Ottawa is rebuilding a program that pairs emerging Canadian companies with federal departments to test their technologies and set them on a path to securing their first government contracts. 

The government gutted the Innovative Solutions Canada program two years ago as part of a federal spending review. On Monday, Procurement Minister Joël Lightbound announced that the program will get a $79.9 million boost over the next five years as part of the government’s Buy Canadian policy. 

The government hopes to help companies that graduate from the program compete for future government contracts, which has been a challenge for past participants. 

“What I’ve heard from entrepreneurs is that a contract is better than a grant,” Lightbound said in an interview with The Logic. “When you have a contract from the federal government, that is an amazing business card here in Canada, but across the world as well.”

The funding is part of a secondary phase of the Buy Canadian policy that includes plans to streamline the bidding process so smaller companies aren’t shut out of federal contracts by administrative burdens and overly complex technical requirements. 

Many small and emerging tech firms hoped the initial Buy Canadian rules would finally let them compete for government contracts against American hyperscalers with more resources and economies of scale. They were disappointed to learn that the government’s definition of “Canadian” requires firms only to have a presence in the country.

Lightbound acknowledged that the government’s procurement process is often stacked against emerging Canadian businesses that don’t have the resources to navigate its complicated systems. “Procurement is too complex, too slow, and too inconsistent,” he said in a speech on Monday. 

Under the new policy, departments will have to make bid requirements clearer and proportional to the size of the opportunity. By the end of 2026, the government plans to launch a supplier recognition program, which will function as a registry of small companies that have good track records of working with the federal government.

The changes address some of the domestic tech sector’s long-standing concerns with Ottawa’s procurement processes, including with Innovative Solutions, said Laurent Carbonneau, vice-president of policy at the Council of Canadian Innovators. “Anything where we are moving the needle on making it easier to do with this really big part of the economy is a good thing in helping companies scale,” he said.

Kay Boamah, co-founder of Toronto-based AI education youth platform Facilitate, said the announcement could make a real difference for startups that have struggled to navigate government procurement processes. He said he is not worried that foreign companies with Canadian operations could qualify for government funding, adding that Canadian founders need to compete more aggressively to seize those opportunities.

Still, Canada’s bigger challenge is helping startups scale, said Boamah, who argued the country has strong support for intellectual property and grants, but not enough fast-moving capital.

“We’re going to continue to get brain-drained if we don’t move faster,” he said.