Government procurement markets: What Canadians need to know
Learn more about government procurement 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.
What is government procurement?
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 activities are executed with taxpayer money, most countries have laws and regulations around procurement activities to ensure value for money, reduce the risk of fraud and protect against bribery and corruption.
How much do governments buy?
Governments buy many goods and services. Everything from tendering and contracting for large infrastructural projects to purchasing routine office supplies fall under the definition of public procurement.
According to the OECD’s Government at a Glance 2021, public procurement expenditure as a percentage of GDP increased slightly across the OECD over the last decade, from 11.8 percent of GDP in 2008 to 12.6 percent of GDP in 2019. The chart below shows total expenditures on general government procurement as a share of GDP. While the data is from 2016, but it gives a good idea of which countries procure heavily through governments.
In 2020, public procurement as a share of total government expenditure decreased across all responding OECD countries as non-procurement government expenditure grew faster than procurement expenditure. This was due to support packages provided by governments in response to the pandemic increased total government expenditures.
What do governments buy?
Public procurement has a massive impact on the delivery of all types of government services, from health, environmental protection, defence and public order, to economic affairs such as infrastructure, transport, communication, energy, and research and development.
Health expenditures represent the largest share of public procurement spending, accounting for approximately 30 percent in OECD countries and over 40 percent in some European countries (Belgium, Germany, Italy and the Slovak Republic) and in Japan.
In the United States, defence and economic affairs represent the largest share of public procurement spending. Economic affairs (16.7 percent), education (11.6 percent), defence (10.5 percent) and social protection (10 percent) represent the remaining largest areas of public procurement spending across OECD countries, with substantial variations between countries. (Source: OECD iLibrary: Government at a Glance 2021)
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Government procurement and international trade agreements
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 choices, increase 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. It is for these reasons that many international trade agreements include clauses that allow foreign suppliers to bid on government procurement contracts.
The Canadian government has worked tirelessly to improve market access for Canadian companies to sell into foreign governments and many of Canada’s free trade agreements contain a chapter on government procurement (see below).
Government procurement chapters in international trade agreements contain contract regulations and procedural rules governing the conduct of procurement in line with the principles of non-discrimination, impartiality and transparency as well as details on the types of acquisitions that are subject to those rules. Contracts from specific government entities that exceed defined monetary thresholds for goods and services are subject to the provisions of international trade agreements.
Canada’s trade agreements with government procurement clauses
Several international trade agreements already in force benefit Canadian suppliers who are looking to sell to governments. Here is a sample of 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, 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.
How select governments buy
Government of Canada procurement process
The Government of Canada purchases approximately $22 billion worth of goods and services every year on behalf of federal departments and agencies, making it one of the largest public buyers in the country.
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 to scope their requirements and ultimately help them get what they need at the best value possible.
PSPC carries out procurement through either a competitive or non-competitive process, usually dictated by the amount and type of expenditure. Most requirements above $25,000 (or over $40,000 for services and construction contracts) are published on canadabuys.canada.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.
Standing offers and supply arrangements are two types of non-binding agreements between the Canadian federal government and potential suppliers of specified goods or services. A standing offer is an offer from a potential supplier to provide goods and/or services at pre-arranged prices, under set terms and conditions, when and if required. It is not a contract until the government issues a “call-up” against the standing offer.
U.S. Government procurement process
According to the Federal Procurement Data System, U.S. spending on government contracts exceeded $597 billion in 2020. Through its General Services Administration (GSA), the U.S. Government facilitates the acquisition of products, services and solutions to help federal agencies achieve their goals at the best value for taxpayers.
The Federal Acquisition Regulations (FAR) is essentially the manual of U.S. Government contracting. All would-be vendors should familiarize themselves with the FAR, and those looking to sell into defence should also be familiar with the U.S. DoD Defense Federal Acquisition Regulation Supplement (DFARS).
The U.S. conducts its public procurement via contracts, contract vehicles, commercial platforms and small business set-asides. Contracts or contract vehicles can be awarded through Multiple Award Schedule or a solicitation on the U.S. government contracts database called SAM.gov.
To be eligible to compete for U.S federal government contracts, you must first register your business with SAM.gov and obtain a unique entity identifier (UEI). You must then either certify as a small business to be eligible to compete for small business set-aside opportunities, or become a Schedule holder to be eligible to compete for Schedule task orders or BPAs.
From there, you must promote your offering to federal departments and agencies and find contract opportunities (published as “solicitations”) by searching on SAM.gov or on eBuy (for Schedule holders only).
U.S. military government contracts
U.S. DoD 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 research and development contracts for the U.S. DoD, and the National Security Agency (NSA), which processes intelligence, cryptology, and information security procurements.
Doing business with the U.S. DoD isn’t just for large defence contractors nor is it just for American companies. It’s a unique opportunity for Canadian businesses of all types and sizes – and making it happen may be less complicated than you think.
This guide will provide more information about the opportunities available to Canadian companies, U.S. Government contracts search and how to get started!
EU government procurement process
In the European Union, public procurement accounts for around 14% of GDP, with an estimated value of over €2 trillion. Canada’s second most important trading partner after the United States, the EU has more than 250,000 public contracting authorities across 27 member states, which operate as a single market. This makes it easier to do business as it allows for free movement of goods between countries.
Other reasons the EU is an attractive market for Canadian businesses is that it offers long-term political stability, it has a competitive tax system, and import tariffs are amongst the lowest in the world. Canada has also forged some special trade relations with the EU that makes the bloc a strong market for Canadian goods, services and expertise.
To find opportunities with EU governments, start by monitoring Tenders Electronic Daily (TED), where around 2,600 contracts notices are published each day. These opportunities are 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 had success in the bid process for that country.
You can also explore using CCC’s International Prime Contractor program to assist your buyer to make the purchase from you on a government to government (G2G) basis. It will also show the contracting entity that your capabilities and proposal have been thoroughly vetted by a Government of Canada agency for ethical and responsible business practices.
Persistence and patience are key
When it comes to finding, nurturing and ultimately winning contracts with governments, persistence and patience are key. On average, it can take anywhere from two to five years to build the required relationships and pass through all the gates involved in complex government procurement processes. Exporters should prepare themselves for the long haul, and they should critically evaluate each opportunity before deciding where to expend their valuable time and effort.
Opportunities abound for forward-thinking Canadian companies with something to offer domestic and foreign governments with matching procurement contracts. While opportunities are abundant, the road to winning a bid is marked with strict regulations and processes—challenges that the CCC can help you navigate through its services.
CCC: Helping Canadians win government business abroad
Canadian Commercial Corporation (CCC) is Canada’s Government to Government (G2G) contracting agency, supporting international trade by providing advocacy, project development and expertise to help exporters gain access to foreign government procurement markets.
CCC’s International Contractor programs create government to government (G2G) contracts with foreign government buyers to help Canadians win more international public sector contract opportunities.
For Canadian exporters
Gain a local BD partner
Go from RFP to co-creation
Mitigate risks to your pursuit
Differentiate your proposal from competitors
For foreign government buyers
De-risk your procurement process
Get faster and better procurement
Attract sources of financing for your project
Building our shared bilateral relationship
CCC is the U.S. Department of Defense designated contracting authority for acquisitions from Canada. Through our U.S. DoD Prime Contractor program, we advocate to maintain the integrated Canada-U.S. defence industrial base and help Canadian businesses navigate and win in the complex U.S. DoD procurement market.
For Canadian exporters
Be seen as a domestic supplier like a U.S firm
Gain credibility from our proposal endorsement
Get help to interpret tender documents
Simplify cost and pricing accounting
Get more support and advocacy
For foreign government buyers
Guarantee of contract performance
Contractual provisions give same data rights
Reduce contract administration effort
CCC provides price verification and performing assist audits. We are also a point of contact for U.S. DoD contracting officials and DCMA North America.
Get assurance of value for money
Broaden your supply base, reduce supply chain risk
Ready to pursue a government contract?
Each year, Canadian Commercial Corporation (CCC) contracts for and manages billions of dollars in contracts with hundreds of Canadian companies’ and foreign governments.
Whether your company is looking to explore sales to international markets or you are actively preparing proposals in response to foreign government solicitations, CCC can provide advice on how the process works. Visit us at www.ccc.ca to learn more.
Learn why government procurement is an attractive market opportunity for Canadian exporters.
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.