Governments, world-wide, are preoccupied with avoiding policy failure. A high level of policy capacity is considered one indicator of addressing this issue. Canada is typical of most countries where policy-related work tends to be centralized within its national capital city (Ottawa). There have been criticisms that on-the-ground perspectives are not conceded in policy decisions. Given the vast size and the decentralization of power, very little research has been dedicated to policy work conducted in its regions and whether it contributes to strengthening policy capacity. This article employs eight key hypotheses about contribution of Canadian regionally-based federal policy work to policy capacity based upon data derived from a national survey. A structural equation model (LISREL) is used to present the results. We find that regional-based policy work currently does little to enhance policy capacity. Policy work is divided along two distinct functional lines: traditional policy analysis and ‘street-level’ bureaucracy. The more engaging policy analysts belong to formal policy units which are a critical aspect of stronger policy capacity. The second factor contributing to policy capacity were attitudes towards the larger political arena.