatory and incidental activities, materials, equipment, and machinery incorporated into the project.

These new capital infrastructure requirements do not apply to OPG or IESO. Nor do the requirements apply to the procurement of medical equipment, information technology, fixtures/furniture/equipment for operational purposes, or routine maintenance, repair, and operations.

For each capital infrastructure procurement, government and BPS entities must outline in the procurement documents each major good and each service required for the deliverables being procured. The entity must also implement a method of DSCP within the procurement, and apply weighted domestic criteria (wherever feasible). Entities must also refer to any ministerial guidance issued on how to apply these requirements.

Government and BPS entities must implement one of two methods of DSCP for their capital infrastructure procurement:

1. Evaluated DSCP approach: The Directive outlines two methods for an evaluated DSCP based on the procurement value threshold. For lower value procurements, entities apply a 10% evaluation advantage to the bidder with the highest proportion of Ontario-made goods and services in their DSCP. For higher value procurements, entities may either (a) incorporate this 10% evaluation advantage (also factoring in Canadian-made goods and services), or (b) have the DSCP account for 10% of the bidder’s total evaluation score and select a bidder with a DSCP score at least 50% higher than the top-ranked bidder, provided that bidder’s price is within 10% and schedule is no more than 10% longer than the top-ranked bidder.
2. Commitment DSCP approach: For the commitment DSCP approach, the entity incorporates a mandatory eligibility requirement where vendors commit in a DSCP to meet or exceed a specific proportion of Ontario or Canadian-made goods and services as part of the procurement.

In addition to requiring a DSCP, the Directive requires entities to apply weighted domestic evaluation criteria wherever feasible and when the procurement value is above $368,000. When weighted domestic evaluation criteria is used, it cannot be worth more than 35% of the overall weighting for the procurement.

The Directive allows government and BPS entities to use an alternative method to those described in the Directive, if (i) it is not feasible to require vendors to submit a DSCP, (ii) the alternative method is “consistent with and advances” the objectives of the Directive’s capital infrastructure procurement section, and (iii) the required senior approval is obtained. Additionally, in limited circumstances, an entity may exclude a procurement from the capital infrastructure requirements on value-for-money grounds where a detailed market assessment indicates applying the requirements could increase estimated costs by 25% or more and the entity obtains the required senior approval.

Lastly, if a capital infrastructure procurement is or will be funded by the federal government, public sector entities should, where possible, negotiate the funding terms to allow for the capital infrastructure requirements. Unless the requirements conflict with the federal funding conditions, the entity must still apply the capital infrastructure requirements. Given the significant federal funding being directed towards major projects, public sector entities should assess how these requirements interact with potential federal funding obligations.

Municipal Buy Ontario Procurement Directive and O. Reg. 54/26

In addition to the Directive, Ontario has also enacted O. Reg. 54/26 and issued the Municipal Buy Ontario Procurement Directive (Municipal Procurement Directive)⁶. Filed on March 27, 2026, O. Reg. 54/26 prescribes municipalities, local boards, and municipal services corporations as public sector entities for the purposes of the Act, subject to certain regulatory exceptions⁷.

The Municipal Procurement Directive establishes procurement requirements for all municipalities, local boards, and municipal services corporations. The requirements largely mirror those set out in the Directive, including general reporting requirements and those relating to fleet vehicles and capital infrastructure. However, notably, the Municipal Procurement Directive does not incorporate the BOBI or the Procurement Restriction Policy.

Timeline and next steps

The Directive came into force on April 13, 2026. On the same date, the general reporting and fleet vehicle requirements under the Municipal Procurement Directive took effect for municipalities, while the capital infrastructure requirements applicable to municipalities will come into effect on May 15. For local boards and municipal services corporations, all applicable requirements do not come into effect until June 1.

Governments and public sector entities will need to carefully assess how best to structure upcoming procurements in light of both new and existing requirements. This includes integrating any newly prescribed methods and tools designed to encourage domestic production, as well as preparing for expanded compliance and reporting requirements.