Canada: New Year Brings New Requirements, Reporting Obligations And Updated Trade Agreement Thresholds

Building Ontario Businesses Initiative

In 2024, most public buyers in Ontario will be required to implement the Building Ontario Businesses Initiative (BOBI). According to the Government of Ontario, BOBI is aimed at directing procurement opportunities to local businesses, leveling the playing field for Ontario businesses, supporting economic and regional development, encouraging growth in the global market, and better preparing Ontario's supply chain for future emergencies.

Background

On February 24, 2022, Ontario introduced the Building Ontario Businesses Initiative Act, 2022 (BOBIA) through the Fewer Fees, Better Services Act, 2022. BOBIA came into force on January 1, 2024, and the first regulation under BOBIA, O. Reg. 422/23 (BOBIA Regulation) was also issued, providing some important clarifications noted below. The BOBIA requirements apply after April 1, 2024 and do not apply to public sector entities in respect of procurement processes commenced by negotiation or the issuance of a procurement document before April 1, 2024.

The BOBI and its measures, including the BOBIA and all regulations thereunder, apply to "government entities" and "designated broader public sector entities," defined in the BOBIA as:

• Government Entities: Government entities include Ontario and its ministries, a prescribed public body under the Public Service of Ontario Act, the Independent Electricity System Operator and Ontario Power Generation Inc. and its subsidiaries.
• Public Sector Entities: Designated broader public sector entities include hospitals, school boards, universities and colleges, children's aid societies, shared services and group purchasing organizations, and publicly funded organizations that received at least C$10-million in the previous fiscal year.

The BOBIA will apply to government entities and designated broader public sector entities that procure goods or services under a specified threshold amount. The threshold amounts are set out in the BOBIA Regulation as follows:

• For government entities:
  • C$30,300 in respect of a procurement process for goods; and
  • C$121,200 in respect of a procurement process for services.
• For designated broader public sector organizations:
  • C$121,200 in respect of a procurement process for goods; and
  • C$121,200 in respect of a procurement process for services.

Key Takeaways

For public buyers:

• When procuring below the trade agreement thresholds, public sector entities must procure goods and services from Ontario businesses (for domestic trade agreements) or Canadian businesses (for international trade agreements), where feasible.
• When procuring above trade agreement thresholds, public sector entities must try to procure goods and services from Ontario businesses and businesses of Ontario's trading partners, and apply weighted domestic criteria in evaluations, where feasible, and subject to the buyer's domestic and international trade obligations.
• Where feasible, and subject to the buyer's domestic and international trade obligations, public buyers must include the submission of an Economic Benefits Submission if the value of the goods and services procured is over C$50-million.
• When conducting a procurement process that is subject to an international or domestic trade agreement requiring the public sector entity to provide non-discriminatory treatment in the procurement process, the BOBIA Regulations clarify that a public sector entity is exempt from the requirements of BOBIA.

For suppliers selling to Ontario public buyers:

• For the purposes of the BOBIA, the definition of an "Ontario business" includes the concept of a "permanent basis in Ontario" and either a headquarters or main office in Ontario, or at least 250 full-time employees in Ontario at the time of the applicable procurement process.
• Ontario public buyers now have an obligation to favour Ontario businesses in certain circumstances — this might include applying weighted domestic criteria in evaluations, favouring Ontario businesses below domestic trade agreement thresholds or favouring Canadian businesses between the domestic and international trade agreement thresholds. This may lead to unique opportunities for Ontario businesses.

Updated Trade Agreement Thresholds for Canada's Free Trade Agreements

In its December 29, 2023 Contract Policy Notice, the Treasury Board of Canada Secretariat published an updated set of procurement thresholds that was indexed for inflation. The updated thresholds came into force on January 1, 2024 and are valid until December 31, 2025. The notice provides the new thresholds applicable to covered federal government procuring entities under Canada's domestic and international free trade agreements (FTAs), such as the Canadian Free Trade Agreement (CFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP), the Canada-United Kingdom Trade Continuity Agreement (Canada-U.K. TCA) and the World Trade Organization's Agreement on Government Procurement (WTO GPA).

Procurement thresholds are the monetary values at, and above which, the government procurement obligations under Canada's FTAs will generally apply to a given procurement by covered entities. Procurement threshold values are indexed for inflation every two years at the beginning of the calendar year according to the formula applicable to the FTA. Importantly for public buyers and suppliers selling to public buyers, some of the thresholds have decreased so buyers and suppliers should take note of the new thresholds.

The complete set of indexed thresholds applicable to all procuring entities covered by the CFTA, including provincial and municipal entities, are available on the CFTA Secretariat's website.

Fighting Against Forced Labour and Child Labour in Supply Chains Act

Background

The Fighting Against Forced Labour and Child Labour in Supply Chains Act, (Act) was introduced by Bill S-211 and came into force on January 1, 2024. The Act aims to prevent and reduce the risk that forced labour or child labour is used in supply chains.

This bulletin provides a brief overview of the Act and reporting requirements. For a more detailed overview of the Act, including details about its application and reporting requirements, please refer to our May 2023 Blakes Bulletin: Parliament Passes Bill S-211: The New Forced Labour and Supply Chain Reporting Law. For an overview of the responsibility and liability under the Act and what businesses should be doing to prepare for initial reporting, please refer to our October 2023 Blakes Bulletin: Complying With Canada's Forced and Child Labour in Supply Chains Act: Are You Ready?.

The Act applies to "government institutions" and "entities," as defined in the Act:

• Government Institutions. Government institution has the same meaning as in section 3 of the Access to Information Act, which includes any department or ministry of state of the Government of Canada, or any body or office, listed in Schedule I, and any parent Crown corporation, and any wholly-owned subsidiary of such a corporation, within the meaning of section 83 of the Financial Administration Act.
• Entities. An entity means a corporation or trust, partnership or other unincorporated organization that:
  • Is listed on a stock exchange in Canada;
  • Has a place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two of the following conditions for at least one of its two most recent financial years:
    • It has at least C$20-million in assets,
    • It has generated at least C$40-million in revenue, and
    • It employs an average of at least 250 employees; or
  • Is prescribed by regulations.

Reporting Obligations

Government institutions and entities that meet certain thresholds will be required to file detailed public reports on measures they have taken to identify, address and prevent forced labour, prison labour and child labour in their supply chains. The first report will be required to be filed on or before May 31, 2024.

Enforcement and Offences

An entity or individual that fails to submit a satisfactory annual report or make it public, obstructs a designated official or fails to comply with an order from the Minister of Public Safety and Emergency Preparedness is guilty of a summary offence and liable to a fine of up to C$250,000. Every director or officer who directed, authorized, assented to, acquiesced or participated in any of these offences will also be personally liable for the offence.

Key Takeaways for Procurement

• Entities with reporting obligations should begin preparing in anticipation of providing a report by May 31, 2024.
• Exposure to statutory or civil liability can be minimized by ensuring that statements in a report are accurate and supported by underlying records and due diligence.
• Both public buyers and suppliers should undertake a risk assessment of its supply chain to understand the parts of its supply chain that may carry out a risk of forced labour being used.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.