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 on December 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 corporations[3] 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 construction[5] 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 good[6] 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‑made[8] or Canadian‑made[9], and whether each service is an Ontario Service[10] 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 Buyers[13] 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.

Organization	Municipalities	Local boards	Municipal services corporations
General requirements	April 13, 2026	June 1, 2026	June 1, 2026
Fleet vehicle requirements	April 13, 2026	June 1, 2026	June 1, 2026
Capital infrastructure requirements	May 15, 2026	June 1, 2026	June 1, 2026

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.

How Gowling WLG can help

We would be happy to meet with you or your organization to discuss your questions and concerns about the Directive or any other provincial procurement laws. If you have any questions, please contact any member of our Infrastructure and Construction groups or Procurement Group.