Government Operations Committee on May 26th, 2026

[Michelle Kealey]

Grants and contribution programs, by their very nature, are funding programs that support a project that's led by the recipient. To give you a sense of the magnitude, the policy on transfer payments covers $82 billion over 700 programs. The diversity of the Gs and Cs is quite unique.

The intent of the buy Canadian policy is to consider extending it as a real opportunity to look at broader impacts.

In terms of the grants and contributions process, you have departmental programs, and they get their annual appropriation. When they want to put a project in place, they'll launch a call for proposals and receive applications. In the context of buy Canadian, they may put some buy Canadian provisions in the application stage. They might consider putting it at the assessment stage, including some provisions within the funding agreement. Once the funding is flowed through the funding agreement, there are standard monitoring and reporting procedures that are to be followed, as per the policy.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

It would be part of the terms and conditions of the transfer payments—I think you said that earlier. The buy Canadian policy requirements are mandatory. We've clarified that.

I'll use the example of a municipal waste-water treatment plant with 30% federal funding, 30% provincial funding and 30% municipal funding. The federal component would be subject to the federal buy Canadian policy we're talking about. That would be written into the transfer agreement with the proponent of that project. Our further expectation would be that the provincial and municipal contributors have a similar policy to follow suit.

Could you help me understand how things would work in such an example?

[Michelle Kealey]

Per the guidance, when they're doing their assessments, we ask departments whether they have projects that support provincial-federal funding, whether there is a provincial buy Canadian policy in place and whether it aligns with the federal approach; if so, we ask that this be considered. In a case in which you have distribution across all jurisdictions, the expectation is that they align. It's about working at the funding agreement level to make sure they speak to one another and that they're working in the context of the recipient and the success of the project.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Help me understand this, specifically: When we are making these project awards or announcements—I'm not sure what the right word is—are all proponents aware of the buy Canadian requirements they are participating in? I heard some concern, earlier, about tracking and monitoring, in particular with grants. At the initial stage, when that funding agreement is approved, what requirements for tracking and reporting are included to make sure the proponent is following through with the requirements we are setting forth?

[Michelle Kealey]

At the beginning of a funding agreement—when it's being drafted—the departments are encouraged to talk about monitoring requirements. The expectation is that they put provisions in the funding agreement that clearly outline the data that is expected as part of the project.

[The Chair, Conservative, Kelly McCauley]

Thank you.

Go ahead, Madame Gaudreau.

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

I want to go back to my long-term vision.

When you're an entrepreneur, you're essentially managing risks. I know this, as I am an entrepreneur myself. However, why make an effort if, even though it may have a direct impact, there is no medium or long-term perspective? We are adopting a procurement policy, but it doesn't fit into a consolidation approach like the one being developed in Germany or France. What will happen if the government changes?

I've asked the same question several times, but what I understand is that this is really a procurement policy, not a policy for industrial prosperity. Is that correct?

[Emilio Franco]

This is a buy Canadian policy. It's a procurement policy that extends to grants and contributions. However, this is just one of the government's policies. There are a number of them, as I explained. There's the defence industrial strategy, for example, and a broader strategy was announced in the economic update, which addresses all the—

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

It's quite the mammoth. Not long ago, I put the question to the people from Shared Services Canada, among others, and I talked about the emergence of information technology companies. We're seeing it now: Countries have decided to take the bull by the horns. From what we're hearing now, it's more the Premier of Quebec who is forming alliances, particularly with France, for the alternative development of the digital ecosystem.

The only thing I managed to get was the cost of the procurement process to move away from Microsoft, among other things. When I ask if IBM is a Canadian company, I'm told that it is. We'll have to go back to the basic definition and its purpose. That's not reassuring. They say it's a policy, but we need to see the big picture.

My basic question is this: Who is responsible for providing a long-term vision, rather than a vision designed to secure re-election? Who is responsible for that in this mammoth government apparatus?

[Emilio Franco]

That's a rather interesting question. You're talking about information technology. In the context of procurement, there's the buyer and there's the procurement officer. PSPC is the procurement officer. It will apply the policy in the context of procurement. However, the buyer will define the requirements. If the buyer defines the requirements in such a way that we'll target a large multinational supplier instead, the procurement process will run its course and the result will be the result. However, if the buyer defines their requirements in such a way that Canadian suppliers in a regional context are in the best position to meet them—perhaps by breaking the project down into smaller parts—the vision you are talking about has a better chance of success.

PSPC has the procurement officers. As for us at the Treasury Board Secretariat, our role is to work with managers within the government to guide them in defining their needs so that procurement processes favour Canadian suppliers.

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

Thank you very much.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Mr. Patzer, go ahead.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Thank you very much.

At the start of the meeting, you referenced that you have given guidance to the departments. I'm wondering, can you table that guidance with the committee?

[Martin Krumins]

Yes.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Thank you.

There have been some updates to the policy. You were talking about how you're getting provinces and territories on board with the buy Canadian policy. Has everybody agreed to a 25% Canadian content policy directive? Is that 25% agreed upon among federal, provincial and municipal governments?

[Martin Krumins]

As it applies to grants and contributions, we do not have that type of requirement. We do not put those definitions into our guidance. We allow each department to work with the recipients, and their provincial counterparts, to determine what might be appropriate for buy Canada.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Let's say that a province came up with a 50% threshold. Whose threshold supersedes the other, that of the province or of the feds?

[Martin Krumins]

It would really depend on the objectives of that program. However, in the relationships and the projects that we're taking collaboratively with the provincial counterparts, we would consider the provincial regime acceptable as long as it's reasonable and considered balanced with what we're trying to achieve.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

All right.

The Department of Agriculture, in an internal memo, said it would comply only if it did not cost extra time or money and it was in the public interest. Given that you guys are the support, extending the policy to all the various departments, what are your thoughts on how the Department of Agriculture views this? It sounds as if it's optional to them, and they'll do it only if it makes sense.

[Martin Krumins]

With respect to the Department of Agriculture's memo, we've worked with them since about December to make sure that they're applying the guidance that we've prescribed. I don't know, with respect to those requirements, if that's on the procurement side or on the grants and contributions side. However, with respect to the grants and contributions side, the cost and value for money are factors in assessing how far to apply the buy Canadian policy, so they need to consider cost factors as they apply to their projects.

[Emilio Franco]

I will add this very quickly: The exceptions you highlighted are the exceptions that are ingrained in the PSPC policy itself. The best value, public interest, no capacity, undue delay—these are all prescribed exceptions that exist in PSPC's policy. Their application, of course, is subject to the minister in the policy. Without having the specific memo in front of me, I would expect that agriculture was simply speaking to the existing exceptions that are outlined under the policy.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

When you say “subject to the minister”, which minister do you mean?

[Emilio Franco]

The PSPC's policy speaks to which minister has to approve those exceptions. In the case of a procurement that's within a department's jurisdiction, it's that department's minister. If it's a procurement that comes to PSPC, it's both the minister of that department and the minister of PSPC.

[Jeremy Patzer, Conservative, Swift Current—Grasslands—Kindersley, SK]

Does the minister responsible for PSPC have a veto over other ministers if they decide that they don't agree?

[Emilio Franco]

I expect we would have a discussion and sort that out.