OTTAWA — Foreign firms that do business in Canada can qualify as domestic suppliers under Ottawa’s new Buy Canadian policy, Procurement Minister Joël Lightbound said in an interview with The Logic. 

The new regime came into force Tuesday, and gives Canadian firms extra points when bidding on federal government contracts valued at $25 million or more. More points will be awarded based on the amount of Canadian content offered by each bidder, which could include manufactured goods, R&D, and other Canadian business operations.

Contracts over $5 million will also be subject to the new policy starting spring 2026. 

However, to qualify as a Canadian supplier, companies need not be headquartered in Canada, have a certain number of Canadian employees or have Canadian-controlled IP. Rather, Lightbound said, a business must “actively operate” in the country. “This means the business has a real, physical location in Canada where work happens, is registered with the Canada Revenue Agency, files taxes in Canada and contributes to the Canadian economy,” he said. 

That means many foreign firms, including American hyperscalers, can qualify as Canadian suppliers. 

A government backgrounder on the policy said one of the purposes is to reduce Canada’s reliance on “any single trade partner,” an indirect reference to the United States. However, Lightbound said he didn’t agree with that framing. Instead, he said, the goal is to make Canada’s economy more resilient and drive economic growth. 

“We’re striking a balance between making sure that we also tend to attract foreign investment, with the emphasis on Canadian content in specific procurements,” he said. 

The government’s previous definition of Canadian required firms only to have addresses in this country, which, if allowed to stand, would have let shell companies based in this country qualify under the new push for domestic procurement. The new definition will disqualify such companies from getting preferential access to contracts, Lightbound said. 

The government’s Procurement Department doesn’t track the percentage of federal contracts going to domestic firms, but an analysis of procurement data suggests 91 per cent of recent contracts went to companies with Canadian addresses. 

It’s not clear what the current baseline is for Canadian suppliers under the new rules, Lightbound said, especially since the government does not yet have reliable data on where the materials being used in the contracts come from. 

The Council of Canadian Innovators argues that for the Buy Canadian policy to benefit domestic tech companies, the government needs to be incentivized to work with “authentically Canadian companies,” which the group has said should be domestically owned.

“If policies functionally allow Canadian branch-plant operations of foreign hyperscalers to call themselves ‘Canadian companies,’ then the wealth and intellectual property generated by the tech sector will continue to leak out of Canada,” Laurent Carbonneau, the council’s director of policy and research said Tuesday in a statement. 

Lightbound also announced that federal construction and defence contracts valued at $25 million or more will need to use Canadian-made steel, aluminum and wood products. The materials must be manufactured and processed in Canada, not just sold by domestic firms.  

The government plans to eventually expand the new Buy Canadian policies to grants, loans and other federal funding streams, as well as federal agencies and Crown corporations.