National Security and Government Entity Procurement Exemptions

Summary#

These final rules, Regulations Amending the Government Contracts Regulations: SOR/2024-273, change federal procurement rules so some contracts no longer have to follow the standard bid (competitive tendering) step. The changes mainly affect contracts tied to national security and contracts with other governments or certain government-owned bodies. The regulations were registered on December 16, 2024 and published in the Canada Gazette on January 1, 2025.

What it does#

• Exempts contracts from the bid requirement in the Government Contracts Regulations when a properly invoked national security exception (NSE) applies under the Canadian International Trade Tribunal Procurement Inquiry Regulations.
• Exempts contracts between the federal government and a “government entity.” The new definition of government entity covers:
  • a provincial government, a foreign state, a political subdivision of a foreign state, or a municipality;
  • a Crown corporation or a corporation or agency wholly owned by one of those governments; and
  • an intergovernmental organization made up of two or more states, or an agency of such an organization.
• Makes clear that Section 18 ("Deemed Terms") of the Government Contracts Regulations still applies to these exempt contracts.
• Comes into force on the date the regulations were registered (December 16, 2024).

Who's affected#

• Federal contracting authorities (the departments and officials who run procurement).
• Companies and suppliers that bid on or supply goods and services to the federal government, especially those involved in contracts with national security components.
• Provincial and municipal governments, foreign governments and their wholly owned Crown corporations or agencies when they enter contractual arrangements with the federal government.
• Intergovernmental organizations that deal contractually with Canada.
• The regulations say they do not change obligations toward Indigenous governing bodies and Indigenous organizations, and they are not expected to create new costs for small businesses.

Why it matters#

• It reduces duplicate paperwork and administrative steps when a national security exception is used, which can speed up urgent or sensitive procurements.
• It clarifies that many arrangements with other governments and certain government-owned entities do not have to go through the usual federal bid process, which can make those dealings simpler and quicker.
• It preserves existing contract terms (the “deemed terms”) and does not change Canada’s trade or Indigenous law obligations.
• The Treasury Board Secretariat will publish guidance to explain how departments should use the new rules.