Directive on Low Value Procurement

A Directive on Low Value Procurement is a formal policy instrument that sets out how public bodies buy goods and services below a defined dollar threshold. It sets the threshold, assigns roles and responsibilities, and prescribes simpler procedures than those used for large contracts, while keeping the buyer within higher-level procurement law and principles.

In the Canadian federal government, this instrument is the Directive on the Processing of Low Dollar Value Procurement, part of the Acquisitions Program of Public Services and Procurement Canada (PSPC). It outlines the procedures and processes for low dollar value (LDV) procurements. The Acquisitions Program policy instruments page on CanadaBuys lists it among the instruments that guide federal buyers.

Dollar thresholds that define low dollar value procurement

Federal guidance defines LDV procurement by contract value. Procurements not exceeding $25,000 for goods, or $40,000 for services and construction, are low dollar value procurements. These amounts include all applicable taxes. The CanadaBuys guidance on determining a sourcing strategy states that these purchases must follow PSPC guidelines, including the LDV directive.

Supplier-facing material from PSPC repeats the same thresholds. It explains that, unlike larger purchases, LDV purchases are often direct purchases from vendors rather than formal tendering processes. See the PSPC page on low dollar value opportunities.

Delegated authority for departments and agencies

The directive is also the vehicle for delegated purchasing power. The Minister of PSPC has delegated authority to procure goods up to $25,000 to departments and agencies listed in Schedules I, I.1 and II of the Financial Administration Act. The policy instruments page confirms this delegation. It lets client departments buy directly to meet operational needs instead of routing every small purchase through PSPC.

Departmental reporting shows how this works. The Department of Finance Canada reported that about 98% of the value of its goods purchased on contract came through PSPC and Shared Services Canada instruments. About 2% of the value, or $15,582.95, went through departmental purchase orders, which are used only for low dollar value goods not available on existing standing offers or supply arrangements. See the Department of Finance Canada 2026 supply chains report.

Rules buyers must follow on small purchases

A simpler process does not mean an unstructured one. The sourcing guidance sets several requirements for buyers:

• Requirements cannot be split or divided to fit under the LDV threshold.
• Buyers must use the most efficient and cost-effective method, which can mean soliciting offers or directly selecting a sole offeror when soliciting is not cost-effective.
• Buyers must complete a risk assessment.
• Buyers must document the file, including the rationale for the strategy and how the estimated contract value was determined.

These requirements appear in the CanadaBuys sourcing strategy guidance.

Links to non-competitive contracting and the Integrity Regime

The LDV thresholds match one of the circumstances in the Government Contract Regulations that allow a contract without soliciting offers: expenditures not exceeding $25,000 for goods and $40,000 for other contracts covered by the regulations. The other circumstances are pressing emergencies, certain architectural and engineering services up to $100,000, cases where competition is not in the public interest, and cases where only one supplier is known. PSPC's introduction to the federal procurement process summarizes these rules. Where a trade agreement applies, a non-competitive award is allowed only if it fits a limited tendering reason in that agreement.

A separate PSPC directive covers contracts, subcontracts and real property transactions below $10,000. It excludes them from the Integrity Regime. See the PSPC directive on awarding contracts below $10,000.

What it means for a supplier bidding on Canadian public contracts

Many federal purchases fall below the LDV thresholds. They are often direct purchases, and many are made by government credit card, most of them under $10,000, according to the PSPC low dollar value page. PSPC presents these contracts as an entry point for smaller businesses to build a relationship with the Government of Canada, and it encourages suppliers to register so federal buyers can find them.

Suppliers should expect faster awards and less public advertising at this level. They should also expect buyers to document their choices and to avoid splitting larger requirements into smaller ones. Above the thresholds, federal buyers typically use competitive methods such as Requests for Proposal, Requests for Standing Offer or Requests for Supply Arrangement.