What is the Government to Government acquisition model?

What is Government to Government (G2G) contracting?

Government to government (G2G) contracting—also referred to as intergovernmental contracting—is a procurement model in which one government entity enters into a commercial contract directly with another government entity for the delivery of goods, services, or integrated solutions.

Unlike conventional public procurement, where a government contracts directly with a private supplier through a competitive tender, G2G contracts place the selling government (or a government‑mandated agency) as the contractual counterparty and, in many cases, as the prime contractor responsible for performance, oversight, and delivery.

G2G contracts are commonly used for complex, high‑risk, or strategically sensitive procurements, such as defence and security equipment, major infrastructure, public utilities, and nationally significant technology projects.

Why governments use G2G contracting

Governments typically consider G2G contracting when traditional competitive procurement may not adequately address specific risks or requirements. Common drivers include:

Urgency or critical timelines, including emergency response or time‑sensitive national priorities
National security, public safety, or strategic considerations, particularly in defence and aerospace procurements
Limited domestic procurement capacity, especially for complex or highly technical projects
Risk of procurement failure, corruption, or market concentration in competitive tenders
Desire to strengthen bilateral relations while advancing economic or industrial cooperation objectives

International bodies such as the Organization for Economic Co-operation and Development ( recognize that, while competition is generally a cornerstone of public procurement, alternative procurement strategies—including intergovernmental arrangements—may be appropriate where justified, transparent, and aligned with public interest objectives.

Learn about the contracts used by governments to buy from other countries.

Common forms of G2G contracting

G2G arrangements vary globally, but generally fall into several recognizable models:

1

Direct government‑to‑government sales

One government sells goods or services directly from its own inventory or production capacity to another government. This model is common for defence equipment transfers and surplus asset sales. Example: GCSurplus and GCMil

2

Government as prime contractor

The selling government (or a designated government agency) acts as the prime contractor, subcontracting with private companies that will deliver the project while retaining contractual responsibility to the buying government. Example: Canadian Commercial Corporation.

3

Government‑facilitated or sponsored procurement

A government sponsors or guarantees a transaction, providing oversight, political backing, or performance assurance, while private suppliers carry out delivery under government‑approved terms. Example: U.K. Export Finance

4

Defence and security‑specific G2G frameworks

Many countries operate formal G2G systems for defence and security acquisitions, such as the U.S. Foreign Military Sales (FMS) program or European intergovernmental defence agreements.

Canada’s G2G model and the role of CCC

Canada delivers its G2G contracting through CCC, to facilitate international trade with foreign governments.

Under Canada’s model:

CCC signs the contract directly with the foreign government buyer, acting as the Government of Canada’s contracting authority.
CCC enters into back‑to‑back agreements with qualified Canadian suppliers, who deliver the goods or services.
CCC provides assurance of performance, including oversight of contract execution and an assurance of performance in accordance with the agreed contractual terms and conditions.

Sectors beyond defence and security

CCC operates across sectors such as defence, aerospace, infrastructure, cleantech, ICT, healthcare, and public utilities, particularly where government‑level involvement is required due to risk, scale, or sensitivity.

A long‑standing and well‑documented example is Canada’s G2G framework with the U.S. Department of Defense – under the Defence Production Sharing Agreement and embedded in the Defence Federal Acquisition Regulation Supplement (DFARS). CCC acts as the mandatory prime contractor for all procurements involving Canadian suppliers above the simplified acquisition threshold of USD $350,000.

G2G contracting vs competitive procurement

Advantages of G2G contracting

For government buyers

Reduced procurement and delivery risk through sovereign‑level assurance and oversight
Faster execution for urgent or complex requirements [eur-lex.europa.eu]
Enhanced accountability and reduced exposure to corruption in high‑risk environments
Potential access to financing and bankable project structures [fastercapital.com]

For suppliers

Limitations and considerations

Despite its advantages, G2G contracting also has constraints:

Reduced competition compared with open tendering, which may affect price tension and perceptions of value for money
Potential transparency concerns if governance frameworks are not clearly documented
Limited supplier pool, particularly where participation is restricted to firms from the selling country

By contrast, competitive procurement emphasizes open competition, market access, and price discovery and remains the default approach recommended by international procurement standards where conditions allow.

Choosing the right procurement approach

Most governments use G2G contracting as a complement to, not a replacement for, competitive procurement. Best practice typically involves:

Used appropriately, G2G contracting can provide an effective alternative when competitive processes are unlikely to deliver timely, secure, or reliable outcomes—while competitive procurement remains critical for routine and market‑based acquisitions.