Municipal Buy Ontario: Key Impacts For Municipal Procurement

Co-authored by articling student Amanda Morana.

On April 13, 2026, the Municipal Buy Ontario Procurement Directive (the “Directive”) came into effect under the authority of the Buy Ontario Act (Public Sector Procurement), 2025 (the “Act”).¹

The Directive follows the Act, which came into force onDecember 11, 2025. The Act aims to use public sector procurement to favour Ontario businesses and is part of Ontario’s $220 billion plan to build using Ontario’s goods and services. While the Act itself does not impose obligations, it enables the government to create regulations and directives thereunder.

For a broader overview of the Buy Ontario framework and its implications across the public sector, see our earlier article, “Buy Ontario: Key impacts for public sector procurement.”

The Act stipulates that a directive made under the Act may impose requirements on a public sector entity engaging in the procurement of goods and/or services.

1. Scope of the Directive

The Directive applies to all municipal sector entities, meaning all municipalities, local boards,² and municipal services corporations³ that are prescribed as public sector entities under the Act.

The purpose of the Directive is to enable Ontario to set out procurement requirements in support of the government’s Buy Ontario mandate.

The Directive does not apply to procurements needed to address situations that are both urgent and unforeseen, such as emergencies.

2. Requirements

The Directive requires municipal sector entities to retain documentation for covered procurements, including details to support decisions or approvals, as well as prepare and provide information and data as requested by Supply Ontario, the Ministry of Public and Business Service Delivery and Procurement (“MPBSDP”), the Ministry of Municipal Affairs and Housing (“MMAH”), and the Treasury Board Secretariat (“TBS”).

3. Strategic categories

The Directive sets out requirements for Ontario’s approach to procurements in two key strategic categories:

i. Fleet vehicles

In an effort to support the domestic automotive industry, the Directive requires municipal sector entities to purchase or lease vehicles manufactured in Ontario for all new procurements of new light-duty passenger fleet vehicles with a Gross Vehicle Weight Rating (“GVWR”) at or less than 4,500 kg. This requirement exists regardless of the procurement value, method, or type, including vendor of record arrangements.

In the event that a Made-in-Ontario Vehicle is unavailable or it is not operationally feasible to purchase or lease said vehicle, the municipal sector entity is required under the Directive to purchase or lease a new vehicle from an Ontario Vehicle Producer.⁴ If neither a Made-in-Ontario Vehicle nor a vehicle from an Ontario Vehicle Producer is available or operationally feasible, a municipal sector entity may only then consider alternative acquisition strategies after they have documented the rationale and sought the appropriate approval. Municipal sector entities are encouraged to refer to operational guidance provided by the province for information on how to apply the requirements.

However, there are exceptions to this section of the Directive. Specifically, the Directive exempts:

1. existing contracts;
2. short-term leases up to 12 months;
3. physically modified vehicles (such as school buses and emergency response vehicles);
4. contract extensions included in the original agreement;
5. vehicles purchased for surveillance purposes; (vi) vehicles with a GVWR greater than 4,500 kg; and
6. used vehicles.

ii. Capital infrastructure

The Directive also sets out new requirements for procurements of capital infrastructure, which includes construction⁵ and fixtures, furniture and equipment that are included in and incidental to construction, and transit fleet vehicles. Municipal sector entities engaging in the procurement of capital infrastructure must do the following:

1. include in the procurement documents:
   1. a list of each major good⁶ and each service required for the deliverables being procured; and
   2. a requirement for vendors to submit a Domestic Supply Chain Plan (“DSCP”) that identifies the source of each of the listed major goods and services; and
2. use one of the applicable methods for Domestic Supply Chain Plans set out in the Directive,⁷ or an approved alternative method.

The structure and level of detail of the DSCP may vary depending on what is being procured, the market sector, and the tools or systems being used to conduct the procurement. At a minimum, however, DSCPs must permit bidders to provide the following information:

• the value of each major good and service required for the project, including goods and/or services supplied by subcontractors;
• indication of whether each major good is Ontario‑made⁸ or Canadian‑made⁹, and whether each service is an Ontario Service¹⁰ or a Canadian Service;¹¹
• the total dollar value of Ontario‑Made Goods and Ontario Services, Canadian-Made Goods and Canadian Services, and other goods/services included in the DSCP; and
• the total dollar value of the DSCP.¹²

Interestingly, the Capital Infrastructure Policy – A Guide for Buyers¹³ indicates that, in applying the above requirement for vendors to submit a DSCP, procuring entities can elect to use one of the following two mechanisms:

1. Evaluated approach

The DSCP is scored as part of the bid evaluation, either by:

• applying a 10% evaluation advantage; or
• accounting for 10% of the total evaluation score for the procurement. In this case, the selected vendor would be that whose DSCP score is at least 50% higher than the top-ranked vendor, provided that such selected vendor’s (1) bid price is within 10% of, and (2) construction schedule is no more than 10% longer than, the top-ranked vendor.

2. Commitment‑based approach

As an unscored mandatory condition of eligibility in the procurement, bidders must agree to meet or exceed a set percentage of Ontario or Canadian‑made goods and services through the submission of a Domestic Supply Chain Commitment Plan confirming compliance with this requirement. As with all mandatory procurement requirements, bidders that do not meet the mandatory requirement are not eligible to proceed in the procurement.¹⁴ When setting the required proportion of domestic content under this approach, procuring entities should ensure that the requirement is ambitious but achievable, based on market research, past experience, and supplier outreach whenever possible.

Municipal sector entities are required to apply the Directive to Vendor of Record arrangements whenever possible and must not use purchasing agreements to circumvent the requirements of the Directive.

In the event that a capital infrastructure procurement is or will be funded in part by the Crown in right of Canada, municipal sector entities should (i) negotiate terms for the funding that would allow the aforementioned requirements to apply to the procurement; and (ii) apply the capital infrastructure procurement requirements unless they conflict with the funding agreement.

Similar to the treatment of fleet vehicles, the requirements surrounding capital infrastructure are also subject to exceptions. Specifically, the requirements do not apply to procurements for (i) medical equipment; (ii) information technology; (iii) fixtures, furniture or equipment acquired solely for ongoing or operational purposes after the facility is operational; or (iv) routine maintenance, repair and operations unless for the repair or renovation of the physical structure.

Additionally, the Directive offers a value for money exclusion, which allows a municipal sector entity to exclude a procurement from the aforementioned requirements if: (i) a detailed market assessment indicates that applying the requirements could increase the procurement’s estimated cost by 25% or more; and (ii) appropriate approval is obtained to exclude the procurement based on its value.

3. Effective dates

The table below specifies the dates that this Directive takes effect for specific municipal sector entities.

Key takeaways

The Directive applies to municipal sector entities, inclusive of all municipalities, local boards, and municipal services, and introduces specific requirements in two strategic categories: fleet vehicles and capital infrastructure. The requirements in the Directive pertaining to capital infrastructure are complex and require action to amend existing procurement documents.

The Directive does not prevail over legislation.

The Directive introduces significant new requirements for two strategic categories concerning fleet vehicles and capital infrastructure that will have practical implications for affected organizations. Municipal sector entities conducting procurements should take proactive steps to understand how the Directive applies to their operations and procurement processes.

Given the complexity of these regulatory changes, it is advisable to consult with a legal professional specializing in procurement law to assess which provisions of the Directive are relevant to your organization, determine what amendments, if any, may be required to your existing procurement documents to ensure compliance, and develop a strategy for implementing any necessary changes in a timely and effective manner.

Footnotes

1 Bill 72, Buy Ontario Act, 2025, Legislative Assembly of Ontario <Bill 72, Buy Ontario Act, 2025 - Legislative Assembly of Ontario>

2 Local board means a local board as defined in subsection 1(1) of the Municipal Act, 2001 or as defined in subsection 3(1) of the City of Toronto Act, 2006. For clarity, it is defined in the Municipal Act, 2001 as a municipal service board, transportation commission, public library board, board of health, police service board, planning board, or any other board, commission, committee, body or local authority established or exercising any power under any Act with respect to the affairs or purposes of one or more municipalities, excluding a school board and a conservation authority.

3 Municipal services corporation means a corporation that satisfies both of the following criteria:

1. The corporation is,
   1. a corporation established by a municipality under section 203 of the Municipal Act, 2001,
   2. a secondary corporation as defined in subsection 203 (3.1) of the Municipal Act, 2001,
   3. a corporation established by the City of Toronto under section 148 of the City of Toronto Act, 2006, or
   4. a secondary corporation as defined in subsection 148(4) of the City of Toronto Act, 2006.
2. The corporation’s shares are all owned by,
   1. one or more municipalities, or
   2. one or more municipalities and the Crown in right of Ontario.

4 Ontario Vehicle Producer means an Original Equipment Manufacturer that sells vehicles and would meet the threshold of 1,500 annualized jobs across their Ontario footprint of active and/or planned fully and partially owned vehicle assembly and plants. Municipal Buy Ontario Procurement Directive, s.6, <Municipal Buy Ontario Procurement Directive>.

5 Construction means construction, reconstruction, demolition, repair or renovation of a building, structure or other civil engineering or architectural work and includes site preparation, excavation, drilling, seismic investigation, the supply of products and materials, the supply of equipment and machinery if they are included in and incidental to the construction, and the installation and repair of fixtures of a building, structure or other civil engineering or architectural work, but does not include professional consulting services related to the construction contract unless they are included in the procurement. Ibid.

6 Major goods means durable materials, systems or components that are essential to ensuring the operational readiness or performance of the deliverable, and include: structural materials: concrete, steel and other metals, lumber, stone, aggregates; building envelope components: windows, glass, roofing systems, bricks; mechanical and electrical systems: HVAC units, generators, elevators; specialty items: prefabricated panels, major fixtures; fixtures, furniture and equipment; and transit fleet vehicles.

7 See the Municipal Buy Ontario Procurement Directive, s.4.2.2, Table 1, < Municipal Buy Ontario Procurement Directive>.

8 Ontario-Made Good means a good that meets any one of the following criteria: (i) wholly manufactured or originating in Ontario; (ii) at least 51% of the total direct costs of producing or manufacturing the good have been incurred in Ontario.

9 Canadian-Made Good means a good that meets any one of the following criteria: (i) wholly manufactured or originating in Canada; (ii) at least 51% of the total direct costs of producing or manufacturing the good have been incurred in Canada; (iii) labelled as “Made in Canada” or “Product of Canada.”

10 Ontario Service means a service wholly provided by individuals (natural persons) located in Ontario.

11 Canadian Service means a service wholly provided by individuals (natural persons) located in Canada.

12 Capital Infrastructure Policy – A Guide for Buyers, Version Date: April 13, 2026, developed by the Ministry of Public and Business Service Delivery and Procurement, section 5.

13 Version Date: April 13, 2026, developed by the Ministry of Public and Business Service Delivery and Procurement.

14 Capital Infrastructure Policy – A Guide for Buyers, Version Date: April 13, 2026, developed by the Ministry of Public and Business Service Delivery and Procurement, section 6.2.

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