Buy Ontario Act: new legislation to use public sector procurement to bolster Ontario’s economy

On December 11, 2025, Ontario passed the Buy Ontario Act (the Act), new legislation aimed at implementing a framework to regulate procurement within the public sector¹. The legislation gives the Government of Ontario directive-making authority to set procurement policies requiring public sector entities—and their suppliers—to prioritize Ontario and Canadian goods and services. Having received royal assent, the Act is now in effect; however, no draft directives or regulations have been released, leaving many details of the law unknown. Public sector entities and suppliers should monitor developments closely to prepare for potential changes in procurement requirements.

What you need to know

• Purpose and procurement directives: The Act allows for the creation of a framework for public sector procurement, prioritizing Ontario (and Canadian) goods and services. It grants the Management Board of Cabinet directive-making authority to outline procurement policies, procedures and standards for which public sector entities must comply with. Future directives may also harmonize with Ontario’s existing policies and/or policies of other provinces and the federal government.
• Broad definition of public sector entity: The Act captures a wide range of organizations—government ministries, agencies, school boards, hospitals, post-secondary institutions—and their third-party supply chain managers.
• Strong enforcement and compliance measures: Non-compliance by a public sector entity can trigger government withholding of funding and reviews initiated by the Minister, creating significant operational and financial risk for public sector entities that fail to comply.
• Repeal of the Building Ontario Businesses Initiative Act, 2022 (BOBI): The Act repeals the BOBI, Ontario’s current legislation to promote purchasing from Ontario businesses. BOBI’s repeal comes into force on a day to be named by the Lieutenant Governor in Council. The Lieutenant Governor in Council is also granted regulation-making authority to address transitional matters arising from the Act’s enactment or BOBI’s repeal.
• No draft directives: While the Act has received royal assent, no draft directives or regulations have been published. Details and timelines remain unclear, including which businesses will qualify as Ontario or Canadian businesses; consequently, stakeholders should monitor developments closely. The regulations under the BOBI, which might inform the approach under the Buy Ontario Act, define an Ontario business as one that conducts its activities on a permanent basis in Ontario and that has either its headquarters or main office in Ontario or at least 250 full-time employees in Ontario.  
• Uncertainty on trade agreement alignment: Domestic and international agreements like CFTA and CETA require equal treatment of goods and suppliers between parties and jurisdictions. Until a draft procurement directive is published, how Ontario will reconcile these trade obligations with a Buy Ontario Policy remains unclear. The previous BOBI regulations were carefully drafted to limit their application in order not to violate trade agreements.

The Act

Purpose and directive-making authority

The Act’s purpose is to establish a framework for regulating public sector procurement and protect Ontario “by using public sector procurement to support Ontario businesses and workers and to build a more competitive, resilient and self-reliant provincial economy”². These measures aim to implement a Buy Ontario Policy, requiring public sector organizations to prioritize Ontario (and then Canadian) goods and services. This initiative builds on recent attempts to address foreign participation, including the Procurement Restriction Policy and the Unleashing Our Economy Act, 2025³ (Bill 5). The Act also repeals the government’s current legislation to promote purchasing from Ontario businesses, the Building Ontario Businesses Initiative Act, 2022 (BOBI). BOBI’s repeal comes into force on a day to be named by the Lieutenant Governor in Council.

The Act grants the Management Board of Cabinet (Board) directive-making authority to outline procurement policies, procedures and standards for which public sector entities are to comply with. Under the Act, the scope of proposed directives could include:

• requiring that preference be given to Ontario or Canadian-made goods and services;
• imposing requirements to either support and promote Ontario businesses and their goods and services, or protect Ontario businesses by limiting eligibility to participate in public sector procurements;
• requiring implementation of vendor performance standards and practices;
• establishing reporting requirements or procedures; or
• requiring public sector entities to use specified compliance/enforcement measures and to impose those measures on vendors⁴.

A directive can also incorporate, by reference, other policies and directives of the Government of Ontario and other governments⁵. For example, future directives could reference Ontario’s Procurement Restriction Policy, or any potential foreign participation regulations under Bill 5. Directives could also align with other provincial or federal initiatives, including the new federal Buy Canadian Policy—the details of which have not been announced but are expected to “provide a roadmap that can be adopted by provinces, territories and municipalities”⁶.

Upon introducing the Act, the Government of Ontario also announced it is working to establish vendor lists of Ontario and Canadian suppliers “to support their inclusion in provincial infrastructure and procurement processes, including as contractors and subcontractors”⁷.

Broad reach for “public sector entities” and procurement agreements

The Act captures a broad class of public sector organizations. Under the Bill, “public sector entity” includes:

• a government entity as defined in the Supply Chain Management Act (Government, Broader Public Sector and Health Sector Entities), 2019;
• a designated broader public sector organization (which has its meaning from the Broader Public Sector Accountability Act, 2010); or
• any other person or entity prescribed by regulations under the Act.

This broad definition means compliance will extend across agencies, hospitals, school boards, post-secondary institutions and many other public sector entities. Other entities can be added to the definition of public sector entity by regulation and, in announcing the Act⁸, the Government indicated the legislation would also apply to municipalities, despite municipalities not yet being included in the definition. Entities contracting with a third-party supply chain manager, such as a group purchasing organization, must also ensure those agreements require the manager to comply with any procurement obligations imposed on the public sector entity⁹.

Procurement directives issued under the Act could have a broad effect on public sector procurement. Stakeholders should monitor the legislation and review their procurement processes and documents to ensure flexibility and readiness for future requirements.

Non-compliance enforcement

The Act outlines strict measures on public sector entities who are not in compliance with the legislation and its directives. Non-compliance can trigger withholding of funding from the Government of Ontario until requirements are met¹⁰. Persistent non-compliance by a public sector entity can result in permanent forfeiture of funding¹¹.

The Act also empowers the Minister to appoint a reviewer to review and prepare a report on a public sector entity’s compliance¹². Following the review, the Minister can publish the report and/or direct the entity to undertake corrective action to remedy the non-compliance¹³. Public sector organizations dependent on government funds will need to prioritize compliance to avoid financial and operational risk.

Open questions: future directives, definitions and trade agreement implications

Future directives

The Act has received royal assent. However, Ontario has yet to publish any draft regulations or directives relating to the Act. As such, more details have yet to come in terms of to how and to what extent the legislation could impact public sector procurement. However, Ontario and its agencies have already put in place requirements relating to foreign participation in certain energy programs. For example, both the Independent Electricity System Operator’s Long-Term 2 Request for Proposal Window 1 procurement and the Hydrogen Innovation Fund provide incentives through rated-criteria points for proponents/applicants that meet “Canadian Status” requirements. Until more information is announced, it remains to be seen if future directives will incorporate similar concepts and rules from these initiatives.

Definition of Ontario and Canadian businesses

What businesses will qualify as Ontario or Canadian businesses has also not yet been defined. The regulations under BOBI, which might inform the approach under the Buy Ontario Act, defined an Ontario business as one that conducts its activities on a permanent basis in Ontario and that has either its headquarters or main office in Ontario or at least 250 full-time employees in Ontario¹⁴. Meanwhile, under Ontario’s Procurement Restriction Policy, the Province defined a “U.S. business” as an entity 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 process¹⁵. Importantly, in contrast to the BOBI definition of an Ontario business, subsidiaries of corporations with headquarters or main offices located in the U.S. are considered U.S. businesses unless they have 250 full-time employees in Canada.

Trade agreement considerations

Greater clarity is needed on how the Act would interact with Ontario’s trade obligations. For example, the Canadian Free Trade Agreement (CFTA) establishes rules for non-discrimination of goods, services and suppliers between Canadian jurisdictions, with each party according treatment “no less favourable than the best treatment the party accords to its own such goods and services”¹⁶.

Similar non-discrimination rules apply under the Canada-EU Comprehensive Economic and Trade Agreement (CETA), which mandates equal treatment for EU services, with limited carve-outs¹⁷. Ontario is also a party to other international trade agreements addressing government procurement, although CFTA and CETA have the broadest application to public sector entities. In adopting BOBI, the government was careful to work within the parameters of applicable trade treaties and its requirements only applied in circumstances where trade treaty non-discrimination provisions did not apply (such as procurements under the dollar value thresholds of the trade treaties).

Many questions remain on the Act and the scope of its impact. Interested procurement participants and public sector organizations should monitor developments relating to the Act closely, and how any proposed directives would affect their supply chain and procurement processes.