$5M threshold for 'Buy Canadian' federal procurement policy still too high, business group says

The new "Buy Canadian" policy is continuing to shut out small businesses from federal contracts, the CFIB says. Photo by Ashley Fraser /POSTMEDIA

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The federal government’s new “Buy Canadian” policy is still shutting out small businesses due to restrictions to contracts of $5 million or more, the Canadian Federation of Independent Businesses told Parliamentarians on June 11.

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Michelle Auger, the CFIB’s director of national affairs, trade and marketplace competitiveness, told a House of Commons committee that the $5-million threshold for the policy taking effect on June 15 “is still very high” for Canadian small businesses seeking federal contracts.

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“A ‘Buy Canada’ approach can help free domestic supply chain, regional development, expand opportunities for Canadian businesses,” Auger said.

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However, she told Parliamentarians that the contract threshold meant many small businesses “will not be able to access or benefit from these opportunities.”

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Auger said the federal government should instead look to “de-bundle contracts” that would allow for small businesses to compete for “more manageable opportunities.”

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For Auger, de-bundling would mean splitting a contract to allow multiple small, localized businesses to fill the gaps needed for the contract.

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Auger said CFIB members supported the “Buy Canadian” policy “in theory,” but found the approach was “focusing too narrowly on the raw material, while overlooking” Canadian small businesses and the economic value they generated.

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“Small firms that create Canadian jobs, economic activity could be excluded from Buy Canadian procurement opportunities to reflect the operational realities” of small businesses, Auger added.

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Instead Auger said that eligibility should focus on “Canadian-owned” businesses regardless of where their materials were sourced.

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Small businesses have long voiced frustration with the federal procurement process, saying it favours large companies with the capacity to navigate the convoluted procurement process.

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The “Buy Canadian” policy is in part a response to punishing U.S. tariffs brought by President Donald Trump’s trade war.

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The federal government has pointed to the “Buy Canadian” policy as an effort to leverage public dollars to support domestic businesses and industries such as lumber and steel.

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It gave Canadian companies a leg up in bidding on government contracts worth more than $25 million (dropping to $5 million by June) in a specific subset of sectors, including defence, pharmaceuticals and infrastructure.

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The policy also requires large federal defence and construction purchases to use Canadian steel, aluminum and wood if bidders were spending at least $250,000 on those materials and could access Canadian supplies.

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“Buy Canadian” is led by Public Services and Procurement Canada (PSPC), the department responsible for central purchasing, but Treasury Board Secretariat, the department holding the government purse strings, has extended the policy so that it also applies to grants and contributions.