Ottawa's small business advocates are calling on the federal government to lower the threshold in its new 'Buy Canadian' procurement policy, warning that the current $5 million cutoff leaves most small and medium-sized enterprises out in the cold.
Parliamentarians heard testimony this week from business groups arguing the policy, while well-intentioned, fails to deliver on its promise of directing federal contracts toward Canadian companies — particularly smaller ones that don't have the capacity to compete for multi-million-dollar government deals.
The Problem With the Current Threshold
The 'Buy Canadian' initiative was introduced as part of a broader effort to strengthen domestic supply chains and reduce dependence on foreign vendors, particularly in the wake of pandemic-era shortages and growing trade tensions with the United States. But critics say the $5 million threshold for mandatory Canadian preference is far too high.
"The vast majority of Canadian small businesses simply cannot compete at that scale," one business group representative told parliamentarians. "A $5 million contract requires infrastructure, staffing, and bonding capacity that most small firms don't have."
The proposed solution: de-bundle large contracts into smaller, more manageable opportunities that local and regional businesses can realistically bid on. Rather than one $10 million IT services contract, for example, the government could issue five $2 million contracts — opening the field to a much wider pool of Canadian suppliers.
A Pattern Advocates Say Must Change
This isn't the first time federal procurement has been criticized for favouring large, established vendors over smaller Canadian competitors. Government contracts have historically flowed to a handful of major firms — often multinational corporations with Canadian subsidiaries — while homegrown small businesses struggle to navigate complex bid processes and meet the scale requirements attached to large contracts.
Business groups are also pushing for simplified procurement processes, faster payment timelines, and better outreach to small businesses that may not even know federal contracts are available to them.
"There's a cultural shift needed inside the government," one advocate noted. "Procurement officers need to think about how to structure contracts to invite competition, not just how to consolidate for efficiency."
What Comes Next
The testimony comes as Parliament continues to study the implementation framework for the Buy Canadian policy. A final set of recommendations is expected later this year, with the government signalling it is open to adjustments based on stakeholder feedback.
For small business owners across the country — including the thousands of federal suppliers based in the Ottawa-Gatineau region — the stakes are significant. The National Capital Region is home to one of Canada's densest concentrations of government contractors, consultants, and tech firms that depend on federal work.
If the threshold is lowered and contracts are de-bundled, local Ottawa businesses could see a meaningful increase in opportunities to work directly with the federal government — a prospect that business groups say would strengthen the local economy and make the Buy Canadian promise real.
The Ottawa Citizen first reported on the parliamentary testimony.
Source: Ottawa Citizen
