Canada: Buy Ontario Mandate: Implications On Public Procurement Practices

With its first regulation (O Reg 422/23) set to be operational from April 1, 2024, the Building Ontario Businesses Initiative Act, 2022 (BOBIA) represents a strategic move by the Ontario provincial government to fortify supply chain security and stimulate economic growth and productivity within the province. It mandates that public and broader public sector entities, such as hospitals and educational institutions, give precedence to Ontario-based businesses in the procurement of goods and services below certain threshold values. The Act, which took effect on January 1, 2024, outlines the criteria for what constitutes an "Ontario business" and specifies the types of goods and services, including their value thresholds, that are subject to this preferential treatment.

Only procurements below set thresholds are covered by the new regulations as follows:

To be deemed an "Ontario business," a company must operate on a permanent basis within Ontario and meet certain criteria related to its headquarters, main office location, or employee count in the province. BOBIA allows for a range of goods and services to fall under its purview, except for specific exclusions such as emergency services, legal services, and goods or services not available from Ontario businesses, among others. Preferences in procurement can be manifested either through exclusive opportunities for Ontario businesses or a competitive advantage in the bidding process.

Key takeaways for affected businesses

Affected businesses, particularly those operating in or aiming to enter the public and broader public sector markets in Ontario, should consider several practical measures to align with BOBIA's requirements:

• Evaluate eligibility: Companies should assess whether they qualify as an "Ontario business" under BOBIA's criteria and ensure they can provide necessary evidence or affirmations of their status when participating in procurement processes.
• Legal and trade agreement considerations: Businesses should consult with legal experts to navigate the implications of BOBIA alongside obligations under various trade agreements, ensuring compliance and mitigating the risk of legal challenges of their procurement practices and procedures.
• Review procurement opportunities: Businesses should stay informed about procurement opportunities from public and broader public sector entities to identify those that are now more accessible under BOBIA.
• Adjust business strategies: If applicable, businesses outside Ontario may need to reconsider their strategies, such as establishing a stronger presence in Ontario through new offices or increasing employment to meet the criteria for an "Ontario business."
• Understand exemptions and thresholds: It is crucial for businesses to understand the types of goods and services and their value thresholds that are exempt from BOBIA to tailor their offerings accordingly.
• Update procurement policies and processes: Businesses should revisit and, if necessary, revise their procurement policies and processes to align with BOBIA's requirements and leverage the new "buy Ontario" rules to their advantage.
• Engage with public sector entities: Proactive engagement with public and broader public sector entities can provide insights into their procurement needs and preferences, enabling businesses to better position themselves as preferred suppliers under BOBIA.

Practical considerations for broader public procurement entities

Hospitals and other broader public sector entities in Ontario are required to make significant adjustments to their procurement policies and practices to prioritize Ontario-based businesses for the supply of goods and services. Here are the key changes that such entities should consider implementing to comply with BOBIA:

• Update procurement policies: Review and update current procurement policies and processes to include a preference for Ontario businesses. This involves ensuring that procurement documents and templates reflect the new requirements under BOBIA.
• Set procurement thresholds: For goods and services, adhere to the specified thresholds under BOBIA. Hospitals, for example, need to prefer Ontario businesses for goods and services valued under CA$121,200. This means that for procurements under these thresholds, Ontario businesses should be given preference.
• Preference mechanisms: Implement mechanisms to give preference to Ontario businesses. This can be done by either limiting the procurement process exclusively to Ontario businesses or by providing Ontario businesses with a 10% evaluation advantage in competitive procurement processes.
• Vendor awareness and engagement: Increase efforts to identify and engage Ontario-based suppliers. Public procurement entities should conduct market research to identify potential Ontario suppliers and engage with them to understand their capabilities and how they can meet the procurement needs.
• Legal and trade agreement compliance: Ensure compliance with existing trade agreements. While prioritizing Ontario businesses, public procurement entities must also ensure that their procurement practices are in line with the obligations under various trade agreements that are applicable to Ontario. This will require consulting with legal counsel to navigate the complexities of compliance without violating trade agreements.
• Training and awareness for procurement Staff: Provide training and raise awareness among procurement staff about the new requirements and how to implement them effectively. This includes understanding the preference mechanism, evaluating bids with the 10% evaluation advantage for Ontario businesses, and managing procurement processes in compliance with BOBIA.
• Monitoring and reporting: Establish monitoring and reporting mechanisms to ensure compliance with the BOBIA requirements. Hospitals and other broader public entities should keep detailed records of procurement processes, decisions, and outcomes to demonstrate compliance and assess the effectiveness of the preference for Ontario businesses. Such documentation could be valuable in defending legal challenges of their procurement practices.

By taking these steps, impacted businesses can gain competitive edge in Ontario's public sector procurement landscape and public procurement entities will not only comply with the new legislative framework but also potentially gain efficiencies.

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