Prime Minister Mark Carney speaks at the Canadian Association of Defence and Security Industries annual trade show in Ottawa on Wednesday.Justin Tang/The Canadian Press
Ottawa is working to create Canadian defence “champions” to help rebuild the domestic industry, by introducing a framework aimed at boosting investment and supply chains in the sector.
Speaking in front of hundreds of industry members, military personnel and government officials at a major defence conference on Wednesday, Prime Minister Mark Carney provided an update on many of the promises his Liberal government made in its Defence Industrial Strategy, released in mid-February.
“We are focused first on building in Canada, directing procurement to Canadian firms where we have those sovereign capabilities,” Mr. Carney said. “Where we can’t build alone, we’re partnering with like-minded allies, attracting investment, transferring IP [intellectual property] and integrating supply chains, so more public dollars will go back to Canada.”
The new Strategic Partnership Framework is one of the tools Mr. Carney said his government intends to use to grow Canada’s domestic supply chain, by working more closely with a few select firms. The framework will guide the selection of these partners, designated as “champions,” by the federal government. However, the timeline for when those champions will be announced is still unclear.
Industry Minister Mélanie Joly explained that forming such strategic partnerships means Ottawa won’t necessarily have to run a traditional procurement process each time it needs new equipment.
When the government is working with a strategic partner, she said, “we’re able to basically have that conversation with how we can get the equipment that is needed.”
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These companies will receive specific information such as operational priorities from the government and be able to depend upon Canada as their anchor customer, providing they invest back into Canadian industry.
Potential candidates for the program could include aviation training giant CAE Inc. and aerospace company MDA Space Ltd. However, U.S. or foreign-owned subsidiaries won’t be ruled out, Ms. Joly said.
“It must be a company that is anchored in Canada, obviously a Canadian company. It can be a subsidiary of other companies, but it needs to have a very strong footprint here, and also decision-making here within the country,” she said.
Ms. Joly will be working alongside Stephen Fuhr, the secretary of state for defence procurement, and the Defence Investment Agency to determine whom the government will designate as its strategic partners.
“Many firms have already approached us, maybe Canadian firms already, or those who have some presence in Canada, but are willing to do even more,” she said.
“So, that’s part of the conversation. It’s not only the footprint they have now, but what they could bring in the context of becoming strategic partners.”
Industry Minister Mélanie Joly will choose the new strategic partners in collaboration with Stephen Fuhr, secretary of state for defence procurement, and the Defence Investment Agency.Justin Tang/The Canadian Press
Ottawa also introduced its new Industrial and Technological Benefits (ITB) policy on Wednesday. Launched in 2014, the current policy, meant to ensure that companies awarded contracts by the federal government are investing equal amounts into Canadian industry, has long been lamented by the defence sector for its inefficiencies.
The newly minted ITB policy will be directly tied to the sovereign capabilities identified in the government’s defence strategy, such as autonomous systems, space, sensors and aerospace, Ms. Joly said.
“That means that decisions are based on what actually builds Canadian industrial capacity, not old regulatory habits,” she said onstage at the conference.
More specifically, the government is adding multipliers to its policy that benefit companies in Canada expanding production or investing in research and development, Ms. Joly said. Companies will also receive new multipliers for working directly with small and medium-sized businesses in Canada, as well as for supporting Indigenous work-force development.
Another new measure targeted at helping smaller businesses, which make up the majority of Canada’s defence industry, includes setting a 90-day service standard for ITB transaction approvals. The measure is meant to keep companies from having to wait long periods for government decisions that affect their bottom line. “I know 90 days is still a lot. We’ll lower that as well,” Ms. Joly said.
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Under the policy, Canadian companies doing at least 70 per cent of their work domestically will also now be credited as if they’re doing 100 per cent, to incentivize companies already in Canada to stay, Mr. Carney said.
This is important as many Canadian defence companies are able to sell products or services to other countries before successfully being contracted at home, often leading them to consider relocating elsewhere before gaining a foothold domestically.
Other promises from February made official through Mr. Carney’s announcement include a defence concierge service to help small and medium-sized businesses navigate government programs, provincial partners and export opportunities, as well as a new Defence Advisory Forum to better connect government and industry.
The forum will be co-chaired by Defence Minister David McGuinty, Ms. Joly, Mr. Fuhr and a rotating selection of senior industry executives from the 10 sovereign capability areas outlined in the defence strategy. Applications for industry members looking to participate in the forum will open on June 1.
The inaugural forum meeting is expected to take place in September.