Canada's procurement overhaul targets small business barriers

The federal government moved Monday to make it easier for Canadian small businesses to win federal contracts. Minister Joël Lightbound announced the Small Business Procurement Program (SBPP) in Toronto, a two-phase reform first flagged in the Spring Economic Update.

The first phase starts this summer. Federal buyers must simplify orders so small companies face fewer administrative hurdles. The government is standardizing procurement contracts across all departments and improving its AI chatbot, Procura, to guide companies through the bidding process. The second phase, due by the end of the year, mandates plain language in procurement requests. A new “Tell Us Once” approach lets businesses reuse documentation for multiple bids. Tools will also let companies check if their submissions are complete and error-free before hitting send. A separate “trusted Canadian small business” recognition program aims to reward repeat contractors.

Right now, only 20% to 30% of federal contract value goes to small and medium-sized businesses, according to Public Services and Procurement Canada. The SBPP is designed to increase that share by reducing friction. The changes are part of nearly $186 million in budget commitments. Roughly half of that went to Innovation, Science and Economic Development, which created the Innovative Solutions Canada (ISC) program. ISC connects businesses with federal departments to develop, test and commercialize technologies, effectively making the government a first customer. ISED says ISC has brought in over 60 federal departments and awarded more than 1,600 grants and contracts, 95% of them to Canadian small and medium-sized businesses.

The reforms follow a separate rule change last month that lowered the minimum threshold for Canadian-prioritized contracts from $25 million to $5 million. As of June 25, 14 contracts worth $726.4 million have been awarded under the government's new Buy Canadian Policy, the department said.

Industry groups and business leaders have long called for an overhaul to federal procurement, which many described as a major barrier for young companies. Grace Lee Reynolds, CEO of MaRS Discovery District, said the new measures could open a door that “has historically been very hard for early-stage companies to open.” In a statement this week, she said making applications easier is “necessary and a good first step.” She added that too many Canadian companies “prove themselves in pilot after pilot and then get stuck, often scaling abroad before they ever get the chance to scale here at home.”

Chad Gaydos, CEO of Vancouver-based procurement software company Procurify, called the government’s direction “encouraging.” He said the focus on plain language and a lighter administrative load mirrors what growing companies already do internally.

The Council of Canadian Innovators (CCI) has been a persistent advocate for procurement reform. Vice-president of policy and advocacy Laurent Carbonneau said the measures set the stage. “If implemented with rigour and transparency, these reforms can be a turning point for Canadian innovation, job creation, and public service delivery,” he said in a statement.

The readthrough for sectors: early-stage technology companies in clean tech, software, defense, and health care stand to gain the most if execution holds. Private firms like Procurify, which builds procurement management software, could see increased demand as more companies need tools to handle the standardized contracts and plain-language bids. Public-facing Canadian small caps in these verticals are worth a watchlist slot, though most direct beneficiaries are private. The first phase goes live this summer. The second phase, including plain-language mandates and the trusted supplier program, is due by the end of 2025.