Government Operations Committee on May 26th, 2026

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Gasparro, go ahead, please.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you, Chair.

Thank you all for being here.

We recently announced our first buy Canadian project with the acquisition of 55 new subway trains for Toronto's line 2 subway. The project has over 55% Canadian content. It will fund more than 900 direct jobs and 1,700 indirect jobs across our country.

Can you speak to how the buy Canadian policy helped enable this purchase and how Treasury Board is working to replicate similar successes across other major projects?

[Martin Krumins]

Certainly. Thank you for the question.

As I was saying, we are in the first phase of the launch of the buy Canadian policy and the integration into the grants and contributions programming. That first phase was launched on December 16. It required departments to assess their grants and contributions to identify where those policies could be applied.

The second phase, which was completed on February 16, focused on departments' determining how to integrate those requirements into their program design. For example, the buy Canadian policy requirements are embedded in either the terms and conditions in funding agreements or recipient reporting, as appropriate.

The departments are currently in the third phase. The example you provided would be a very good example of that. It involves implementation occurring in two streams—incorporating buy Canadian related provisions into new agreements that are signed and, where appropriate, into existing agreements as they are visited or negotiated. We're seeing this across a multitude of strategic sectors. The example you provided is within the infrastructure, construction and transportation sector. That's the largest contributor to the buy Canadian policy from the assessments that departments have completed. Health and pharmaceuticals are also significant, as are communications and defence and security.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you for that.

I will move on to something else that I think you touched on a little earlier. Can you walk us through what the plans are to monitor the buy Canadian policy to ensure that it's functioning as intended?

[Martin Krumins]

We have three strategies that we will be implementing to monitor compliance with the policy for grants and contributions. First, we'll use the risk and compliance process, which is an annual process managed through the Treasury Board Secretariat. It involves all departments' assessing their compliance with these policies. We will be asking about two specific things: the percentage of agreements that were signed, as identified against their earlier assessments, and the percentage of agreements and the values obtained through that.

Second, we'll ask departments to track and identify, through annual departmental reporting, their best practices and lessons learned, as well as to update their tools and resources accordingly. As I've noted, we had prescribed some specific performance measures, including the value and number of agreements. This is below the program level. The statistics in terms of the number of programs that are incorporating the buy Canadian policy are at the program level. We will be asking departments to start tracking that at the very specific agreement and project level, as well as to include the value of materials and the value of Canadian content.

I would caution, though, that given the magnitude of projects in scope—we're estimating that roughly 45,000 projects funded annually would be within scope—it is quite an overwhelming paper burden to go through all those. Our systems will need to catch up, but rest assured that these are the measures we're trying to track.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Can you touch on some of the exceptions to the buy Canadian policy and explain the rationale behind them, please?

[Martin Krumins]

For that, I'll turn to my colleague Michelle Kealey.

[Michelle Kealey, Acting Executive Director, Financial Management Transfer Payments Policy, Treasury Board Secretariat]

Thank you.

Naturally, given the diverse nature of grants and contributions programs, we've allowed for exceptions. As we've indicated in our guidance, the departments are to identify when applying buy Canadian would not make sense. For example, for programs in which the funding has already been subscribed or for programs that have sunset, that wouldn't make sense. In a case in which it would naturally apply but it's not the circumstance that would allow for it, the minister would approve the exception.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Great.

How much time do I have, Chair?

[The Chair, Conservative, Kelly McCauley]

You have one minute and 50 seconds.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Great. Thank you.

It was touched on earlier that there was a reduction in the threshold for contracts, from a high watermark of $25 million down to contracts worth $5 million. Can you touch on the rationale behind that?

[Martin Krumins]

Grants and contributions are a bit of a different instrument from procurement. Procurement is a very prescriptive set of rules. Grants and contributions are an instrument through which we provide funding to a recipient to further the objectives of the Government of Canada. This is not a case in which we're acquiring, specifically, a good or service in return: We're contributing and providing money to a project's ultimate outcomes.

With respect to thresholds, because of the diversity of programs across the Government of Canada—specifically, infrastructure or health, or working with small NGOs that provide local community services—we did not set out a threshold or definitions within the construct of the guidance for grants and contributions. Rather, we pointed directly to the definitions and thresholds contained within the PSPC framework for buy Canadian.

That said, in the assessments that came back, most of the departments were including, at the program level, eligibility criteria in programs that are well below the $5-million threshold. Therefore, we can say that there are 21 departments and 116 programs that are extending the criteria to programs below the $5-million threshold. Because of the nature of the small amount, this will extend the program's annual funding by a further $185 million in total.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Thank you, Chair.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Madame Gaudreau, go ahead.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you, Mr. Chair.

My question is this: Who's thinking about this as a whole? I'm trying to understand the strategic thinking behind it. This is a topic I already touched on in the previous hour. PSPC talks to us about procurement; Innovation, Science and Economic Development Canada talks to us about innovation; the Department of Finance talks to us about investments. However, who in the federal government is responsible for ensuring that all policies pursue the same objectives?

You heard my question earlier. Do you meet regularly? Who is responsible?

[Martin Krumins]

Thank you for your question. It's a good question.

I would say that our role in TBS is to focus on the instruments and to make sure that they're applied correctly. We are not the holders of the buy Canadian policy, but we do work closely with Public Services and Procurement Canada, with respect to the procurement component.

If you'd like, I could turn to Emilio Franco, my colleague, to speak about how we work with PSPC.

[Emilio Franco, Executive Director, Procurement and Materiel Directorate, Treasury Board Secretariat]

The government has announced a number of strategies. The “buy Canadian” policy is only one component of a larger policy framework. For example, there's the defence industrial strategy, which deals not only with procurement, but also with how we're going to improve and strengthen Canada's defence industrial economy.

There are a number of strategies we are working on together, with each minister concerned, to ensure that the policies, strategies and programs are aimed at achieving the same objective, which is to support the Canadian economy.

I know that when you talk to each of us, you can get the impression that we each have our own policy, but we really work with the government.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Technically, a lever would be meaningful when the industry…. I understand that there are meetings with all stakeholders in the industrial community, but they have demands and, unfortunately, they are not being heard. We're going to end up saying that the policy has included the word “preference” and not the word “obligation”, because there are currently obstacles to industrial development. We would do well to step up and help each other.

Is holding meetings on an innovation strategy something that will be on your to-do list?

[Emilio Franco]

Yes, we are always working to find the best way to improve the situation.

I work in procurement, but it's only one of the tools in the tool box to help Canadian suppliers. We have grants and contributions, as well as a number of employment programs.

I think it's about how we can ensure that all the programs work together. Personally, I'm involved in discussions on strategies that affect procurement, and I can confirm that we talk to each other to ensure that the strategies we launch improve the Canadian economy for Canadian suppliers and Canadians.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Let's talk about strategic sectors. Has the government identified any sectors that deserve special attention?

[Emilio Franco]

Yes, there is a list of strategic sectors to which some elements of the “buy Canadian” policy apply.

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

How is Treasury Board going to work with the provinces? We have seen that, even within Quebec and the provinces, trade agreements are not always easy.

Are there any concerns about the development of trade agreements? Where are we in the development of these agreements on the provincial side?

[Emilio Franco]

As the PSPC representatives said earlier, when it comes to procurement, they work with the provinces and territories. At Treasury Board, we are participating in discussions to develop a plan on how we can all work together in a consistent manner to—

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

We mustn't forget that each province also has its own strategy. For example, Quebec's strategy is not the same as Ontario's or Alberta's.

[Emilio Franco]

That's true. For example, we have worked with the provinces and territories to establish a definition of the term “Canadian supplier”. I know that each province and territory has to make its own decision and doesn't have the same definition, but we've worked together to try to find one.