Ontario's new Building Ontario Businesses Initiative Act, 2022 ("BOBIA") is an effort by the provincial government to enhance supply chain security and economic growth in Ontario. It requires public and broader public sector entities (like hospitals, universities and colleges) to prefer Ontario businesses when procuring goods and services.

BOBIA largely defers to regulations to define key components of the new regime – namely: what constitutes an "Ontario business"; what goods and services are subject to the preference, and at what value; and how the preference is given effect.

BOBIA came into force on January 1, 2024, and its first regulation (O Reg 422/23) was recently issued; however, that regulation will not come into effect until April 1, 2024. That regulation sets out key components of the new regime, which are summarized below.

An "Ontario Business"

BOBIA requires that "Ontario businesses" receive preferential treatment in government procurement. To be considered an "Ontario business" for the purposes of BOBIA, a business must meet both of the following criteria:

  • It is a supplier, manufacturer, or distributor that conducts its activities on a permanent basis in Ontario, whether as a sole proprietorship, partnership, corporation or other business structure; and
  • It 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.

BOBIA permits public and broader public sector entities to rely on a vendor's representation that it meets the above criteria (e.g. an affirmation in its bid), without requiring further due diligence.

Goods and Services, Value Thresholds

The regulation contemplates all goods and services being subject to BOBIA, except for the following:

  • treasury operations services procured by the Ministry of Finance or the Ontario Financing Authority – i.e., services related to the management of financial assets and liabilities, including services related to borrowing, debt management, risk management, cash management, banking, investing, and services ancillary to the above (including advisory and information services);
  • a good or service required for an emergency (defined as a situation or impending situation that could result in serious harm to persons or substantial damage to property);
  • a good or service procured pursuant to a standing offer, vendor of record arrangement or a multi-use list;
  • a good or service procured for commercial sale or resale or for use in the production of a good or service intended for commercial sale or resale;
  • the services of a lawyer, paralegal or notary public;
  • the services of an expert witness to be used in a court or legal proceeding; and
  • a good or service that is not available from an Ontario business.

However, the preference for an Ontario business only applies to procurements with a value below certain thresholds – namely:

  • for public sector entities
    • goods with a value under $30,300
    • services with a value under $121,200
  • for broader public sector entities
    • goods with a value under $121,200
    • services with a value under $121,200

The value of goods or services must be determined based on the amount that the public or broader public sector entity reasonably expects to pay in respect of the procurement process for those goods or services.

How Preference is Given

The regulation requires that preference be given to Ontario businesses in the procurement process, either by:

  • limiting the procurement process to Ontario businesses only (other businesses would not be eligible to bid); or
  • providing Ontario businesses with a 10% evaluation advantage in the competitive procurement process.

What Should Public, Broader Public Entities Do

Although BOBIA's requirements do not apply until April 1, 2024, requirements to prefer Ontario businesses are not limited to BOBIA. Similar requirements have been introduced in the Ontario Public Service Procurement Directive, and the Broader Public Sector Procurement Directive, which are currently in effect.

Any public or broader public sector entity that has not revisited its procurement policies and process templates in light of these new "buy Ontario" rules will need to do so. This should involve consultations with legal counsel.

When complying with these new requirements, it is important that public and broader public sector entities consider their obligations under the procurement chapters of various trade agreements. Trade agreements are law in Ontario, and are not superseded by the new "buy Ontario" regime.

Implementing BOBIA and new procurement directive requirements, including preferences for Ontario businesses, without considering trade agreement obligations, may give rise to legal challenges and failed procurements.

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.