The obvious reading of "Buy Ontario" is that it helps the big Ontario contractors who already win public work. Look at the thresholds and the opposite is true. The Ontario-only preference applies to the smallest contracts — the ones a two-person consultancy, a local trades company or a small manufacturer can actually win — and the definition of an Ontario business is easy for them to meet. A head office in Mississauga qualifies. So does one in Sudbury.
The province says it spends about $30 billion a year on goods and services, and the directive reaches ministries, hospitals, school boards, colleges and, for capital infrastructure, municipalities. Most small suppliers have never registered with a public buyer because the process looked built for someone else.
Who counts as an Ontario business
The Buy Ontario Procurement Directive uses three definitions:
| Category | Test |
|---|---|
| Ontario business | Conducts its activities on a permanent basis in Ontario, and either has its headquarters or main office in Ontario, or has at least 250 full-time employees in Ontario at the time of the procurement |
| Canadian business | The same test applied across Canada: headquarters or main office in a province or territory, or at least 250 full-time employees in one province or territory |
| U.S. business | Headquarters or main office in the U.S. and fewer than 250 full-time employees in Canada; a subsidiary controlled by a U.S.-headquartered corporation is included |
The definitions do not depend on legal form. A sole proprietorship, partnership or corporation can qualify. The test turns on where the business is genuinely run from and, for larger employers, where the people are.
The thresholds
The preference changes with contract value (all figures from the directive, which the Chair of Treasury Board can update):
- Government ministries and agencies: Ontario businesses get the preference below $34,700 for goods and $139,000 for services.
- Broader public sector (hospitals, school boards, colleges, universities): Ontario preference below $139,000 for goods and services.
- Canadian preference from those amounts up to $368,000.
- $368,000 and above: open to businesses from Ontario's trading partners, with weighted domestic criteria.
The directive sets no fixed price premium for the Ontario preference. Entities must "give preference," and how they do it varies by buyer. Legal services, resale and goods or services no Ontario business offers are carved out.
Capital infrastructure: the Domestic Supply Chain Plan
For capital infrastructure — construction, major repairs and the services around them — the directive goes further. Buyers can require a Domestic Supply Chain Plan and give a 10% evaluation advantage to the bidder with the highest proportion of Ontario-made goods and services, or set a mandatory threshold. Above $368,000, weighted domestic criteria can be worth up to 35% of the evaluation. The rules applied to ministries and the broader public sector from April 13, 2026, and to municipalities from May 15, 2026. Infrastructure Ontario's June 2026 pipeline listed 132 capital repair projects across the province.
A plan you submit to win the bid becomes a commitment you have to keep. If your plan says 70% Ontario content, your subcontracts and supply agreements need to deliver 70%, and they need to say so.
What goes wrong for small suppliers
The U.S.-controlled subsidiary. An Ontario corporation owned by a U.S. parent is a U.S. business under the directive unless the group has at least 250 full-time employees in Canada — even if every employee and every customer is in Ontario. Founders who took U.S. investment, or who set up a Canadian subsidiary of a U.S. company, should check where headquarters and control actually sit. Any change has to be real: the directive turns on where the business is genuinely run, and a representation you make to a public buyer can be relied on and checked.
Representations made casually. Public buyers may rely on a supplier's statement that it is not a U.S. business. A wrong statement in a bid is a misrepresentation, with the contract and your future eligibility at stake. Someone senior should own that answer.
Teaming without paper. Small firms win public work by partnering — one brings the qualification, another the capacity. A handshake teaming arrangement falls apart when the prime contract imposes Ontario-content commitments, insurance and indemnities that must flow down. A short teaming agreement and properly drafted subcontracts fix that; contract review before you sign the prime contract fixes the rest.
Tariff exposure in the price. A fixed-price public contract with U.S.-sourced inputs is a tariff bet. The clauses that decide who bears that cost are covered in tariffs and supply contracts.
Before you bid
- Confirm in writing where your headquarters or main office is, and who controls the company.
- Register on the supplier portals of the buyers you want to serve, and on Supply Ontario's vendor lists as they open.
- Put teaming and subcontract templates in place that flow down domestic-content, insurance and confidentiality obligations.
- For capital work, build a Domestic Supply Chain Plan you can actually perform, and track it.
- If you are not yet incorporated, consider whether to incorporate before bidding — public buyers often ask for corporate documents, insurance and financial statements that a sole proprietor finds harder to produce.
I help small suppliers with exactly this: the corporate housekeeping, the teaming and subcontract agreements, and a review of the prime contract before it is signed, each on a fixed fee. Procurement changes and new intakes are tracked monthly in Money for Business.
The preference is in the law; the paperwork is still the supplier's job.
Common questions
What is the Buy Ontario Act?
The Buy Ontario Act (Public Sector Procurement), 2025 received Royal Assent on December 11, 2025. It lets Ontario use public sector procurement to favour Ontario businesses. The Buy Ontario Procurement Directive made under it took effect on April 13, 2026.
What counts as an Ontario business under Buy Ontario?
A business that conducts its activities on a permanent basis in Ontario and either has its headquarters or main office in Ontario, or has at least 250 full-time employees in Ontario at the time of the procurement.
Is a Canadian subsidiary of a U.S. company an Ontario business?
Usually not. The directive treats a subsidiary controlled by a U.S.-headquartered corporation as a U.S. business unless the group has at least 250 full-time employees in Canada, and it restricts procurement from U.S. businesses.
What are the Buy Ontario thresholds?
For government ministries, Ontario businesses get preference below $34,700 for goods and $139,000 for services. For broader public sector entities, below $139,000 for goods and services. Canadian businesses get preference from those amounts up to $368,000. Above $368,000, trading-partner suppliers can compete, with weighted domestic criteria.
Does Buy Ontario apply to municipalities?
Municipalities became subject to the capital infrastructure requirements on May 15, 2026, under the municipal Buy Ontario directive. Ministries and broader public sector entities were covered from April 13, 2026.
What is a Domestic Supply Chain Plan?
A plan, used in capital infrastructure procurements, showing the proportion of Ontario-made goods and services a bidder will use. Buyers can give a 10% evaluation advantage to the bidder with the highest proportion, or set a mandatory minimum. What you commit to in the plan becomes a contractual obligation.
Is there a price preference for Ontario businesses?
The directive does not set a fixed percentage for the general Ontario preference; buyers must give preference and decide how. For capital infrastructure, it specifies a 10% evaluation advantage under the evaluated Domestic Supply Chain Plan approach.
Does Buy Ontario apply to legal services?
No. The Ontario preference does not apply to lawyer, paralegal or notary services, expert witnesses, goods for resale or commercial production, or goods and services not available from an Ontario business.