The Great Thaw: June Numbers Signal End of Federal Spending Freeze

The federal procurement numbers are confirming what contractors have been feeling all year: there's been a significant contraction in government spending. The data shows a dramatic 47% drop in contract values, validating concerns across the industry. However, June's numbers suggest this may be temporary—we're seeing almost triple the activity compared to the same period last year, indicating the slowdown might already be reversing.

Federal Spending Reality Check: The Numbers Don't Lie

Massive Contraction Confirmed, But Recovery Signs Emerging Source: Government Contract Data Analysis | Date: June 15, 2025

What's Happening: The federal procurement drought is real and the numbers are stark. Contract spending dropped 46.8% compared to the same period last year—from $503.5M to $267.7M between April 1 and June 15. The total number of contracts fell even more dramatically, down 67.6% from 222 contracts to just 72.

What It Means For You:

• Validation of Concerns: If you've been feeling like opportunities dried up, the data confirms your experience

• Shift to Larger Contracts: Average contract value increased from $2.3M to $3.7M, indicating consolidation toward bigger opportunities

• June Recovery Signal: Early June data shows almost 3x the activity compared to June 2024, suggesting the contraction may be ending

The Key Insight: While the April-May numbers are concerning, June's dramatic uptick indicates this may be an election-year pause rather than a fundamental shift. The >$20B defence spending commitment suggests significant contracts are coming.

The Real Problem: Even though a few big contracts have allowed 2025-2026 to remain competitive with LY, the dramatic drop in the number of contracts is what is truly alarming, and should have contractors potentially looking to other levels of government to fill the void

Where the Money Is Going

Top Federal Contract Awards (April-June 15, 2025)

Three Priority Sectors Continue:

• Defense: Maintaining momentum with significant technology and training investments

• Infrastructure: Major construction projects proceeding despite overall slowdown

• Technology: Strategic investments in telecommunications and specialized systems

Between Us: The presence of a U.S. Air Force contract in the top three while provinces debate American supplier bans shows the complexity of current procurement politics.

Provincial Developments: Pragmatism Over Politics

Saskatchewan Ends U.S. Countermeasures Source: SaskToday  | Date: June 12, 2025

What's Happening: Saskatchewan is ending its policy of prioritizing Canadian suppliers over American ones, reverting to standard procurement processes. The move acknowledges that over 99% of provincial contracts already went to Canadian companies.

What It Means For You:

• Reality-Based Policy: Recognition that essential services sometimes require specialized U.S. suppliers

• Procurement Stability: Return to merit-based evaluation rather than origin-based restrictions

• Market Access: Critical supplies and equipment procurement returns to normal processes

To be clear, it is not as though SK is now going to prioritize Americans, or no longer focus on Canadian suppliers. Instead, this rule-change was driven by an actual inability for hospitals and other suppliers of critical services to operate without access to certain American products or tools. Ultimately, this back-and-forth highlights our reliance on America, whether we like it or not.

New Brunswick Removes Interprovincial Trade Barriers Source: CTV News Atlantic  | Date: June 12, 2025

What's Happening: New Brunswick is eliminating five exceptions under the Canadian Free Trade Agreement, opening previously restricted entities to national competition starting September 1, 2025.

Affected Entities:

• Atlantic Lottery Corporation

• Regional service commissions

• Wastewater commissions

• Fredericton Area Pollution Control Commission

• Greater Moncton Sewerage Commission

What It Means For You:

• Market Expansion: Out-of-province contractors gain access to previously restricted opportunities

• Atlantic Strategy: Maritime markets become more accessible for national contractors

• First-Mover Advantage: Early relationship building in New Brunswick could pay dividends

The Reality Check: The spending contraction is real and contractors' concerns are validated by the data. However, June's strong recovery suggests this is an election-year pause rather than a permanent shift. The key is maintaining readiness for the spending resumption while adapting to the trend toward larger, more consolidated contracts.

Professional Services Note: Traditional consulting opportunities remain limited, but essential services, infrastructure delivery, and defence capabilities continue to see investment.

The Bottom Line

The federal procurement contraction is documented and significant—your business concerns are supported by real data. However, June's dramatic uptick (nearly 3x last year's activity) suggests the drought may be ending.

This appears to be election-year caution rather than fundamental policy change. Contractors should use this period to strengthen capabilities, build relationships in newly accessible markets like New Brunswick, and prepare for the likely spending resumption in the fall.

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