August 26, 2025

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Procurement — the purchasing of goods and services by the federal government — is a significant contributor to GDP. Public Services and Procurement Canada (PSPC), the government’s central purchasing agent, manages nearly $37 billion in annual procurement! That’s around 3.7% of GDP.

The range of goods and services the government puts out to tender is vast, ranging from vehicles and heavy equipment to office supplies and training programs. This substantial public spending, combined with the variety of opportunities, represents a major opportunity for Canadian businesses — provided they have the patience and determination to navigate the federal procurement system.

Barriers to Success

Several challenges in the procurement system limit businesses’ ability to compete and scale up globally:

• It’s too slow: Long delays between bid deadlines and contract awards create uncertainty and limit Canada’s ability to respond to urgent needs.
• It values procedure over performance: Rigid, one-size-fits-all security rules and lengthy personnel clearance delays restrict the solutions available to government and drive-up bid costs.
• Its evaluation and verification process is murky: Unclear evaluation standards and inefficient verification processes make bid assessment slow and unpredictable, risking delays, missed innovations and supplier frustration.
• It can delay projects: Procurement timelines often fail to align with project needs. For example, a bid may be issued in January, approved in April, awarded in May, yet not begin until September. These gaps increase costs, frustrate suppliers and deter participation — further limiting options for government and driving costs higher.

The Future of Procurement

The future of federal procurement will be defined by whether the government can modernize its systems to meet the needs of both taxpayers and suppliers. Reform must go beyond process tweaks and move toward a strategic model — one that prioritizes outcomes, embraces transparency and lowers barriers for small- and medium-sized businesses (SMEs). Simplifying bid requirements, streamlining evaluation practices and aligning procurement with broader economic and innovation goals will be key.

Digital tools can and should play a central role in this modernization. Artificial intelligence (AI), for example, can be used by suppliers to draft, refine and submit bids more efficiently, reducing the time and resources required to compete. On the government side, AI could help score bids, identify compliance gaps and ensure consistent evaluation. But efficiency gains must be balanced with fairness, transparency and accountability. Clear standards, human oversight and responsible deployment of AI will be essential to maintain trust.

Looking ahead, the challenge is to strike the right balance — embracing digital tools to reduce complexity and speed decision-making, while ensuring these technologies are used responsibly and equitably. Done correctly, procurement can evolve from a bureaucratic bottleneck into a platform that empowers businesses, strengthens supply chains and delivers better value for taxpayers.

Recommendations

Procurement is a strategic lever for innovation, economic growth and social good, not just an administrative mechanism for buying goods and services. To move forward, the Government of Canada should focus on four priorities:

Simplify and standardize

• Cut the red tape: Streamline and standardize procurement documents across departments to reduce the burden on businesses and public servants. Focus on project needs, not boilerplate legal text.
• Strengthen the connection: Equip PSPC with the flexibility and tools needed to align procurement processes with both government objectives and industry realities.

Empower people

• Train and empower procurement officers: Provide officers with the training, guidelines and authority to make strategic decisions that prioritize value and outcomes.
• Enable flexibility: Replace rigid checklists with outcome-based criteria, allowing officers to reward innovation and adapt to evolving project needs.

Enable innovation and commercialization

• Prioritize commercialization: Align procurement programs with commercialization objectives by recognizing intellectual property as a protection that enables businesses to capture the value of their ideas. Government should also support broader commercialization pathways and avoid technological tools with little use beyond a single application.
• Signal demand early: Adopt models like the UK’s Forward Commitment Procurement, giving companies advance notice of government needs so they can invest and innovate in areas such as clean technology and health.
• Provide navigation support: Offer standardized training to help bidders understand how to submit proposals as well as stay updated on system changes.
• Develop and adopt innovative-friendly procurement standards: Establish standards that streamline processes, reduce perceived risk for suppliers and harmonize procurement practices across departments and jurisdictions.

Ensure transparency and accountability

• Set clear metrics: Track and publicly report procurement outcomes, including Canadian content, SME and Indigenous participation, number of procurements successfully completed, projects delivered under budget, regional distribution and adoption of innovative solutions.
• Strengthen trust: Require an independent review of procurement performance, ensuring transparency, consistency and accountability across departments.

Procurement should be more than checking boxes. Implemented effectively, these recommendations can transform procurement into a strategic platform that empowers Canadian businesses, strengthens supply chains and drives economic and national security outcomes.