The Newfoundland and Labrador government has quietly become one of the most aggressive provinces in Canada when it comes to regulating how contractors use artificial intelligence — gaining the right to investigate, approve, deny, or modify any vendor’s intended use of AI, and to audit that use at any time.
“We may investigate, approve, deny or modify a vendor’s intended use of AI, and we may also audit the vendor’s use of AI,” said Barry Petten, the Progressive Conservative minister responsible for public procurement. “Those are big changes.”
The rules, added to provincial requests for proposals in December 2025, require companies bidding on government contracts to declare upfront whether they plan to use AI and how.
They came in direct response to fabricated citations — believed to be generated by an AI large language model — that turned up in two separate government-commissioned reports. One was a 10-year education improvement plan produced by the provincial Education Accord team. The other was a $1.6-million health human resources study prepared by Deloitte Canada for the provincial Health Department, obtained by The Canadian Press through access to information legislation.
Related: Deloitte to Refund Australia for AI-Generated Errors in Government Report
Neither contract, both signed under the previous Liberal government, included any provisions governing AI use.
Deloitte denied that the health report was written with AI, but acknowledged using it “to support a small number of research citations” and said it has since corrected those citations. The company stands behind the report’s recommendations, while the provincial Health Department said it is “reviewing options related to compensation” for the errors.
Petten described the changes as a work in progress. “It’s on the fly, we’re learning as we go,” he said. “And hopefully we’ll get better in time.”
Most other provinces haven’t started. A Canadian Press survey of all provincial governments found that Alberta requires vendors to document AI use and be able to explain it in the event of an audit, while Saskatchewan and Nova Scotia have transparency requirements for AI — but only in IT contracting. New Brunswick covers AI privacy and security standards in IT procurement documents. Ontario, Manitoba and British Columbia have no AI provisions in their procurement rules at all.
Tom Cooper, a business professor at Memorial University, said governments should take Deloitte’s AI use as the new baseline assumption for any consulting engagement — and hold contractors to a higher standard as a result. AI tools save time and money, he argued, and that efficiency dividend should show up in the quality of the work.
“Reports should be getting much better — more comprehensive, more interviews, more jurisdictional scans,” Cooper said. “If you’re getting the same report quality, then there’s a problem.”
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
