A Canadian flight engineer with the RCAF inspects a CC-138 Twin Otter as the armed forces prepare to deploy above the Arctic Circle for 'Operation Nanook,' on March 18.Carlos Osorio/Reuters
Canada’s new Defence Investment Agency is expected to reduce its $100-million minimum for handling contracts with defence companies, which has been a sore spot for smaller players who make up the majority of the industry.
The threshold, introduced when the agency was launched in October to help streamline Canada’s sluggish defence-procurement system, excludes it from handling contracts valued at less than $100-million.
The limit sparked disappointment among small-to-medium-sized defence businesses working on traditionally less expensive technologies, such as uncrewed systems, because it excluded them from being the primary contractor on procurements handled by the agency.
At the time, Secretary of State for Defence Procurement Stephen Fuhr said the limit was put in place to maintain efficiency and not waylay the agency’s work with smaller contracts at its onset. Roughly six months later, the agency is preparing to break out from within Public Services and Procurement Canada and become its own stand-alone entity through the introduction of legislation this spring.
This transition is likely when changes to the $100-million limit will be made, Mr. Fuhr said. “It was there for a reason. That reason will no longer exist once we’re up and running,” he said during an interview on stage at a defence conference in Calgary on Thursday.
“Whether we reduce it to $50-million or $25-million or we just take it away completely, that’s to be determined. But it won’t stay at $100-million.”
The scope of the agency was one of several issues raised during a two-day conference in Calgary that brought stakeholders together to discuss the future of Canada’s defence industrial base.
Held for the first time this year, the Western Canada version of a defence and security conference held in Halifax for nearly two decades brought more than 1,700 people to the Calgary Telus Convention Centre.
The Defence Investment Agency is now handling more than 30 procurements, and its staff has grown from 15 to 100 people, Diogo Brandao, senior director of policy for the Defence Investment Agency, said in a panel discussion at the conference. It has also expedited several defence procurements, moving up the delivery of a new fleet of rifles for the Canadian Armed Forces by two years, for example.
Diogo Brandao, second from left, senior director of policy at the Defence Investment Agency, spoke on a panel during the Defence Security and Aerospace conference in Calgary on Tuesday.Todd Korol/The Canadian Press
However, the agency recently drew ire from Canadian industry for one of its procurements after awarding General Dynamics Ordnance and Tactical Systems – Canada, a Quebec-based subsidiary of the U.S. defence company, $355.7-million to develop a nitrocellulose production facility. Canada does not currently produce the compound, which is used in a range of military munitions.
The decision to award a U.S. subsidiary, whose supply chain is integrated with its American facilities, this key sovereign capability upset some industry stakeholders who said the move went against the federal government’s push to buy Canadian.
Ottawa spending $1.4-billion to ramp up domestic ammunition production capacity
General Dynamics is a part of Ottawa’s Munitions Supply Program, which was created in the 1970s and protects producers from competition, factoring into the government’s decision to award the company this contract.
However, Mr. Fuhr said the Munitions Supply Program is ripe for change and added that if a Canadian company develops its own nitrocellulose capability, he will welcome more than one domestic producer.
“We’ve got to get crack-a-lacking on building ammunition in Canada,” he said in an interview with The Globe and Mail. “We’re not doing it fast enough and I’ll be looking to see where we can get that.”
On Tuesday, CellCore Technologies Inc., a Saskatchewan-based company, announced its plans to begin producing nitrocellulose in Canada by 2028. Incorporated in July, 2025, the company said it has already secured a site for its factory and received interest from other NATO countries, putting it in a good position as it prepares to break ground on a facility this year.
Change is happening quickly within Canadian defence procurement. Between 2015 and 2025, Canada increased its defence spending as a percentage of GDP by nearly 0.5 percentage points. On Thursday, Canada hit 2 per cent of GDP, pulling off an increase in spending, that previously took it about a decade, in less than a year.
Mr. Fuhr said he’s proud of what the federal government has been able to achieve in terms of ramping up defence spending.
But to reach its NATO target of 5 per cent of GDP toward defence by 2035, “We have to be disciplined and focused every year to get this thing done,” he said.
“Otherwise, we’re going to end up in the same place.”