The federal government is looking to overhaul its defence procurement processes yet again, this time by making the fledgling Defence Investment Agency (DIA) into a Crown corporation.
Procurement minister Joël Lightbound introduced Bill C-40, also known as the Canadian Corporation for Defence Investment Act, into the House of Commons on Tuesday morning. The bill would create the Canadian Corporation for Defence Investment, the legal name for what will continue to operate as the DIA.
“With the introduction of this legislation, we are making clear that large-scale, agile defence production and procurement is here to stay,” Lightbound said in a statement. “Procurement and investment must live together, by connecting the capabilities our armed forces need with the investments that will deliver them and the industrial capacity that will sustain them.”
“Gone are the days where a government takes three bids, takes the lowest bidder, and we move on with our lives.”
The federal government created the DIA almost exactly one year ago to overhaul military procurement processes that the defence industry said were plagued by inefficiencies. At the moment, the DIA is housed within Public Services and Procurement Canada and directly led by CEO Doug Guzman, a former RBC deputy chair and Goldman Sachs managing director, and overseen by defence procurement secretary of state Stephen Fuhr.
This new version of the DIA will have more independence and authority to negotiate and manage defence production, contracts, and investment under criteria established by the Department of National Defence (DND) and the Canadian Armed Forces (CAF), according to the draft legislation.
“Gone are the days where a government takes three bids, takes the lowest bidder, and we move on with our lives,” Fuhr said at a Tuesday afternoon press conference.
Under C-40, the DIA will operate at arm’s length, with its own CEO, an executive chairperson, and board of directors. In addition to the CEO and chairperson, the board will contain a deputy minister and up to two other directors. The DIA will be housed under the DND portfolio and report to a new Associate Minister of National Defence for Procurement.
Notably, Crown corporations do not fall under the procurement Ombudsman’s mandate, meaning the new DIA won’t be subjected to its oversight. When asked at the press conference if the federal government would expand the procurement Ombudsman’s mandate, Fuhr said he didn’t have an answer, and that the DIA’s oversight would be ministerial.
Earlier, in his own remarks, defence minister David McGuinty said the new DIA will be “more efficient, more professional, more commercial, [and] more fleet-footed” in acquiring goods the CAF requires with the money it’s delegated.
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“It’s important to remember that National Defence will still be subject to Treasury Board submissions,” McGuinty said. “We will be subject to the scrutiny of committees. We will be subject to the power of Finance and Treasury Board and the Privy Council Office asking their important and probative questions, so this is not a question of delegating all of this authority to a Crown.”
The DIA positions that bringing procurement, production, and investment functions together under a single organization allows it to make decisions more quickly, reduce fragmentation, and “provide greater continuity and predictability across defence acquisitions.” In a technical briefing, senior government officials said the new structure would make it easier for the DIA to retain experts on certain procurements, or draw from expertise on its board of directors. At the press conference, Fuhr and McGuinty also waved attracting talent outside of the public service as a benefit. McGuinty just made his own outside recruitment, appointing longtime Council of Canadian Innovators chief strategy officer Dana O’Born as his chief of staff this week.
Canada has been pushing to fortify its sovereign and military capabilities, earmarking nearly $82 billion in last year’s budget to help “rebuild, rearm, and reinvest” in the Canadian Armed Forces. This included almost $7 billion to build Canada’s defence industrial base under the Defence Industrial Strategy, which is supported by the DIA.
Feature image courtesy Mark Carney via LinkedIn.