‘Buy Ontario’ rules coming for public sector purchases

Thestar.com
March 11, 2022

Ontario is changing the rules so that purchases of goods and services by the public sector -- including hospitals, universities and school boards -- must give preference to Ontario companies.

The announcement, made Wednesday morning by Minister of Government and Consumer Services Ross Romano, is expected to hit $3 billion annually for provincial businesses by 2026. The move covers government ministries and agencies as well.

Called BOBI, “the ‘building Ontario businesses initiative’ will level the playing field for Ontario businesses vying to support our province’s procurement needs and will ensure they are able to compete with overseas businesses,” Romano said.

“By harnessing our immense buying power, BOBI will allow our government to build our businesses in every corner of our province and support new jobs for our workers.”

The change was a part of the recently passed Bill 84, Fewer Fees, Better Services Act, which was introduced by Nina Tangri, the province’s associate minister of small business and red tape reduction.

“One of our government’s top priorities is ensuring Ontario is open for business -- that means creating and protecting jobs, supporting businesses, and increasing investment and trade, so Ontario’s economy can grow and thrive,” she said.

“The building Ontario businesses initiative will help unleash the province’s full potential and fuel Ontario’s recovery and future prosperity.”

The province hopes the move will also help businesses recover from challenges faced during the now two-year COVID-19 pandemic.

The rules cover all of the province’s $29 billion in goods and services procured annually and all public sector organizations impacted “will receive training and education to support them to use BOBI effectively in their procurements.”

Romano also said the annual amount spent locally will comprise almost 10 per cent of procurements.

At the start of the pandemic in March 2020, as the province scrambled for vital supplies such as masks,Premier Doug Ford had said that they should be available for purchase locally, and “never again will the people of Ontario be beholden for the vital supplies that we need to fight COVID-19 pandemic,” Romano noted.

Millions have since been spent in Ontario for masks manufactured here, he added.

The new rules mean that in assessing bids for procurements, things such as social and economic considerations must be taken into account, Romano said from an Etobicoke business where he made the announcement alongside Tangri as well as Vic Fedeli, minister of economic development, job creation and trade.

That means for an Ontario company that pays higher wages compared to a business overseas, that must be part of the overall evaluation.

“A Brampton uniform manufacturer follows Ontario’s strict environmental standards when disposing of waste, which adds additional expenses compared to some competitors who pollute for free,” the government said in a written release. With BOBI, businesses who pay to protect our environment will have a fairer chance in the bidding process.”

In 2019, the province announced that it would boost its buying power by centralizing its procurement process for things like computers or other mass purchases, saving an estimated $1 billion a year when fully implemented.

Karin Schnarr, a professor and director of MBA Programs at Wilfrid Laurier University’s Lazaridis School of Business and Economics, noted that the pandemic has been extremely challenging for Ontario businesses -- especially small- and medium-sized ones.

“Right now, anything the Ontario government can do to help support Ontario’s business community is a positive step as we all move into the COVID recovery period,” she said. “Given ongoing challenges with global supply chains, it may also be a good strategic move to have a stronger reliance on goods that are more local.”

She said cost “will always be a factor … Ontario companies are going to need to be competitive when they bid, but there is also the supplementary bump to the Ontario economy when the goods are produced in Ontario.”

Fraser Johnson, professor and Leenders supply chain management association chair at Western University’s Ivey Business School, said like “Buy America” policies south of the border, “ ‘buy local’ rhetoric has been around for as long as governments have been buying stuff from the private sector.”

When governments buy things such as subway cars or aircraft, they have clauses where a certain percentage of the product must be locally produced, he added, “and every jurisdiction does that, whether France or Canada.”

However, he said, this is slightly different and while it “sounds great to the general public ... from a process standpoint, it complicates” things.

“If I’m a buyer, I’m worried about getting the best value from my suppliers,” he added, “... and now we have a policy that adds another layer of complexity that makes it more difficult for me to be able to justify (purchases).”

He said governments typically procure services locally -- things like information technology or cleaning services in hospitals -- so goods will be affected most.

“As a taxpayer, I want to make sure that (the public sector) is getting the best value for me,” Johnson said. “And if all things are equal, buying local is a great idea. In reality, most things aren’t going to be local. I want them buying products and services from suppliers that provide the best value to the taxpayer.”

He said the government could further help local businesses by continuing to reduce regulations, taxes and fees.