The Building Ontario Businesses Initiative Act, 2022, S.O. 2022, c. 2, Sched. 2 (BOBIA) took effect on January 1, 2024, and the first BOBIA regulation (O Reg 422/23) became operational on April 1, 2024. BOBIA introduces important changes to Ontario’s Broader Public Sector (BPS) Procurement Directive, as it aims to foster economic growth within Ontario by requiring public-sector organizations to prioritize local businesses in procurement activities.
It is noteworthy that section 3 of BOBIA legally obligates (“shall give preference to”) public-sector organizations to prefer Ontario businesses.
The changes align with the Government of Ontario’s broader objective of promoting Ontario businesses, enhancing competition, and strengthening domestic supply chains. The scope of the changes affects public procurement processes, policies, and compliance standards across the broader public sector, which includes hospitals, school boards, municipalities, universities, and other publicly funded organizations. Such organizations need to make significant amendments to their procurement practices.
Scope of the Amendments
1. Thresholds and Exemptions: Public sector procurement must prioritize “Ontario businesses” for procurements below certain financial thresholds involving both goods and services. The procurements below the following financial thresholds are covered by BOBIA:
| For Government Entities | For Designated BPS Organizations |
|---|---|
| $30,300 CAD in respect of a procurement for goods | $121,200 CAD in respect of a procurement for goods |
| $121,200 CAD in respect of a procurement for services | $121,200 CAD in respect of a procurement for services |
The regulation clarifies that 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 Ontario.
For procurements above the thresholds, public-sector entities must still comply with the domestic and international trade agreements such as the domestic Canadian Free Trade Agreement (CFTA) and the Comprehensive Economic and Trade Agreement (CETA) with the European Union, which impose non-discrimination rules on procurements above certain thresholds.
BOBIA does not apply in the case of specific exclusions, such as emergency services, legal services, and goods or services not available from Ontario businesses, among others.
2. Impact on BPS Organizations: In practical terms, BPS organizations must now revise their procurement policies to align with BOBIA, including developing and incorporating new evaluation criteria that prioritize Ontario businesses, as applicable.
In giving a preference to Ontario businesses, BPS organizations can either limit a proposed procurement exclusively to Ontario businesses or they can choose to provide Ontario businesses with a 10% advantage in their procurement evaluation methodology.
To make the most of the new preference mandate under BOBIA, BPS organizations would be well served to try to identify and attract Ontario businesses to bid on their procurements. For this purpose, they may consider conducting market research and coordinate a reach-out campaign to ensure they attract a meaningful pool of bidders.
PBS organizations should also establish new training programs for their procurement staff and provide adequate instructions on how to implement the new requirements effectively. As is intended by BOBIA, this could encourage a reduction in administrative burdens, and enable more efficient procurements and potentially accelerate project time to completion.
Under BOBIA BPS organizations will likely face increased scrutiny regarding the effectiveness and fairness of their procurement practices. As a result, enhanced monitoring and reporting mechanisms may be necessary to demonstrate compliance with both BOBIA and the trade agreements.
There is a potential concern that the BOBIA mandate could lead to reduced competition in certain procurement markets, which may impact pricing and innovation. BPS Organizations must therefore remain vigilant in ensuring that their procurement practices continue to promote a competitive marketplace, even with the emphasis on Ontario businesses.
Conclusion
The changes under BOBIA represent a significant shift in public procurement policy in Ontario. It was not very long ago that any type of local preference or preference based on perceived inequities experienced by different groups in Ontario were firmly denounced.
By prioritizing Ontario businesses, the provincial government now seeks to use public sector spending as a catalyst for economic growth, job creation, and resilience in Ontario’s supply chains. For procurement professionals and BPS organizations, these changes require a careful balancing of local economic goals with compliance obligations under the applicable trade agreements.
* Denis Chamberland is a procurement law specialist, counsel with Fogler, Rubinoff LLP. Among other clients, he works extensively with Broader Public Sector Organizations in Ontario. He can be reached at [email protected]
