Government markets: What Canadians need to know
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 is arguably the greatest driver of economies around the world, accounting for trillions of dollars in annual spend globally. According to the Organisation for Economic Co-operation and Development (OECD), public procurement accounts for an average of 12% of gross domestic product (GDP) and 29% of government expenditures in OECD countries.
But with such staggering public procurement expenditures in all corners of the world, it can be overwhelming for Canadians to know where to start looking and how to harness this massive global opportunity to grow their business. This article is a good starting point for understanding how to assess the government procurement market opportunity and what you need to know to enter this market and succeed.
- What is government markets?
- What is government procurement?
- How big are government markets?
- What do governments buy?
- Government procurement and international trade agreements
- How select governments buy
- Success with government markets: Persistence and patience are key
- CCC: Helping Canadians win business abroad
What is government markets?
Government markets (or public procurement markets) refer to the opportunities to sell goods and services to government departments and agencies at the national, provincial/state, or local levels. These markets are unique due to their scale, regulatory requirements, and specific procurement processes that businesses must follow to secure contracts.
Key characteristics of government markets include:
- Process driven: Governments use formal public procurement processes to purchase goods and services, often requiring detailed documentation, compliance with regulations, and competitive pricing.
- Heavy reliance on contracts: Government markets heavily rely on short-term or long-term contracts for everything from small products and services to infrastructure and defense to technology and consultancy.
- Lots of regulations: Businesses must comply with various legal and regulatory requirements, including labour laws, environmental standards, and quality certifications, to work with government entities.
- Stable demand: Government contracts often provide a stable and consistent source of revenue for businesses, as government needs are ongoing and frequently unaffected by market fluctuations.
- Diverse purchases: Governments purchase a broad array of products and services, including technology, construction, healthcare, education, and defense.
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 big are government markets?
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 2023, 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 12.9 percent of GDP in 2021. Across OECD-EU countries, public procurement increased from 13.7 percent of GDP in 2019 to 14.8 percent in 2021.
General government procurement spending as a percentage of GDP and total government expenditures, 2007, 2019 and 2021
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.
In 2021. social protection accounted for the largest share of public spending (15.8 percent of GDP) in OECD countries. Social protection includes pensions, and sickness, disability and unemployment benefits. Healthcare, hospital and patient services, appliances, equipment, and medical products, represented the second largest share of public expenditure. From 2019 to 2021, average health expenditures increased from 8 percent to 9 percent of GDP in OECD countries, mostly due to the COV ID-19 pandemic.
Finally, economic affairs formed the third largest spending category in the OECD in 2021. This category includes commercial, agricultural, energy and transport expenditure made by public administrations to support productive activities. General public services and education accounted for fourth and fifth largest category spending.
In Canada, health accounted for 25 percent of general government expenses in 2022. Social protection was closely behind at 24 percent, followed by general public services (16 percent), education (13 percent), and economic affairs (9 percent).
In the United States, economic affairs (21.9 percent) and defence (20.2 percent) represented the largest share of public procurement spending. Education (16.4 percent), health (16.3 percent) and general public services (10.7 percent) represent the remaining largest areas of public procurement for the U.S. government. (Source: OECD iLibrary: Government at a Glance 2023)
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Government markets 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.
Canada’s trade agreements with government procurement clauses
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.
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, 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.
Other Canadian free trade agreements with government procurement clauses
Government market: Canada
The Government of Canada purchases approximately $37 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.
Buying agency and process
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 (previously 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.
Contract types
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.
Finding opportunities
Opportunities to sell to Canadian governments are posted on CanadaBuys which is a government initiative designed to streamline and enhance the procurement process for government purchases.
It serves as a centralized platform to manage and facilitate government purchasing activities, standardize and simplify the procurement process and provide a digital platform for vendors to find opportunities, submit proposals, and manage their contracts.
Businesses interested in providing goods or services to the federal government need to register on the CanadaBuys platform. Canadian businesses can search for opportunities on CanadaBuys through GBOF.ca (free for Canadian businesses), which lists government opportunities across many jurisdictions.
How to get contracts with the Government of Canada | Finding tender opportunities with Canadian provinces and territories
Government market: U.S. Government
According to the U.S Government Accountability Office (GAO), the U.S. federal government committed about $694 billion on contracts in fiscal year 2022, an increase of about $3.6 billion from fiscal year 2021 after adjusting for inflation.
Buying agency and process
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 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).
Regulations
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).
Finding opportunities
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.
In addition to searching for current active opportunities, SAM.gov allows registered entities to manage their information, including updating their details and renewing their registration to maintain an active status. It also provides data on federal awards, including contracts, grants, and cooperative agreements, which allows users to search and review information on past and current awards to identify potential opportunities.
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.
Discover sales opportunities with governments around the world
The Global Bid Opportunity Finder (GBOF) can help you grow in government markets by helping you find bid opportunities with foreign federal, state and municipal governments around the world with a single account.
GBOF is exclusively available for Canadian companies.
Government market: U.S. military
Total contract awards at the Department of Defense grew from $422 billion in 2022 to $470 billion in 2023, an increase of 11.5%.
Buying agencies and process
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.
Like other opportunities with the U.S. government, tender opportunities with the U.S. military are posted on SAM.gov. They are also listed on Canada’s GBOF.ca.
Canadians doing business with U.S military
Canadians looking to build a relationship with the various agencies in the U.S. DoD ecosystem can refer to our Selling to the U.S. military guide to get started. To summarize, you will need to
- Identify your product or service
- Get your NCAGE code
- Register with SAM.gov
- Identify contract opportunities
- Build awareness of your product or service with various agencies
- Get to know contract regulations to ensure that you comply.
Once you have identified a potential opportunity, you can contact CCC to learn more about our U.S. DoD Prime Contractor service which is designed to assist Canadian companies to navigate the U.S. federal procurement system and advocates for Canadian companies during the contracting process.
Canadian companies benefit from partnering with CCC as it has established relationships with many U.S. defence agencies and provides a Government of Canada guarantee for all approved proposals. This is particularly valuable in highly regulated and competitive defence markets.
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!
Government market: EU
In the European Union, public procurement accounts for around 14% of EU 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.
Finding opportunities
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.
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 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.
$15.5 Billion
Total contracts CCC supported in 2022-2023 (5-year CTT totals)
$1.24B
Exports in aerospace
$606M
Exports in infrastructure
$9.85B
Exports in defence
$1.88B
Exports in ICT
$1.92B
Exports in other sectors
International Prime Contractor service
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
We leverage the Canadian embassy and a government to government relationship to help identify and advance your pursuit to negotiation and signature.
Go from RFP to co-creation
Our unsolicited G2G proposal approach changes moves you from an arms-length vendor selection to a collaboration between governments supported by your expertise to design the right solution.
Mitigate risks to your pursuit
As prime contractor, we reduce political, corruption, human rights, and payment risks, and leverage the Government of Canada network to help navigate the complex government procurement decision-making process effectively.
Differentiate your proposal from competitors
With a Government of Canada guarantee of contract performance, we help increase the buying government’s confidence in their selection of your proposal.
For foreign government buyers
De-risk your procurement process
We take contract performance risk off the table with our proven G2G contracting model, vendor due diligence, and government guarantee of contract performance.
Get faster and better procurement
We can satisfy priority government needs with unsolicited proposals from our qualified Canadian suppliers using our flexible and transparent G2G contracting approach. We welcome value for money assessments on our proposals.
Attract sources of financing for your project
We bring a proven track record of successfully delivered public sector projects and a network of commercial banks to attract project financing.
Building our shared bilateral relationship
Each G2G contract we collaborate on offers an opportunity to deepen our trade relationship and builds meaningful ties between our governments.
U.S. DoD Prime Contractor service
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
Canadian companies are treated as domestic sources of supply, thereby giving your proposals equal consideration as U.S. firms.
Gain credibility from our proposal endorsement
We review your technical and financial proposal and perform a complete due diligence review to provide a Government of Canada endorsement of your proposal.
Get help to interpret tender documents
We answer your questions about U.S DoD solicitations, help you interpret their documents and help you navigate to successful contract wins.
Simplify cost and pricing accounting
We certify that your price aligns with Canadian government cost and profit policy and eliminate the need to present cost and pricing data that conforms with U.S. accounting standards.
Get more support and advocacy
Leveraging our decades of experience, we help you find solutions to disputes or export challenges to ensure successful contract delivery.
For foreign government buyers
Guarantee of contract performance
When you buy from Canada through CCC, the Government of Canada provides a guarantee of contract performance.
Contractual provisions give same data rights
Receive the same rights for data and information related to production that would be normally obtained.
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
CCC conducts a cost and price analysis to ensure the price is fair and reasonable and in accordance with Government of Canada Cost and Profit Policy.
Broaden your supply base, reduce supply chain risk
By performing technical, managerial, and financial due diligence on your Canadian supplier, we broaden your supply base and reduce your supply chain risk.
Ready to pursue a government contract?
Each year, CCC contracts for and manages billions of dollars in contracts with hundreds of Canadian companies’ and foreign governments.
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.
This post was last updated on September 19, 2024.
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.
