Government markets: What Canadians need to know
Author: Anu Sood
Published: July, 2026.
Learn more about government markets, sales opportunities for your business, where to find government contracts for bid, and what you need to know to enter and succeed in this market.
Government markets are arguably the greatest driver of economic growth around the world, accounting for trillions of dollars in annual spending. According to the Organisation for Economic Co-operation and Development (OECD), public procurement accounts for an average of 13% of gross domestic product (GDP).
But with staggering public procurement expenditures worldwide, it can be overwhelming for Canadians to know where to start and how to harness this massive global opportunity to grow their businesses.
This blog will provide an overview of government markets and information on a few key markets.
What is a government market?
A government market (or public procurement market) refers to opportunities to sell goods and services to government departments and agencies at the national, provincial/state, or local levels. These markets are unique in their scale, regulatory requirements, and specific procurement processes that businesses must follow to secure contracts.
Government procurement (or public procurement) refers to the processes by which governments purchase goods, services and works from the private sector. It gives governments access to the products and expertise necessary to deliver effective and efficient public services and maintain national security.
Since government procurement is funded with taxpayer money, most countries have laws and regulations governing procurement to ensure value for money, reduce the risk of fraud, and protect against bribery and corruption.
Government market refers to the overall public-sector marketplace, including all government agencies and organizations that purchase goods and services. Government procurement is the formal process governments use to acquire goods and services through activities such as tendering, bidding, and contract management.
Government market is who buys, while government procurement is how they buy.
Government organizations procure a wide range of products and services to support public programs and operations, including basic office supplies, information technology, construction, healthcare, professional services, and defence.
Procurement is typically conducted through competitive processes such as requests for proposals (RFPs), tenders, and standing offers, with an emphasis on transparency, fairness, value for money, and accountability.
Characteristics of government markets
Government markets have several distinctive characteristics that shape how businesses engage with public-sector customers:
- Process-driven purchasing: Governments procure goods and services through structured and transparent procurement processes. These often involve competitive bidding, detailed documentation, strict evaluation criteria, and compliance with procurement policies and regulations.
- Strong reliance on contracts: Government purchasing is largely contract-based, ranging from short-term agreements for routine supplies to long-term contracts for major projects such as infrastructure, defence, information technology, and professional services.
- Extensive regulatory requirements: Suppliers must meet a wide range of legal, ethical, and regulatory obligations, including labour standards, environmental requirements, security clearances, accessibility standards, and industry-specific certifications.
- Stable and predictable demand: Government organizations provide a relatively stable source of demand because public services and programs are ongoing. As a result, government spending is often less sensitive to economic cycles than private-sector spending.
- Broad and diverse purchasing needs: Governments purchase a wide variety of goods and services across numerous sectors, including technology, construction, healthcare, education, transportation, defence, and consulting, creating opportunities for businesses of all sizes and industries.
- Emphasis on fairness and transparency: Public procurement is guided by principles of fairness, openness, and accountability. Procurement decisions are typically documented and subject to oversight to ensure equal opportunity for suppliers and responsible use of public funds.
How big is the government market?
Government procurement is one of the largest markets in the world and a major driver of economic activity.
According to the OECD, public procurement accounted for 12.7% of GDP across OECD countries in 2023, representing roughly one-eighth of total economic output. Governments spend these resources to purchase goods, services, and public works necessary for delivering public services, ranging from healthcare and infrastructure to digital services and defence.
Beyond its economic size, public procurement has become an increasingly important strategic policy tool. Governments use their purchasing power not only to obtain value for money but also to support industrial policy objectives such as fostering innovation, strengthening domestic industries, improving supply chain resilience, and promoting environmental and social goals.
Why consider selling to government?
Most Canadian companies focus their growth strategies on the United States or other commercial export markets. Very few think seriously about selling to governments — and that’s exactly what makes it such a compelling opportunity.
Governments are the world’s largest buyers of goods and services. Programs get funded, contracts get renewed, and the demand for goods, services, and expertise is constant. For Canadian companies looking to build more stable, predictable, long-term revenue, government procurement deserves a serious look.
Not sure where to start? CCC helps Canadian companies navigate government procurement markets worldwide.
Contact us to explore the opportunities that might be right for your business.
What do governments buy?
Governments purchase an extraordinarily wide range of goods, services, and public works that keep societies functioning. According to the OECD report Public Procurement, Trade and Industrial Policies: Supporting National Priorities (2026), public procurement covers everything governments buy to deliver public services—from healthcare and infrastructure to digital technologies and essential supplies.
Healthcare is one of the largest categories. Governments procure medicines, pharmaceuticals, medical devices, and healthcare services to run hospitals and respond to emergencies. The COVID-19 pandemic highlighted how critical these supply chains are and how dependent governments can be on global suppliers.
Infrastructure is another major area of spending. Governments purchase construction services and materials for roads, bridges, ports, airports, dams, water systems, energy infrastructure, and broadband networks. These investments shape economic growth and improve the quality of life for citizens.
Governments also buy transportation equipment, digital technologies, defence and security goods and more. The OECD report points to semiconductors, railway rolling stock, and other technologies that are increasingly viewed as essential for economic resilience and national security. Public procurement decisions in these areas can influence entire industries and supply chains.
Beyond individual products, governments increasingly use procurement to achieve broader goals. They seek suppliers that can help promote innovation, strengthen domestic industries, improve supply-chain resilience, and advance environmental and social objectives.
Governments are in the middle of a once-in-a-generation spending surge
Governments worldwide are investing in defence, cybersecurity, critical infrastructure, digital transformation, and clean energy. They need technology that works, suppliers they can trust, and partners who can deliver at scale. If your product or service solves a real-world problem in the commercial market, there’s a strong chance it solves the same problem for a government somewhere in the world.
Government contracts are also fundamentally different from commercial ones. They tend to be larger, longer, and more stable. They’re less price-sensitive and more focused on capability, reliability, and track record. And once you’ve won one, you’ve built the credibility and relationships that make the next one significantly easier to secure.
The global government market can change your company’s trajectory. The question isn’t whether you can afford to pursue it but rather whether you can afford not to.
Reach out to us if you have a product or service that you currently sell commercially and are of use to governments around the world.
Access to government markets
Often, government procurement favours local suppliers. While the intent is to boost the local economy, in practice, this approach can introduce market distortions that limit choice, raise prices, and undermine economic efficiency.
The international trade community has been working to bring government procurement under multilateral trade disciplines to increase competition from foreign suppliers to put downward pressure on costs for goods and services, give taxpayers value for money, and provide access to goods and services that can improve the quality of government services.
For these reasons, many international trade agreements include clauses that allow foreign suppliers to bid on government procurement contracts. One notable exception is defence and national security procurements, which governments universally reserve the right to restrict regardless of trade agreement obligations.
The World Trade Organization (WTO) Agreement on Government Procurement (GPA) is an international agreement that promotes open, fair, and transparent government procurement among participating WTO members.
The core aim of the GPA is to open government procurement markets among its 21 parties, comprising 48 WTO members.
Since government procurement is funded with taxpayer money, most countries have laws and regulations governing procurement to ensure value for money, reduce the risk of fraud, and protect against bribery and corruption.
Several international trade agreements benefit Canadian suppliers who are looking to sell to governments. Here are 5 free trade agreements with government procurement clauses.
- WTO Agreement on Government Procurement (GPA)– The core aim of the GPA is to mutually open government procurement markets amongst its 21 parties, comprising 48 WTO members.
- Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Chapter 15 – Government Procurement– Free trade agreement between Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam that covers virtually all sectors and aspects of trade.
- Canada – European Union Comprehensive Economic and Trade Agreement (CETA), Chapter 19 – Government Procurement– Provides preferential access to opportunities in the EU and sets new standards for trade in goods and services, non-tariff barriers, investment, government procurement, and other areas, including labour and the environment.
- Canada – Korea Free Trade Agreement, Chapter 14 – Government Procurement– Provides strategic access to regional and global value chains and levels the playing field with other countries who also have trade agreements with South Korea.
- Canada – United Kingdom Trade Continuity Agreement (Canada-UK TCA)– Replicates CETA on a bilateral basis and maintains preferential trade access into each other’s key markets.
No. Defence and national security procurements are typically excluded from international trade agreement obligations. Governments retain broad discretion to restrict competition in procurement when national defence, national security, or public order interests are at stake. This means that even where a trade agreement grants foreign suppliers access to a government’s procurement market, that access does not extend to contracts for military equipment, defence services, intelligence activities, or other procurements designated as essential to national security.
The biggest technology buyers are governments.
For Canadian companies. the same capabilities that solve problems for commercial clients can often be adapted to meet urgent government needs, often under longer contracts, at larger scale, and with greater pricing stability than commercial deals offer.
The challenge is knowing how to reach these buyers, structure proposals that resonate with government procurement officers, and navigate the compliance and contracting requirements that come with public-sector work.
CCC works with innovative Canadian companies that offer dual-use technology, helping them position their solutions for international government markets by providing due diligence, contracting structures, and government-to-government relationships that enable them to compete — and win.
Contact us to find out whether your technology is a fit for international government procurement.
Examples of government markets
Canada
For a business looking at government markets, Canada’s largest procurement opportunities over the next decade are likely to be concentrated in infrastructure, clean energy, transportation, housing, digital technologies, defence, and advanced manufacturing.
- Infrastructure and Major Projects. Canada is investing heavily in transportation, trade corridors, energy infrastructure, ports, airports, and strategic resource projects. A new Trade Infrastructure Strategy will fund ports, railways, highways, and airports to diversify exports beyond the United States.
- Housing and Urban Development. Housing affordability and supply remain central priorities. The government is supporting homebuilding through the new Build Canada Homes initiative, investments in affordable housing, and policies to reduce barriers to construction.
- Defence and Security. Canada is substantially increasing spending on defence, military readiness, cybersecurity, and domestic defence manufacturing.
- Productivity, Innovation, and Strategic Industries. The government is investing in innovation, advanced manufacturing, clean technologies, and strategic industries through the new Canada Strong Fund, a $25 billion sovereign wealth fund that will invest alongside private capital in nationally significant projects and companies.
Public Works and Procurement Services (PSPC) is the government’s main buyer of goods and services (including construction); it plays a key role by helping federal departments and agencies scope their requirements and ultimately secure what they need at the best value possible.
The Defence Investment Agency is a Special Operating Agency within Public Services and Procurement Canada that is tasked with streamlining high-priority procurements, strengthening Canada’s defence industrial base, driving innovation, and aligning defence investments with Canada’s strategic and operational needs.
PSPC carries out procurement through either a competitive or non-competitive process, usually dictated by the amount and type of expenditure. Most requirements exceeding $25,000 (or $40,000 for services and construction contracts) are published on CanadaBuys.canada.ca (formerly buyandsell.gc.ca).
Requirements valued below $25,000 are considered “low dollar value procurement,” and contracting officers may request quotes directly from suppliers, through either a competitive or non-competitive process.
The Government of Canada uses three main methods of supply to procure goods and services: direct contracts, standing offers, and supply arrangements.
Direct contracts are the most common vehicle for significant, one-time, or complex purchases. They are often used for major infrastructure projects, defence equipment, or large-scale IT implementations. These are binding agreements between the government and a supplier, and they account for the bulk of high-value government spending. Direct contracts can include task authorizations (TAs), which allow the government to issue specific work orders under an umbrella contract as needs arise.
Standing offers are used for goods and services that government departments need to reorder on a recurring basis. A standing offer is not a contract, bur rather a pre-negotiated offer from a supplier to provide specific goods or services at set prices and terms, when and if required. It only becomes a contract when the government issues a “call-up.” The Government of Canada issues five types of standing offers, depending on whether it is national or regional in scope, and available to one department or many.
Supply arrangements are like standing offers in that they apply to regularly purchased goods and services, but they’re used when requirements are less predictable. Rather than a fixed price and scope, a supply arrangement establishes a pool of pre-qualified suppliers. When a department has a specific need, it runs a mini-competition among that pool to award the actual contract. Many supply arrangements include ceiling prices, giving departments room to negotiate further based on their specific requirements.
What are the five types of standing offers used by PSPC?
PSPC issues five types of standing offers. The type used depends on the geographical area involved and the number of federal departments or agencies involved:
- National Master Standing Offer (NMSO) — used by many departments or agencies throughout Canada.
- Regional Master Standing Offer (RMSO) — used by many departments or agencies within a specific geographic area.
- National Individual Standing Offer (NISO) — used by a specific department or agency throughout Canada.
- Regional Individual Standing Offer (RISO) — used by a specific department or agency within a specific geographic area.
- Departmental Individual Standing Offer (DISO) — used only by PSPC on behalf of specific departments and agencies.
Opportunities to sell to Canadian governments are posted on CanadaBuys. It serves as a centralized platform to manage and facilitate government purchasing activities, standardize and streamline the procurement process, and provide vendors with a digital platform to register, find opportunities, submit proposals, and manage their contracts.
Canadian businesses can also search for opportunities on CanadaBuys through GBOF.ca (free for Canadian businesses), which lists government opportunities across many jurisdictions.
United States
The United States has the world’s largest government procurement market. For a business looking at government markets, the largest U.S. procurement opportunities over the next decade are likely to be concentrated in defence, border security, law enforcement, veterans, and domestic industrial capacity.
- National Defense (largest priority) – Increase defense spending to $1.5 trillion, a 44% increase over the FY2026 level. Invest in military modernization, national security infrastructure, shipbuilding, and the defence industrial base.
- Border Security and Immigration Enforcement – Maintain or increase investments in border security and immigration enforcement. Expand resources for homeland security and counterterrorism activities.
- Law Enforcement and Public Safety – Increase funding for federal law enforcement agencies and provide additional tools, technology, and resources to keep communities safe.
- Veterans – Continue funding and support for veterans’ benefits and healthcare.
- Trade, Manufacturing, and Industrial Policy – Increase funding for trade enforcement, protecting intellectual property and technology, attracting investment to the United States, expanding manufacturing and the defence industrial base and maritime industries, shipbuilding, and domestic resource development.
- Agriculture and Natural Resources – Focus agricultural spending on supporting farmers, ranchers, forestry, wildfire management, and domestic timber production.
Agencies identify their needs, issue solicitations or requests for proposals (RFPs), evaluate bids based on factors such as price, technical capability, past performance, and compliance requirements, and award contracts to selected vendors.
Procurement takes many forms, including open competitions and framework agreements such as the General Services Administration (GSA) Schedules.
To compete for U.S. Federal Government contracts, businesses must first obtain a Unique Entity ID (UEI) and register in the System for Award Management (SAM.gov), the federal government’s central vendor database.
During registration, companies provide basic business information, tax details, banking information for payments, and identify their industry classifications using NAICS codes. Once registered, vendors can search for contract opportunities posted on SAM.gov, respond to solicitations issued by federal agencies, and pursue contracts directly or through government-wide acquisition vehicles such as GSA Schedules.
Maintaining an active SAM registration is essential, as agencies generally cannot award contracts or make payments to unregistered companies.
U.S. government procurement is governed by a comprehensive set of laws, regulations, and policies designed to ensure fairness, competition, transparency, and accountability in the use of public funds.
At the federal level, the primary rulebook is the Federal Acquisition Regulation (FAR), which establishes uniform procedures for acquiring goods and services across government agencies. The FAR is supplemented by agency-specific regulations, such as the Defense Federal Acquisition Regulation Supplement (DFARS) for the Department of War.
SAM.gov is the primary portal for contract opportunities with the U.S. government. Businesses can search for solicitations, notices, and awards. It’s also where companies register to do business with the government and update their entity information.
Canadian businesses can search for U.S. government opportunities by either registering directly on SAM.gov or through Canada’s GBOF.ca (free for Canadian businesses), which lists government opportunities in the U.S., Canada and many other jurisdictions.
U.S. military
The U.S. Department of War (formerly the U.S. Department of Defense) is entering one of its largest procurement cycles in decades. Over the next several years, the Pentagon is expected to spend heavily on ships, aircraft, missiles, drones, artificial intelligence, software, and industrial capacity.
Defence-spending categories include:
- Ships and shipbuilding: The Navy is planning a major expansion of its fleet, including new submarines, destroyers, and unmanned vessels, representing the largest shipbuilding effort in decades.
- Aircraft and drones: The Air Force and Navy are investing in next-generation fighters, bombers, autonomous drones, and collaborative combat aircraft that pair AI-enabled drones with manned aircraft. The Air Force has already moved new drone wingmen programs into production.
- Missiles and munitions: The Pentagon is dramatically increasing purchases of long-range missiles, air-defence interceptors, and low-cost cruise missiles while expanding domestic production capacity for rocket motors, guidance systems, and other critical components.
- AI and software: Defence procurement is increasingly shifting toward software, autonomy, and data infrastructure. The military is separating software procurement from hardware in some programs and investing heavily in AI-enabled command systems, logistics, and manufacturing.
- Industrial base and manufacturing: Beyond weapons, the Pentagon is investing in the defence industrial base itself, expanding factories, strengthening supply chains, and encouraging new entrants to compete with traditional defence contractors.
U.S. DoW procurement is complex and decentralized. The Defense Logistics Agency (DLA) manages the global supply chain—from raw materials, to end user, to disposition—for the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, 11 combatant commands, other federal agencies, and partner and allied nations. Each individual armed service executes its own defence procurement and is supported by distinct procurement offices.
Other purchasing agencies include the Defense Advanced Research Projects Agency (DARPA), which researches and develops contracts for the U.S. DoW, and the National Security Agency (NSA), which processes intelligence, cryptology, and information security procurements.
Like other U.S. government opportunities, tender opportunities with the U.S. military are posted on SAM.gov. They are also listed on Canada’s GBOF.ca.
European Union
While traditional programs such as agriculture and regional development remain important, the EU is increasingly directing public spending resources toward competitiveness, defence, digital technologies, clean energy, and strategic autonomy.
The European Commission’s proposed €2 trillion budget for 2028–2034 is explicitly designed to strengthen Europe’s sovereignty, boost competitiveness, and improve resilience in response to geopolitical tensions, climate change, and technological competition.
The EU has identified six broad priorities for the coming decade:
- Competitiveness, research, and innovation – investing in advanced manufacturing, AI, semiconductors, research, startups, and industrial competitiveness. A new European Competitiveness Fund is expected to channel hundreds of billions of euros into these areas.
- Defence and security – Europe is dramatically increasing spending on defence, military mobility, cybersecurity, drones, missile defence, and defence industrial capacity. The EU has proposed mobilizing up to €800 billion in defence investments over several years and increasing the EU-level defence and space budget fivefold.
- Clean energy and the green transition – the EU continues to invest heavily in renewable energy, energy infrastructure, decarbonization, batteries, and green manufacturing. Climate and biodiversity remain major cross-cutting priorities, with at least 30% of EU spending targeted toward climate-related objectives.
- Regional development and cohesion – almost half of the proposed budget, around €865 billion, is earmarked to reduce disparities between regions and support economic convergence across member states.
- Agriculture and food security – despite reforms, agriculture remains one of the EU’s largest spending categories, with hundreds of billions allocated to support farmers, food security, and rural development.
- Resilience, migration, and global partnerships – the EU is increasing investments in border security, migration management, preparedness for crises, and partnerships with neighbouring countries and strategic allies. Continued support for Ukraine is also a major budget priority.
To find opportunities with EU governments, start by monitoring Tenders Electronic Daily (TED), where around 2,600 contract notices are published each day. These opportunities are also pulled in daily to Canada’s Global Bid Opportunity Finder (GBOF), where you can filter by industry, region and country—amongst other criteria.
Once you find an opportunity and understand the basics of EU government procurement, it’s time to prepare your bid, which often requires you to submit the technical, financial and certifications aspects of your bid separately for independent assessment.
Focus on the technical and financial components, which can make or break your bid, and consider enlisting the help of a local specialist or partner who has successfully navigated the bid process in that country.
You can also explore using CCC’s International Prime Contractor program to assist your buyer in purchasing from you on a government-to-government (G2G) basis.
Collaborating with CCC demonstrates to the European contracting entity that your capabilities and proposal have been thoroughly vetted by a Government of Canada agency for technical and financial capacity, as well as ethical and responsible business practices.
Success with government markets – Persistence and patience
When it comes to finding, nurturing and ultimately winning contracts with governments, persistence and patience are key.
On average, it can take two to five years to build the necessary relationships and navigate all the gates involved in complex government procurement processes. Exporters should prepare for the long haul and critically evaluate each opportunity before deciding where to expend their valuable time and effort.
The Canadian advantage selling to government buyers
Canada has a strong reputation in engineering, construction, defence manufacturing and aerospace. Infrastructure is also a particular area of Canadian leadership — and a growing focus for governments around the world, especially when it comes to green public infrastructure to mitigate the impacts of climate change.
Global security and defence is another growing market where Canadian firms have recognized capabilities. That market is also evolving, with new demands and opportunities emerging.
Beyond our expertise, Canada is a sought-after partner thanks to our strong “country brand” worldwide. Canadian companies are generally seen as fair-dealing and transparent. While peacekeeping used to be the primary way of forging and reinforcing that reputation, today trade is the sphere of influence.
Partnership-style arrangements through which companies help deliver local economic and social benefits and knowledge transfer are also a strong reason foreign governments choose to work with Canada.
Ready to pursue a government contract?
CCC has decades of experience helping Canadian exporters access government markets and key decision-makers, advising on pursuit strategies, negotiating contract terms or holding the pen on the final deal as prime contractor.
If your company includes government markets as part of your international growth strategy, CCC can be your business development partner – contact us to learn more.
Learn more about CCC’s signature contracting service for bringing qualified Canadian companies to government buyers around the world.
While CCC’s government to government (G2G) contracting approach provides a direct, unsolicited proposal route to seize on international opportunities, it’s helpful as an exporter to have an understanding of government procurement processes.
Let us help you explore ways that the Government of Canada can help you win more international deals.