Standing Committee on National Defence: October 23, 2025

Secretary of State’s (Defence Procurement) mandate, priorities and North Atlantic Treaty Organization (NATO) defence spending

Date: October 23, 2025 at 9:15 a.m. to 10:15 a.m.

Location: In person

On this page

• General items
• Key projects
• 2024 year in review - National Shipbuilding Strategy
• Related documents

General items

Opening remarks

The Honourable Stephen Fuhr
Secretary of State (Defence Procurement)

Standing Committee on National Defence (NDDN)

Mandate and Priorities – Defence Procurement

October 23, 2025

Good evening/morning everyone. Thank you, Mr. President and thank you to the committee for inviting me here.

I’ll begin by acknowledging our presence today on the traditional unceded territory of the Algonquin Anishinaabe people.

I’m pleased to participate in today’s discussion of the priorities associated with my role as Secretary of State responsible for Defence Procurement.

My mandate, Mr. Chair, is to meet the rapidly evolving threats of today and tomorrow. Our government is equipping our soldiers, sailors, and aviators with the tools they need, while investing in the growth of a strong defence-industrial base in Canada.

Mr. Chair, Canada’s new government has committed to our NATO partners that we will increase defence spending to 2% of GDP by the end of this fiscal year and 5% within the next decade.

To make that happen, the Government of Canada is changing its approach to defence spending and procurement. We all know that procurement has been too slow, overly complicated, and fragmented across departments.

These are not new issues, Mr. Chair. In fact, this Committee examined them in its 2024 report, A Time for Change: Reforming Defence Procurement in Canada, and we have incorporated many of its recommendations into the creation of this new agency.

Building on that foundation, the Defence Investment Agency represents a new era in how Canada delivers critical capabilities to its Armed Forces.

Many of its core features reflect the Committee’s guidance: streamlining the end-to-end process, simplifying approvals, tailoring oversight to project complexity, and embedding a stronger sense of urgency and prioritization in how we deliver capabilities.

We also drew from the recommendations from all parties, which called for a single point of accountability to replace the diffuse responsibility that has long hampered results. The Defence Investment Agency, established as a special operating agency within Public Services and Procurement Canada, now provides that clear accountability.

It consolidates multiple procurement functions under one roof while maintaining transparency and ministerial oversight.

Our goal is simple: to make procurement faster, clearer, and more responsive. The Agency focuses on consolidating processes, reducing red tape, and accelerating defence acquisitions while ensuring industry has greater clarity and predictability.

At the same time, the Agency’s work will align closely with the forthcoming Defence Industrial Strategy, which will serve as the roadmap for advancing Canada’s defence industrial objectives—supporting home-grown innovation in aerospace, shipbuilding, and advanced manufacturing, while helping Canadian firms scale up and compete globally.

Mr. Chair, this is a significant transformation of defence procurement and required major shifts in how we work.

That’s why, leading up to its launch, we consulted broadly with industry partners, small and medium-sized enterprises, Indigenous suppliers, and allied frameworks to ensure we got things right.

To manage day-to-day operations, the Government has appointed Doug Guzman as CEO of the new Agency.

Mr. Guzman brings a wealth of experience to the job and extensive expertise in capital allocation, project execution, and managing large financial projects.

In the Second World War, the government of the day acted decisively to reform procurement, delivering the planes, ships, vehicles, gear, and ammunition our military needed at a speed that met the moment.

Today, amid a shifting geopolitical landscape and growing global threats, Canada must once again rise to the occasion.

The creation of the Defence Investment Agency marks a decisive step forward—one that will strengthen our sovereignty, support Canadian industry, and ensure our military remains ready and resilient, now and into the future.

Thank you very much.

Defence Investment Agency

Issue

The Government of Canada has created a new Defence Investment Agency to modernize defence procurement.

Key facts

• On June 25, 2025, the Prime Minister announced Canada’s commitment to NATO’s Defence Industrial Pledge, which will see investments of 5% of annual GDP by 2035 in individual and collective security
• On October 2, 2025, the Prime Minister announced the creation of the new Defence Investment Agency, which will overhaul and streamline Canada’s defence procurement so the Canadian Armed Forces have the world-class equipment they need
• The Prime Minister also announced the appointment of Doug Guzman as its Chief Executive Officer
• The Defence Investment Agency is being established as a new Special Operating Agency within Public Services and Procurement Canada

Key messages

• To protect Canadian sovereignty and bolster our industrial capacity, we have created the new Defence Investment Agency
• The Agency will consolidate procurement processes, remove duplicative approvals and red tape, and provide industry with greater clarity and certainty
• With this centralized process of review and approval, procurements will advance faster so that we can equip the Canadian Armed Forces with the world-class tools that it needs

If pressed on ties to economic impact:

• The Defence Investment Agency will tie procurement to domestic industrial benefits, creating new careers, growing our economy, and supercharging innovation in aerospace, shipbuilding, and advanced manufacturing
• We intend to better leverage defence procurement through this investment in Canadian workers, companies, and technologies. The Agency will help Canadian firms scale up, develop cutting-edge capabilities, and compete globally

If pressed on defence spending:

• The establishment of the Defence Investment Agency is a cornerstone of Canada’s plan to increase defence spending to 2% of gross domestic product in 2025 and to 5% by 2035
• This effort supports economic growth while better protecting Canadian sovereignty, and strengthens our ability to work with Allies
• Our goal is to reinforce defence supply chains and industrial capacity among allied nations, thus reaffirming Canada’s commitment to global security

Background

Until now, defence procurement in Canada has been divided across multiple ministers and accountabilities, and layers of oversight from central agencies. To meet the Government’s commitment to accelerate spending on defence, reforms to defence procurement are needed. The Defence Investment Agency will centralize accountability, leverage expanded authorities and introduce flexibilities in the procurement process to deliver faster procurement outcomes.

Reforming defence procurement has been the subject of several reports and studies. The Standing Committee on National Defence tabled a wide-ranging report (June 2024) entitled, “A Time for Change: Reforming Defence Procurement in Canada”. In December 2024, the Auditor General of Canada tabled a report on the application of Industrial and Technological Benefits (ITBs) to defence procurements, noting areas for administrative improvements, and will be tabling a report on Canada’s Future Fighter Jets in Spring 2025. The Parliamentary Budget Officer has recently released reports on the incremental cost of procurements such as the Polar Icebreaker Project and the F-35s.

Key projects

Defence investments (includes NATO commitments)

Advice to the minister.

Question: How does spending on National Defence benefit Canadians and how can Canada realistically meet a revised Defence spending target of 5% by the end of 2035?

• We are taking important steps to rebuild, rearm, and reinvest in the Canadian Armed Forces
• In fact, the National Defence budget has increased to $44.3 billion this fiscal year, as we make foundational investments in our forces
• This includes investments to expand and enhance military capabilities, strengthen Canada’s defence industries, and diversify our defence partnerships
• These investments will bring Canada’s defence spending to 2% of GDP within the current fiscal year
• Further, in June, the Prime Minister announced that Canada had agreed with NATO Allies to invest 5% of annual GDP in defence by 2035
• To meet this pledge, Canada will invest 3.5% of GDP in core military capabilities and a further 1.5% in critical defence and security-related infrastructure
• Major investments range from modern aircraft to submarines capable of patrolling our three coastlines
• Indeed, to advance the acquisition of our next fleet of submarines, we recently identified ThyssenKrupp Marine Systems and Hanwha Ocean as qualified suppliers
• Taken together, these investments reflect that the Government is committed to making the investments necessary to protect Canadians, defend our North, and support our Allies

Quick facts

Defence Spending

• 2025-26: Canada’s defence spending is projected to reach 2.01% of its Gross Domestic Product (GDP), with 22.6% devoted to major equipment, up from 1.47% of GDP and 18.3% on major equipment in fiscal year 2024-25.

North Atlantic Treaty Organization (NATO) Common Funded Budget

• In addition to investing in their own armed forces, all NATO Allies contribute directly to NATO’s budget based on an agreed cost-share formula derived from Gross National Income. Canada is the 6th largest contributor to NATO’s common funded budget.

Background

• On June 25, 2025 Canada and its NATO Allies agreed to a new Defence Investment Pledge of investing 5% of annual GDP by 2035
• As part of this 5% pledge, Canada will invest 3.5% of GDP for core military capabilities, expanding on the June 9, 2025 announcement
• This includes further investments in the Canadian Armed Forces, by modernizing military equipment and technology, building up Canada’s defence industries, and diversifying defence partnerships
• An additional 1.5% of GDP will be dedicated to investments in critical defence and security-related expenditure, such as new airports, ports, telecommunications, emergency preparedness systems, and other dual-use investments which serve defence as well as civilian readiness

Our North, Strong and Free (ONSAF)

• Measures to increase and accelerate defence investment will complement Canada’s Defence Policy: ONSAF.
• Announced on April 8, 2024, ONSAF features six major themes:
  • Supporting our people;
  • Strengthening our foundations;
  • Building an innovative industrial base;
  • Defending Canada;
  • Defending the Arctic and North America; and
  • Defending Canada’s global interests and values.
• Further, ONSAF included investments of:
  • $8.1 billion over five years (fiscal year 2024-25 to 2028-29); and
  • $73 billion over twenty years (fiscal year 2024-25 to 2043-44)

Parliamentary Budget Officer (PBO) Analysis

• The PBO published a report on October 30, 2024, entitled “The Fiscal Implications of Meeting the NATO Military Spending Target” in follow-up to its update in July 2024.
  • The report stated that additional spending would be required to meet the NATO 2% commitment but concluded that such expenditures are possible without unduly impacting Canada’s deficit-to-GDP ratio.
  • However, it reiterated a position that the PBO took in summer 2024, that ONSAF underestimates GDP growth and that, as a result, Canada’s defence budget would have to rise significantly to meet the NATO 2% target.
  • The PBO labelled the ONSAF GDP forecast as “erroneous” as it assumed a nominal GDP growth rate of 1.7%, which “does not even keep pace with inflation and therefore assumes a 4-year economic recession, almost twice the length of the country’s longest recession in the last 40 years”.
• The PBO relies on its own methodology for calculating GDP, which it says is broadly similar to the Department of Finance’s methodology.
• National Defence uses Canadian GDP figures provided by NATO, which use several data sources, including the Organization for Economic Co-operation and Development (OECD), and is a standard practice for NATO Allies.
• While the timeline has accelerated for Canada to reach 2%, the PBO’s criticism of National Defence spending projections is likely to endure as long as methodological differences persist.
• The PBO is preparing an updated report on Canada’s defence spending, which is expected to be released in fall 2025.

Responsible Principal: Assistant Deputy Minister (Finance)

September 5, 2025

Procurement of Canadian F-35 jets

Issue

In December 2017, the Government of Canada launched an open and transparent competition to permanently replace Canada’s fighter fleet with 88 advanced jets—the Future Fighter Capability Project.

Note:

• All questions related to capability, technical issues, deliveries and requirements, in-service support costs, including the complete life-cycle costs, the Auditor General Report on the F-35 entry into service, and current review of the F-35 acquisition should be answered by the Minister of National Defence
• All questions related to the Industrial and Technological Benefits Policy and Canadian Industry’s participation in the Joint Strike Fighter Program should be answered by the Minister of Industry and Minister responsible for Canada Economic Development for Quebec Regions
• All questions related to trade issues should be answered by the Minister of Foreign Affairs or Ministers responsible for Trade as Public Services and Procurement Canada has no involvement

Key Facts

• The project is estimated to be $27.7 billion, which includes associated equipment, initial weapons and ammunition, sustainment set-up and services, as well as the construction of Fighter Squadron Facilities (Cold Lake, Alberta and Bagotville, Quebec)

Key Messages

• The Government is committed to ensuring that members of the Canadian Armed Forces have the equipment they need to do their jobs and protect Canadians, while also ensuring the best value for Canadians
• The Government is currently reviewing the purchase of the F-35s to ensure that they represent the best fighter capability for our country with an optimal solution in terms of capability, price and economic benefits for Canadians and that this acquisition will drive significant work for Canadian industry over a 25-year period
• The Canadian industry is expected to have significant opportunities to contribute to the sustainment of fighters in areas such as the airframe and engine depots, training, maintenance of components and supply chain management over the life of the fleet

Background

As part of its defence policy, “Our North Strong and Free”, the Government of Canada has renewed its commitment to procure 88 advanced fighter jets for the Royal Canadian Air Force.

An independent fairness monitor oversaw the entire competitive process to ensure a level playing field for all bidders. An independent third-party reviewer was also engaged to assess the quality and effectiveness of the procurement approach.

On January 9, 2023, the Government of Canada announced that following an open, fair and transparent competition, Canada had finalized an agreement with the United States government and Lockheed Martin with Pratt & Whitney for the acquisition of F-35 fighter jets for the Royal Canadian Air Force.

On November 25, 2024, the Government of Canada announced that Canada has identified L3Harris MAS from Mirabel as its strategic partner. The company will collaborate with the Canadian government and the F-35 Joint Program Office to explore the requirement for an air vehicle depot.

On March 14, 2025, the Prime Minister asked the Minister of National Defence (MND) to review the planned acquisition of the F-35 aircraft; the review is led by the Department of National Defence with input from key project stakeholders. The Independent Review Panel for Defence Acquisition will also provide separate advice to the MND. It is anticipated that this review will be finalized by the end of September 2025.

The Office of the Auditor General of Canada has completed its Performance Audit of Canada’s Future Fighter Capability Project. The report was tabled in Parliament on June 10, 2025. Key findings include significant cost increases, infrastructure delays, Royal Canadian Air Force pilot shortages and project management gaps.

Replacing the Canadian Patrol Submarines

Issue

Canada has identified German company TyssenKrupp Marine Systems (TKMS), and Korean company, Hanwha Ocean Co., Ltd. (Hanwha), as the two qualified suppliers for the Canadian Patrol Submarine Project (CPSP)

Key facts

• A Request for Information closed on February 28, 2025, and 25 responses were received including seven from Original Equipment Manufacturers (submarine builders)
• On August 26, 2025, Canada announced the German company ThyssenKrupp Marine Systems (TKMS), and Korean company Hanwha Ocean Co. Ltd. (Hanwha) as the two qualified suppliers for the Canadian Patrol Submarine Project
• To avoid any gaps in Canadian submarine capabilities, Canada anticipates a contract award by 2028, with the delivery of the first replacement submarine no later than 2035

Key messages

• Canada has the largest coastline in the world, and it is essential that the Royal Canadian Navy be equipped with superior underwater surveillance capability to maintain our country’s security and sovereignty
• The Navy’s current Victoria-class submarine fleet is scheduled to be decommissioned in the mid-2030s and replacement submarines are needed
• The Government of Canada has identified two qualified suppliers in order to progress and accelerate their replacement by no later than 2035, to ensure a continuous Canadian submarine capability

Background

Through Canada’s defence policy, “Our North, Strong and Free”, the Government of Canada is providing members of the Royal Canadian Navy with the equipment they need to maintain current and future operational readiness.

Canada’s key submarine capability requirements will be stealth, lethality, persistence and Arctic deployability – meaning that the selected submarine must have extended range and endurance.

Through the Canadian Patrol Submarine Project, Canada will acquire a larger, modernized submarine fleet that will provide a unique combination of these capabilities to ensure that Canada can detect, track, deter and, if necessary, defeat adversaries in all three of Canada’s oceans while contributing meaningfully alongside allies and enabling the Government of Canada to deploy this fleet abroad in support of our partners and allies.

The Government of Canada remains committed to engaging Canadian industry and creating high-paying jobs at home through the Canadian Patrol Submarine Project. As such, Canada intends to leverage work on the submarines to generate economic benefits for Canada’s marine and defence industry throughout the fleet’s operational life.

National Shipbuilding Strategy

Issue

The National Shipbuilding Strategy is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy and Canadian Coast Guard, create a sustainable marine sector, and generate economic benefits for Canadians.

Note: All questions related to budget, requirements, timelines, international comparisons, and project management should be directed to the Minister of National Defence

Key facts

• As of August 2025, Canada has awarded approximately $54 billion in contracts under the National Shipbuilding Strategy to businesses across the country and, of these, $1.17 billion went to small and medium businesses with less than 250 employees
• In 2024 alone, the Government of Canada awarded approximately $6.5 billion in new contracts to Canadian companies under the Strategy, including approximately $85.2 million to small and medium businesses
• National Shipbuilding Strategy contracts awarded between 2012 and 2024 are estimated to contribute close to $38.7 billion ($2.8 billion annually) to Canada’s gross domestic product and to create or maintain approximately 21,400 jobs annually over the 2012 to 2025 period

Key messages

• The National Shipbuilding Strategy is about Canadians and Canadian businesses working together to strengthen and renew our Naval and Coast Guard fleets
• So far, 9 large vessels and numerous small ships have been delivered, and many more are under construction across Canada
• We will continue working closely with industry to manage costs and schedules, and ensure the best value is provided to Canadians throughout the duration of these projects

If pressed on the River-class Destroyer Project:

• On March 3, 2025, the Government of Canada awarded the Implementation (build) contract for the River-class Destroyer Project to Irving Shipbuilding Inc., with an initial value of $8 billion (including taxes)
• This contract supports the construction and delivery of the initial three ships as well as the development and delivery of necessary training, spares, and maintenance products required to operate and support the ships in service
• Full-rate production on the first ship, His Majesty’s Canadian Ship Fraser, is underway

If pressed on the Polar Icebreakers:

• The Canadian Coast Guard is acquiring 2 polar icebreakers which will strengthen its icebreaking fleet
• They will also support critical scientific research and environmental protection efforts, and ensure national security in the Arctic
• This investment enhances Canada’s maritime infrastructure and safeguards our sovereignty in the Arctic
• On August 20, 2025, the Government of Canada announced the official start of construction of the Polar Max, one of the 2 new polar icebreakers

Background

The National Shipbuilding Strategy is a long-term plan to renew the Royal Canadian Navy and Canadian Coast Guard fleets. It aims to eliminate the boom and bust cycles of vessel procurement that have slowed Canadian shipbuilding in the past. Canadian shipyards involved are Irving Shipbuilding in Nova Scotia, Vancouver Shipyards in British Columbia and Chantier Davie in Quebec.

The River-class Destroyer Project Implementation contract outlines the terms and conditions for the construction and acceptance of the first 3 ships. Proceeding in batches provides Canada with flexibility to adapt to technological advancements, address evolving operational requirements, and respond to emerging threats. This approach helps ensure that the fleet will remain modern and capable throughout its lifecycle.

As part of the Definition contract, the River-class Destroyer Project is presently in the third of four design stages. As design completion progresses in parallel with construction, Canada’s Definition contract and Implementation contract with Irving Shipbuilding will be open concurrently for a period of time.

On March 7, 2025, Seaspan’s Vancouver Shipyards was awarded a $3.15-billion contract (excluding taxes) to build one polar icebreaker. On March 8, 2025, Chantier Davie Canada Inc. was awarded a $3.25-billion contract (excluding taxes) to build the other polar icebreaker.

The Davie icebreaker will be built using a hybrid domestic-international build strategy, with work split between Davie’s facilities in Quebec and its Finnish shipyard. With the evolving global climate, it is essential more than ever that Canada delivers ships to the Canadian Coast Guard in a timely manner so they can continue to work to protect Canadian sovereignty and security.

The National Shipbuilding Strategy continues to evolve and will be strengthened by the Icebreaker Collaboration Effort (ICE) Pact, a partnership between Canada, Finland, and the United States that was signed into effect in November 2024. This collaboration seeks to accelerate Arctic and polar icebreaker production, boost the marine industries of all three nations, and enhance technical cooperation and information sharing to meet global demand for icebreakers. For Canada, the ICE Pact presents new opportunities for the shipbuilding sector by leveraging shared expertise and capabilities developed under the NSS, while promoting a key role for Canadian shipyards and supply chains.

2024 year in review - National Shipbuilding Strategy

2024 year in review: National Shipbuilding Strategy - Canada.ca

Related documents

Industrial and technological benefits (ITB) policy

Question: How is the Government of Canada leveraging federal procurement for economic benefits for Canada?

Key messages

• The Industrial and Technological Benefits Policy is the government’s main tool for leveraging economic benefits from large defence and Canadian Coast Guard procurements
• The Industrial and Technological Benefits Policy supports Canada’s economy by sustaining thousands of high-quality jobs across Canada, in firms of all sizes, particularly in the defence, aerospace and marine sectors
• Canada’s Industrial and Technological Benefits Policy requires companies awarded major defence and Canadian Coast Guard contracts to undertake business activity in Canada equal to the value of the contracts they have been awarded

Supplementary messages

• The Government of Canada is committed to providing the Canadian Armed Forces and the Coast Guard with the equipment they need to protect Canada and contribute to international peace and security
• The Industrial and Technological Benefits (ITB) Policy is making an impact from coast to coast. The resulting business activities help scale up companies, support Canada’s Key Industrial Capabilities, and encourage exports, innovation and skills development
• The overall portfolio includes 103 active projects with ITB obligations of over $64 billion, including over $35.5 billion in business activities completed, over $13 billion in progress, and over $15 billion in future work opportunities

Background

• The Industrial and Technological Benefits (ITB) Policy applies to certain defence and Canadian Coast Guard procurements over $100 million that are not subject to trade agreements or for which the national security exception is invoked. Defence procurements valued between $20 and $100 million are assessed for the possible application of the Policy
• Under the ITB Policy, contractors that bid on major defence and Canadian Coast Guard contracts must submit an economic proposal to Canada, called a Value Proposition. The Value Proposition is a weighted and rated element of the bid selection process and is scored alongside technical and cost requirements. Innovation, Science and Economic Development Canada (ISED) determines the economic benefit requirements for each Value Proposition on a procurement-by-procurement basis through extensive industry engagement and market analysis
• The beneficiaries of ITB-motivated business activity are Canadian companies of all sizes, including domestic firms headquartered in Canada and Canadian subsidiaries of foreign multinationals. Post-secondary and public research institutions also benefit from business decisions undertaken by prime contractors with ITB obligations, specifically related to R&D and skills development and training. Regardless of the beneficiary, ITB credit for eligible business activities is measured in Canadian content value, or that portion of the value of a product or service that involves costs associated with Canadian goods and services
• Small and Medium-sized Businesses (SMBs) account for the majority of firms in the Canadian defence industry, but face particular challenges in participating in global value chains. To support SMBs, the ITB Policy’s Value Proposition generally requires prime contractors to involve SMBs in fulfilling 15 % of their overall ITB obligation
• The ITB Policy is estimated to contribute more than 40,000 jobs and nearly $5 billion to Canada’s GDP annually. More than 720 Canadian organizations are benefiting from active ITB projects, including more than 460 SMBs and over 45 academic and research organizations

Media relations office

343-291-1777

Preparation and approvals

Sector contact: Demetrios Xenos, DG-ITBB, 613-889-1462

Sector approval (ADM-Level): Mary Gregory, AADM, 613-762-8602

SCMS contact (Director): Geneviève Sicard, Director 343-550-1582

SCMS approval (Exec/ADM-level): Kendal Hembroff, ADM, 343-291-1652

Buy Canadian

Issue

On September 5, 2025, the Prime Minister announced an expanded Buy Canadian Policy to strengthen domestic industries and ensure federal spending benefits Canadian businesses.

Key facts

• In fiscal year 2024 to 2025, Public Services and Procurement Canada, as Canada’s central purchasing agent, awarded $55.6 billion in contracts for goods, services and construction. Of this, approximately $50.9 billion (91%) was awarded to suppliers operating in Canada
• Between April and September 2025, Public Services and Procurement Canada, as a common service provider, awarded 564 contracts and amendments for approximately $2.0 billion to suppliers located outside of Canada. Of this amount, 188 contracts and amendments were awarded for defence purposes representing 92% ($1.8 billion) of the total value
• In July 2025, Public Services and Procurement Canada launched the Interim Policy on Reciprocal Procurement, which ensures all new non-defence procurements over $10,000 are limited to Canadian suppliers and suppliers of Canada’s reliable trading partners when our reciprocal trade agreements apply
• These measures form part of a broader Buy Canadian Strategy, which includes new policies to prioritize Canadian suppliers, goods, services and inputs in federal procurement and funding programs

Key messages

• As announced by the Prime Minister in September 2025, Public Services and Procurement Canada is developing a Buy Canadian Procurement Policy Framework that will apply across all federal institutions, including Crown corporations
• Buy Canadian measures will be phased into federal procurements to incentivize the participation of Canadian suppliers and the use of Canadian content
• We’ve already begun consultations with key sectors, including the steel, aluminum and lumber industries
• We’re also seeking feedback from the public to help shape the Buy Canadian policy for the future
• By working together, we can ensure federal procurement delivers lasting economic benefits and strengthens communities across Canada

If pressed on the value and volume of US contracts:

• Last fiscal year, only about 3 percent of Public Services and Procurement Canada contracts were awarded to suppliers located in the US, and were almost entirely for defence purposes

Background

On September 5, 2025, the Prime Minister announced an expanded Buy Canadian Policy that introduces a suite of new measures to prioritize Canadian suppliers, materials, and innovation across federal procurement and funding programs, amongst other measures to protect, build and transform Canadian strategic industries.

Public Services and Procurement Canada is developing a Buy Canadian Procurement Policy Framework, which encompasses a number of new measures, including:

• Encouraging the participation of Canadian suppliers by conditionally limiting procurements to Canadian suppliers or by giving price-based evaluation credit during the bid evaluation process;
• Incentivizing the use of Canadian content by evaluating bids based on its inclusion;
• A Policy on Prioritizing Canadian Materials in Federal Procurement that will require suppliers working on defence and construction contracts exceeding a certain value to use Canadian steel, wood products, and aluminum where these inputs are necessary. The Policy will have the required flexibility to introduce additional materials as required;
• Continued work to further restrict eligibility for non-defence procurements to Canadian goods and services or those from our trusted trade partners
• These new measures build on the Interim Reciprocal Procurement Policy that launched in July 2025, which limited the federal non-defence procurement market to suppliers located in Canada and from our trading partners
• In spring 2026, PSPC will also launch a Small and Medium Business Procurement Program that will create specific streams of procurement for small and medium businesses and will also help them navigate the federal procurement system more easily

Increasing Indigenous involvement in procurement

Issue

Public Services and Procurement Canada, in partnership with Indigenous Services Canada and the Treasury Board of Canada Secretariat, are actively working to increase the participation of Indigenous businesses in federal procurement.

Note: All questions regarding the Indigenous Business Directory, verification of Indigeneity and alleged cases of Indigenous misrepresentation should be directed to Indigenous Services Canada.

Key facts

• As of August 2025, there are approximately 3,000 businesses on the Indigenous Business Directory led by Indigenous Services Canada
• All departments have a minimum target to award 5% of the total value of procurements to Indigenous businesses
• In 2023-2024, Public Services and Procurement Canada awarded 3.4% ($143 million) of the total value of its procurements to Indigenous businesses
• Starting in 2024-2025, PSPC’s methodology to calculate the 5% target will include the value of subcontracts awarded to Indigenous companies by non-Indigenous suppliers

Key messages

• Public Services and Procurement Canada is committed to economic reconciliation with Indigenous peoples, and is working with Indigenous Services Canada and the Treasury Board of Canada Secretariat to increase Indigenous participation in federal procurement to meet the minimum target of 5% government-wide
• We are taking concrete action to increase Indigenous participation in procurement including:
  • considering Indigenous participation in all procurements;
  • including Indigenous Participation Plans in contracts to provide subcontracting opportunities and other economic benefits; and
  • providing dedicated procurement opportunities to Indigenous businesses

Background

On August 6, 2021, the Government of Canada announced a mandatory requirement for federal departments and agencies to ensure that a minimum of 5% of the total value of contracts are held by Indigenous businesses by 2024-2025. The announcement included Canada’s commitment to continue meaningful engagement to co-develop a longer-term transformative approach to Indigenous procurement and to increase the capacity of Indigenous-owned businesses to compete and receive more federal procurement contracts.

PSPC did not achieve its 5% target commitment in the 2023 to 2024 fiscal year; however, concrete actions are being taken to help increase Indigenous business participation in federal procurement, including developing Indigenous Participation Plans to boost subcontracting with Indigenous businesses and provide employment and training opportunities for Indigenous Peoples; applying Indigenous-by-default measures to consider Indigenous participation in all procurements; using limited bidding among prequalified Indigenous offerors; updating supply methods to include Indigenous businesses; structuring and unbundling projects to enable competitive Indigenous bids; and incorporating weighted Indigenous criteria in bid evaluations. PSPC also continued to increase awareness of federal procurement opportunities through its outreach and engagement activities.

Communications Messages on the Defence Investment Agency

September 25, 2025

Context

On October 2nd, 2025, the Prime Minister will announce that the Government of Canada is moving forward with the establishment of the Defence Investment Agency. It will initially be set up as a Special Operating Agency within Public Services and Procurement Canada (PSPC).

Key Messages

• The Defence Investment Agency (DIA) is a new Special Operating Agency that has been created to accelerate and streamline defence procurements
• The Agency will centralize procurement expertise and streamline decision-making to get the Canadian Armed Forces the equipment they need faster, grow Canada’s industrial base, and create good-paying jobs for Canadians
• DIA will actively support and develop Canada’s domestic defence industry through strategic partnerships, targeted investments, and engagement with Canadian businesses, fostering innovation and enhancing the nation’s ability to meet current and future defence requirements
• The establishment of DIA is a cornerstone of Canada’s plan to increase defence spending to 2% of GDP in 2025 and 5% by 2035, supporting economic growth, protecting Canadian sovereignty, and strengthening our ability to work with Allies
• This initiative will create more resilient defence supply chains and strengthen Canada’s industrial capacity by deepening collaboration with allied nations, reaffirming Canada’s role in global security

Questions and Answers

Q1. What is the Defence Investment Agency (DIA)?

A1. The DIA is a new Special Operating Agency within Public Services and Procurement Canada, created to accelerate and modernize defence procurement for Canada. Its mission is to deliver equipment, technology, and capabilities to the Canadian Armed Forces and Coast Guard more quickly and efficiently, while growing Canada’s domestic industrial base through strategic partnerships, targeted investments, and active engagement with Canadian industry.

Q2. Why is the Government creating a new agency for defence investments?

A2. The Government is creating the Defence Investment Agency (DIA) to speed up and modernize defence procurement, so the Armed Forces and Coast Guard get the equipment and technology they need faster. The DIA will also strengthen Canada’s industrial base and drive innovation by making procurement more efficient and supporting Canadian businesses.

Q3. What will the Defence Investment Agency do differently from existing procurement bodies?

A3. The Defence Investment Agency will consolidate procurement authorities, reduce the need for multiple Cabinet and Treasury Board approvals, and deploy integrated teams with technical, commercial, and project management expertise. It will also engage industry earlier in the process and adopt flexible procurement strategies tailored to defence needs.

Q4. How will the Defence Investment Agency improve defence procurement compared to the current system?

A4. The DIA centralizes procurement authorities, streamlines decision-making, and reduces bureaucratic delays. It brings together previously separated expertise from multiple departments, enabling faster, more agile procurement and better engagement with industry, to ultimately deliver equipment and capabilities for the CAF faster.

Q5. What are the main objectives of the Defence Investment Agency?

A5. The DIA aims to accelerate procurement timelines, grow Canada’s defence industrial base, create good-paying jobs, support innovation, and ensure the CAF has timely access to modern equipment and technology. It will also foster collaboration with industry and international partners.

Q6. How does this initiative support Canada’s defence commitments?

A6. The creation of the Defence Investment Agency is a key part of Canada’s plan to increase defence spending to 2% of GDP in 2025 and 5% by 2035. It will help Canada meet its NATO obligations, enhance operational readiness, and support participation in initiatives like Readiness 2030 (formerly ReArm Europe).

Q7. Who will lead the Defence Investment Agency?

A7. The DIA will be led by Chief Executive Officer Doug Guzman, with ministerial oversight provided by the Secretary of State for Defence Procurement. This role ensures dedicated leadership and accountability for defence procurement while strengthening Canada’s domestic industrial base through strategic engagement and investment.

Q8. How will the DIA support Canadian industry?

A8. The DIA will support Canadian industry by streamlining defence procurement, making it faster and more efficient for Canadian businesses to supply equipment and technology to the Armed Forces and Coast Guard. The Agency will strengthen the domestic industrial base through strategic partnerships, targeted investments, and active engagement with Canadian companies, helping drive innovation, economic growth, and job creation.

Q9. What safeguards are in place to ensure transparency and accountability?

A9. The DIA will operate under a clear governance framework, with performance measurement tools, regular reporting, and oversight from central agencies. It will also engage stakeholders and maintain transparency throughout the procurement lifecycle.

Q10. How will this affect existing staff and departments?

A10. Personnel from PSPC, DND, CCG, CAF and ISED will be transferred to the DIA to form integrated teams. This approach ensures continuity, leverages existing expertise, and fosters collaboration across departments.

Q11. How much will it cost to set up the Defence Investment Agency?

A11. The total cost to establish the DIA is currently being finalized and will be confirmed through Budget 2025 and Supplementary Estimates.

The Agency is expected to be initially comprised of approximately 45 full-time equivalents (FTEs), with the number of FTEs expected to grow over time as the Agency is established. Personnel will be drawn from PSPC, the Department of National Defence (DND), the Canadian Coast Guard (CCG), the Canadian Armed Forces (CAF) and Innovation, Science and Economic Development (ISED).

These departments will absorb some initial costs internally, while additional funding will be sought to support long-term operations. This approach will ensure the Agency can begin operations immediately, while maintaining flexibility to scale and adapt based on early results and evolving defence priorities.

Q12. When will the Defence Investment Agency begin operating?

A12. The Agency is expected to begin operations as a Special Operating Agency (SOA) within PSPC no later than October 2025. This initial phase will focus on standing up the organization, deploying integrated procurement teams, and advancing a first wave of high-priority defence procurements.

During this phase, the Agency will:

• Finalize its organizational structure
• Begin staffing and onboarding personnel from PSPC, DND, and ISED
• Launch pilot procurements to test new procurement models
• Establish corporate services and digital infrastructure

Q13. What is the governance structure of the Defence Investment Agency?

A13. The DIA will be led by Chief Executive Officer Doug Guzman, reporting to the Deputy Minister of PSPC, with ministerial oversight from the Secretary of State for Defence Procurement. An interdepartmental governance committee, including Deputy Ministers from key departments, will provide advice on the strategic direction of the Agency.

Q14. Will the Defence Investment Agency change how contracts are awarded?

A14. Yes, the Defence Investment Agency will have expanded contracting authorities, including the ability to enter into high-value and high-complexity contracts more quickly. It will also be able to limit contractor liability and indemnify contractors under certain conditions, aligning with industry norms.

Q15. How will the DIA interact with the Canadian Armed Forces and other departments?

A15. The DIA will work closely with the CAF and DND to define requirements and deliver procurements. It will consolidate expertise from PSPC, DND, CAF, and ISED, ensuring integrated teams support procurement from early stages through delivery.

Q16. What procurements will the covered under the Defence Investment Agency?

A16. The Defence Investment Agency (DIA) will support the Canadian Armed Forces and the Coast Guard across air, land, sea, and digital domains.

All procurements related to Defence, Security, and the Coast Guard may receive input from the DIA, regardless of the stage in the procurement process or the authorities involved. This means that, moving forward, both the Minister of Public Services and Procurement Canada and the Minister of National Defence can rely on the DIA’s expertise for any and all related procurements.

The DIA’s involvement ensures a more integrated and streamlined approach, helping to deliver better outcomes for Canada’s defence and security needs.

Q17. Will the Defence Investment Agency cover the National Shipbuilding Strategy and strategic partnerships such as the ICE Pact?

A17. As the Agency grows and takes on additional procurements, decisions will be made about the timing for transferring programs such as the National Shipbuilding Strategy and the ICE Pact.

Key messages and Considerations for the Secretary of State’s participation at the CANSEC 2025

Thursday, May 29, 2025

Key messages

General

• The Government of Canada has taken, and continues to take, action with a bold plan to bolster Canada’s strategic defence sector. The Government has been actively and strategically investing in the defence sector for many years
• Canada's defence policy—"Our North, Strong and Free”—includes a focus on strengthening the foundations of our military, modernizing existing capabilities, and acquiring new ones. The policy also emphasizes defending Arctic sovereignty, and strengthening Canada’s ability to operate in the region amid growing strategic and geopolitical interest
• Public Services and Procurement Canada (PSPC) works in partnership with other Canadian federal departments to deliver defence related goods and services, including those called for in Canada’s defence policy. Recent events have reminded us modern military capacity is still needed to protect and defend our sovereignty and our values, at home and abroad
• With the ever-accelerating pace of technological advancement of both allies and adversaries, Canada faces ongoing challenges to ensure that our military equipment remains technologically capable of meeting the missions demanded of them

Specific

• I am pleased to have this opportunity to visit CANSEC and learn more about the companies that form part of Canada’s defence and security industries and are so critical to our safety and security and to growing Canada’s economy
• The Government is continuously looking for ways to improve and streamline the procurement process. Is there any feedback you would like to share about your company’s experience with defence procurement and how we could improve it moving forward?
• What are you seeing as the key pressure points on your supply chains going forward?

Potential areas of interest

Defence Policy Update

Released in April 2024, the Defence Policy Update, “Our North, Strong and Free”, commits Canada to reaching the 2% of GDP spending target as agreed to among NATO members in 2023. Central to this pledge, Our North, Strong and Free discusses speeding acquisition and advancing defence procurement reform to reduce the operational and financial risks of delays and gaps between capabilities being retired and new ones being added. Noting the $12.6 billion in GDP and 78,000 jobs across Canada’s economy in 2023, this update also promises to maintain an innovative and effective defence industrial base through sustained strategic partnerships founded on transparency and trust. The Secretary of State may wish to elaborate on how PSPC values the opportunity CANSEC provides to cultivate a stronger, more cohesive partnership with Canada’s defence industry.

Defence Procurement Review

As part of its Defence Policy Update, Our North, Strong and Free, Canada committed to a review of its defence procurement system. The Defence Procurement Review has delivered options for ministers’ consideration that included proposals for changes to legislation, enhancements to PSPC’s Contract Security Program, and new opportunities for innovation, research, and development. In addition, the Department of National Defence is advancing a defence industrial strategy and a forum for ministers and senior leaders from the defence sector to engage more strategically on the challenges facing Canada and its defence sector. The Secretary of State may wish to comment, through the Review, PSPC is working to streamline procurement processes to ensure timely delivery of capabilities while maintaining fairness, transparency, and value for money.

Defence Procurement Agency

The Government of Canada has committed to establishing the Defence Procurement Agency, modernizing defence procurement rules and amending legislation and regulations as required, to centralize expertise from across government and streamline defence procurement. The Secretary of State may wish to comment that a Defence Procurement Agency would harness recommendations from the Defence Procurement Review to develop strategic partnerships with Canada’s defence industry, develop a defence industrial strategy, and modernize PSPC’s Contract Security Program so Canada’s defence industry is better equipped to compete for classified work. The Secretary of State may also wish to say Canada is committed to developing new approaches to how it procures with its allies, and building resilient supply chains, incentivizing industry to manage production to meet changing demand levels.

Continuous Capability Sustainment

Canada is focused on meeting the evolving challenge to ensure its military materiel is technologically capable of engaging mission demands. The current paradigm of inserting technology upgrades mid-life cycle is not allowing Canada to properly keep up with technological changes as well as ensuring the operational relevance of increasingly digitally enabled platforms. Consultations with industry are underway, exploring sustainment opportunities and initiatives. The Secretary of State could note the utility of CANSEC in providing a face-to-face forum to further develop the government to business relationship.

National Shipbuilding Strategy (NSS)

The NSS is a long-term commitment to renew the fleets of the Royal Canadian Navy (RCN) and the Canadian Coast Guard, create a sustainable marine industry, and generate economic benefits for Canadians. As a key part of Canada’s broader defence strategy, the NSS is revitalizing Canadian shipyards and constructing vessels, strengthening domestic shipbuilding capacity, and reinforcing Canada’s sovereignty and national interests. Through the NSS, Canada has established strategic partnerships with three Canadian shipyards, namely Seaspan’s Vancouver Shipyards Co Ltd, Irving Shipbuilding Inc (ISI), and Chantier Davie Canada Inc (CDCI), for the construction of large vessels. ISI and CDCI are also engaged in ongoing work to support and upgrade the Halifax-class frigates to ensure they remain operational until the new River-class destroyers enter into service. In addition to these strategic partnerships, many other Canadian companies are contributing to the delivery of these large ship construction and repair efforts, as well as the delivery of small vessels and undertaking other vessel repair, refit, and maintenance work through competitive procurement processes.

Icebreaker Collaboration Effort (ICE) Pact

The Icebreaker Collaboration Effort (ICE Pact) is a trilateral partnership among Canada, Finland, and the United States designed to ensure that the Arctic and Polar regions remain peaceful, cooperative, and prosperous. Established in response to the growing geopolitical significance of the Arctic, it focuses on enhancing economic and security cooperation, specifically through the shared development of best-in-class Arctic icebreakers and related polar capabilities. For Canada, the ICE Pact presents new opportunities for the shipbuilding sector by leveraging shared expertise and capabilities developed under the NSS, while promoting a key role for Canadian shipyards and supply chains. Recent developments include the first National Coordinator Meeting in Helsinki in March, a PSPC-led Request for Information (RFI) to industry, which closed on May 16^th, seeking feedback on the initiative’s design and implementation, and a trilateral acquisitions program workshop in Washington. Canada will be hosting the next National Coordinator Quarterly Meeting in Ottawa on June 11 and 12. The Secretary of State may wish to raise the ICE Pact to the participating maritime industry at CANSEC, highlight the new and exciting potential opportunities provided by the trilateral partnership, and seek insights and feedback from industry towards its implementation.

Indigenous procurement (minimum 5% target)

On August 6, 2021, Canada announced a new government-wide mandatory requirement for federal departments and agencies to ensure a minimum of 5% of the total value of contracts are held by Indigenous businesses (the 5% target). This requirement has been phased in with full implementation completed in 2024-2025. In addition, the updated Procurement Strategy for Indigenous Business was officially announced on that day. Through industry engagement, like the Defence Industry Advisory Group, Canada is seeking views on how best to implement Indigenous considerations in defence contracting. Finally, procurement activities subject to Modern Treaties include legal obligations that must be met by Canada. The Secretary of State may also wish to discuss the value Indigenous participation (Indigenous subcontracting, employment, and skills and training development) adds to the modernization of Canada’s approach through its procurement of systems and in-service support and maintenance.

Canadian Program for Cyber Security Certification (CPCSC)

On March 12, 2025, Canada announced the first phase of the Canadian Program for Cyber Security Certification, which introduces mandatory cyber security requirements for defence contractors when handling protected A, protected B, and controlled goods information. The implementation of the CPCSC will be phased-in gradually, allowing companies to adapt their operations to meet new requirements. The first phase will involve releasing a new Canadian industrial cyber security standard, opening the accreditation process, and introducing a self assessment tool for level 1 certification. This will help businesses understand the program before a wider rollout later in 2025. The Secretary of State may wish to visit the PSPC booth where there are PSPC staff responsible for the establishment of the CPCSC program and to encourage companies to visit and test their readiness and knowledge of CPCSC, highlight the recently released Standard, stress the importance of cyber security in today’s fast changing threat environment, and direct companies to the CPCSC team for more information.

Summary of the Standing Committee on Industry and Technology on the Defence Industrial Strategy, October 1, 2025

Defence Industrial Strategy

Today, officials from the Department of National Defence (DND) and Innovation, Science and Economic Development Canada (ISED) appeared before the House of Commons Standing Committee on Industry, Science and Technology (INDU) for a one-hour meeting on the use of the Defence Industrial Strategy to regenerate and further develop Canada’s industrial ecosystem and increase procurement opportunities for Canadian businesses.

In this first meeting, witnesses appeared on behalf of each DND and ISED:

DND/CAF:

• Wendy Hadwen, Assistant Deputy Minister, Policy-Industry
• Major General Jeff Smyth, Royal Canadian Air Force, Chief of Air and Space Force Development

ISED:

• Kendal Hembroff, Associate Assistant Deputy Minister, Industry Sector (by video conference)

The tone of the meeting was cordial. While few of the questions were directly related to the Defence Industrial Strategy (DIS) itself, those that did arise focused on accountability and how the DIS will operate to address cost containment measures. Members were primarily interested in the existing military procurement system. Members asked about the perspectives of national defence industry players and the government's ability to deliver on its "Buy Canadian" commitments. Members asked if there were opportunities to diversify sources of defence technology and increase export opportunities. Advancements in National Defence's ability to manage the transition to fighter aircraft were highlighted, as well as the importance of standards for interoperability with allies.

In her opening remarks, Ms. Hembroff underscored that planned defence spending represents a generational opportunity to invest in Canada’s defence industry and economy, and at a time when many of Canada’s manufacturing sectors are facing unprecedented challenges. She then provided an overview of the DIS, its goals, and ISED’s role in developing and implementing it, while pointing to some of the existing building blocks Canada has for building a comprehensive strategy, including the “Buy, Build and Partner” framework, as well as several existing policies and programs that work to support companies involved in civil and defence activities. She further stressed that Canada’s defence industry is at the cutting-edge of technology development and our defence sector acts as a driver of innovation in terms of research and development, design and manufacturing, and in terms of our strong capabilities in areas including: maintenance; repair and overhaul; training and simulation systems; unmanned aerial systems, earth observation; space robotics; combat ground vehicles; munitions; shipbuilding; and sonar technologies. She further highlighted Canada’s established and emerging capabilities in dual-use areas like artificial intelligence, cyber, quantum, biomanufacturing, and critical minerals. Ms. Hembroff concluded by stating that the forthcoming DIS will ensure our historic investments are focused on building and sustaining Canada’s defence industrial base to meet the needs of the Canadian Armed Forces and our allies, while driving economic growth, resilience, and innovation across the broader Canadian economy.

In her opening remarks, Ms. Hadwen noted that the DIS represents a comprehensive defence effort that requires the expertise of our civilian and military members, in addition to working closely with colleagues in the public service, in particular ISED, and ensuring communication and collaboration between government and industry. Ms. Hadwen stressed that this is an opportunity to bring consistency to defence spending, especially in the context of Canada's recent commitment to invest 2% of GDP in defence by the end of 2025-26. She highlighted how the DIS will work to: explain how defence spending will intersect with the Canadian economy and how the outcomes will flow to Canadians in terms of Canada's defence and shared national security; Establish a renewed and more dynamic relationship between industry and the Defence Team; and access industrial capabilities to address the threats of today and tomorrow. She also highlighted three core priorities for the DIS: (1) strengthening Canada's industrial base; (2) aligning defence investment with national industrial forces; and 3) safeguarding our national sovereignty.

Key takeaways

Obstacles to domestic defence industry players: MP Ted Falk focused his questions on the frustrations firms in the defence industry have expressed about contracting with the government. Ms. Hembroff cited the lack of awareness of opportunities to compete successfully, as well as those to operate in a broader Canadian supply chain. Both Ms. Hembroff and Ms. Hadwen pointed to the overwhelming number of small and medium sized enterprises wanting to partner with larger firms for broader made-in-Canada outputs. Ms. Hadwen also pointed to frustrations surrounding the recent rupture in trade and economic relationships.

Overreliance on US defence technology and export opportunities: MP Ste-Marie focused his questions on reducing the reliance on US defence technologies while developing and implementing the DIS. Major General Smyth noted that there are very few countries that undertake production for capabilities such as F-35s. He underscored that projects of this scale will take time and funding to develop. He further noted that we work first in partnership with our federal counterparts (i.e. DND, ISED, and Public Service and Procurement Canada [PSPC]) to define our given capabilities, and then to identify gaps, and finally, how to meet our operational needs in a timely way. MP Ste-Marie also asked what his initial question looks like in reverse, i.e. how the DIS would affect our exports to key foreign markets such as the US Ms. Hembroff noted that the US currently represents 63% of Canada’s exports from the defence sector and that we will need to follow this closely as the DIS is developed and implemented, as international opportunities remain critical for the industry. 

Maintaining interoperability standards with our allies: MP Bains asked questions related to the technology ecosystem and the importance of maintaining interoperability with our allies. Major-General Smyth affirmed that interoperability standards remain a top priority, stressing that it is a cornerstone of NATO member commitments.

Progress of National Defence’s ability to manage the fighter jet transition: MP Guglielmin posed a series of questions related to the Auditor General’s Report on the progress of National Defence’s plans to introduce the F-35 fighter aircraft into service, and the ways in which the DIS could risk undermining this initiative and potentially affect cost controls. Major General Smyth stressed the importance of good stewardship of public funds and the importance of balancing defence procurement needs while ultimately serving Canadians.

Accountability: MP Guglielmin also asked about the accountability measures in place to meet defence procurement requirements on time and on budget. Ms. Hadwen responded by noting that this work is done in close collaboration with other government departments, ensuring transparency and mutual accountability on behalf of the Canadian government.

Members in attendance:

• Ben Carr (Winnipeg South Centre, MB) – Chair
• Raquel Dancho (Kildonan—St. Paul, MB) – Vice Chair
• Gabriel Ste-Marie (Joliette-Manawan, QC) – Vice Chair
• Karim Bardeesy (Taiaiako'n—Parkdale—High Park, Ontario ON)
• Parm Bains (Richmond East-Steveston, BC))
• Dominique O’Rourke (Guelph, ON)
• Ted Falk (Provencher, MB)
• Kathy Borrelli (Windsor—Tecumseh—Lakeshore, ON)
• Michael Guglielmin (Vaughan—Woodbridge, ON)

Summary of the Standing Committee on Public Accounts on fighter jets, October 7, 2025

Name of Committee: Standing Committee on Public Accounts

Date and time: Tuesday, October 7, 2025

Topic of Meeting: Report 2, Delivering Canada's Future Fighter Jet Capability, of the 2025 Reports 1 to 4 of the Auditor General of Canada

Report Prepared by PSPC Parliamentary Affairs

Note that this report is provided for information purposes only and should not be quoted.

Committee members in attendance

• Chair: John Williamson (Conservative – Saint John—St. Croix, NB)
• Vice Chair: Sébastien Lemire (Bloc Québécois - Abitibi—Témiscamingue, QC)
• Vice Chair: Jean Yip (Liberal – Scarborough—Agincourt, ON)
• Gérard Deltell (Conservative - Louis-Saint-Laurent—Akiawenhrahk, QC)
• Anthony Housefather (Liberal – Mount Royal, QC)
• Ned Kuruc (Conservative – Hamilton East—Stoney Creek, ON)
• Stephanie Kusie (Conservative - Calgary Midnapore, AB)
• Tom Osborne (Liberal – Cape Spear, NL)
• Kristina Tesser Derksen (Liberal - Milton East—Halton Hills South, ON)

Witnesses

Department of National Defence

• Stefanie Beck, Deputy Minister
• LGen Jamie Speiser-Blanchet, Commander Royal Canadian Air Force
• Heather Sheehy, Assistant Deputy Minister, Materiel
• Peter Hammerschmidt, Assistant Deputy Minister, Infrastructure and Environment

Public Services and Procurement Canada

• Paula Folkes, Associate Assistant Deputy Minister

Office of the Auditor General

• Karen Hogan, Auditor General of Canada
• Nicholas Swales, Principal

Summary

The committee discussed a range of topics including Canadian defence procurement, risk management, readiness for new fighter jets, infrastructure development, and military technology such as drones. Questions focused on Canada’s independence in procurement, the evaluation process for fighter jets, cost projections, international collaboration, and maintenance plans. The discussion also covered managing program risks, meeting delivery requirements, staffing challenges, and ongoing research and exercises to inform future procurement decisions. Overall, the meeting highlighted efforts to ensure transparency, efficiency, and readiness in Canada’s defence capabilities.

There were no follow up items or motions introduced.

Topics

Canadian Defence Procurement

MP Lemire raised a question regarding Canada's independence in defence procurement compared to the United States. Ms. Beck responded that Canada has invested in purchasing destroyers and submarines, marking a shift away from reliance on the US She also noted that high-quality defence products are manufactured outside of the United States. MP Lemire then inquired about Canada’s contribution to the production of aircrafts. Ms. Beck explained that Canadian companies are currently manufacturing approximately $3 billion worth of aircraft components, with new contracts being awarded on a monthly basis, and contracts are emerging every month.

MP Housefather asked whether, during the procurement process for the F-35, there was ever serious consideration of fourth-generation fighter jets, or if the focus was solely on fifth-generation aircraft like the F-35. Ms. Folkes explained that Canada conducted an open and transparent competitive procurement process with high-level mandatory requirements. Both fourth- and fifth-generation fighter jets were eligible to compete, provided they met those requirements. The process was designed to ensure all qualified bidders had a fair opportunity. Oversight included the use of a fairness monitor, third-party reviewers, and a red team of experts to assess and challenge the evaluation process. Ultimately, the F-35 was selected as the preferred bidder based on cost, capability, and economic benefits.

MP Housefather inquired about whether Canada compared its cost projections for the fighter jets with those of other countries to see if they experienced similar discrepancies between initial estimates and actual costs. Ms. Hogan said that such comparisons were not made. The estimate from DND was based on data that was two years old, despite more up-to-date cost information being available. While it's unclear what other countries did, Canada could have used the newer data in its projections.

MP Yip asked about best practices Canada can learn from previous major procurement projects for acquiring future fighter jets. Ms. Beck highlighted the joint project office as a key best practice, sharing risks and costs among partner countries. This collaboration pools research and innovation, with the US bearing most costs, giving Canada a strong R&D return. Ms. Folkes spoke to the value of Canada joining a user group with NATO and Five Eyes allies to share information and collaborate, including through the Canada-Australia-UK reprogramming lab for F-35 mission data. This partnership brings economies of scale, better pricing, and bulk-buy opportunities. With thousands of these aircraft worldwide, Canadian industry stands to benefit significantly. However, she noted that recent geopolitical conflicts highlight the need to base cost estimates on worst-case scenarios rather than optimistic ones, given the changing global landscape.

MP Deltell asked about RCAF’s use of drones and the current situation. Ms. Beck responded that all branches of the military have drones, with deployment depending on specific needs and desired effects. She also noted an upcoming drone exercise in November in Ottawa, which could help guide government procurement decisions. Additionally, research on underwater drones is underway in Halifax.

Risk Management

MP Kusie asked about the management of the program. LGen Speiser-Blanchet explained that they are focused on enduring they have all the elements in place and are working with the government to ensure success. Ms. Hogan said there had been cost increases inside and outside DND’s control. Ms. Hogan said DND often has difficulty moving forward with programs.

MP Tesser Dersken inquired about the draft action plan and discussed updates to the risk management process. She then asked whether there were any developments regarding the briefing with the Senior Review Board. Ms. Beck responded that there are ongoing discussions about risk. She further explained that the current project is somewhat unusual, as it is being managed by a joint complex. Consequently, there is not a single risk management plan; instead, a holistic approach is being applied.

MP Deltell asked about cost projections. Ms. Hogan highlighted that the report references the costs. Had there been more proactive risk management, the outcome may have been different.

Readiness and Requirements for Receiving Fighter Jets

MP Osborne asked about the measures in place to meet the requirements for receiving the fighter jets. LGen Speiser-Blanchet explained that they are actively monitoring implementation plans, including the Master Implementation Plan—a document that guides the RCAF in ensuring all necessary requirements are met. In terms of timing, she confirmed they are currently on track to receive the jets as scheduled. While the full infrastructure will not be completed until 2031, interim arrangements are in place to accommodate the arrival of the jets beginning in 2028. LGen Speiser-Blanchet also addressed the steps being taken to manage staffing challenges.

MP Kuruc commented on the current global security environment and asked how critical it is to prioritize the acquisition of the fighter jets. Ms. Beck responded that the importance of this acquisition cannot be overstated. She emphasized that Canada's role in deterrence and defence requires equipment that makes the country appear unfriendly. Furthermore, LGen Speiser-Blanchet noted that many of Canada’s adversaries already possess fifth-generation capabilities, highlighting the urgency for Canada to acquire comparable technology. MP Kuruc asked if they will go backward and procure 4^th generation equipment. Ms. Beck said that their direction is to continue with the contract with the MOU until they hear otherwise.

Defence Construction Canada

MP Stevensen asked about the difference between defence construction Canada and PSPC and who is responsible for dealing with the costs. Ms. Paula explained that Defence Construction Canada, which operates within the Public Services and Procurement portfolio, is responsible for undertaking construction projects for national defence. It has specific authorities under the Defence Production Act and reports through the Minister of Public Services and Procurement. Regarding infrastructure costs, the 50% cost estimate fidelity from 2019 was partly due to the many secure requirements associated with the Joint Strike Fighter (F-35) program. Accurate infrastructure information could only be obtained after Canada made its purchase decision and informed the Joint Program Office. This is why detailed infrastructure cost data was not available in 2021. Once the procurement decision was finalized towards the end of 2022, more comprehensive information on infrastructure and other complex requirements became accessible, enabling more accurate cost estimates.

MP Lemire spoke to Quebec industry. Ms. Folkes discussed how Canada plans to support and maintain its fleet of F-35 fighter jets, including the infrastructure and opportunities related to maintenance and repair. She highlighted the goal of establishing a regional maintenance depot in Quebec and emphasized that maintenance represents the majority of the aircraft’s lifecycle, offering additional industrial opportunities for Canada.

Follow-up Items

No follow up items for PSPC

Next Steps

The committee meeting scheduled for 10 a.m. on October 21, 2025, was approved, and they will convene with the Auditor General to discuss her public remarks on the current report.