Shunning a microphone, Sean Naugle used his “military voice” to address a room of bleary-eyed founders this morning during a session on how entrepreneurs can do business with Canada’s defence sector.
Naugle, a 30-year veteran of the Canadian Armed Forces (CAF) and a senior contracts officer at CFB Edmonton, was at Edmonton Unlimited on Tuesday to talk about the complexities of the CAF’s procurement system.
“Everybody here is well aware of the global trade landscape that’s changed dramatically over the past several years,” Naugle told the three dozen or so in attendance. “Canada is very vulnerable to that restructuring. That has translated into a lot of changes at the Department of National Defence (DND) … in terms of some of the programs that are available to everyone in the business community.”
Sean Naugle, CAF
“We want to partner with you: we need suppliers, diversity, more options to make procurement faster and better.”
Canada has seen a rash of investment from the federal government into defence and dual-use technologies over the last 18 months, with billions invested into reinvigorating Canada’s defence industrial complex. A big part of Prime Minister Mark Carney’s efforts to overhaul defence has involved procurement, with the government introducing a “build, partner, buy” framework into its defence industrial strategy that centres domestic production, supply chains, and dual-use technology as anchor commitments. That, in turn, has led many Canadian tech startups to eye the DND and the armed forces as prospective clients.
“We want to partner with you: we need suppliers, diversity, more options to make procurement faster and better,” Naugle said, before outlining some of the red tape potential vendors must deal with if they want to land military contracts. Those included managing company-wide security clearances in some instances, and the minutiae of the vendor process and applying for contracts that can be hyper-specific.
Legacy systems
Among those in attendance was Connie Stacey. Stacey is the founder of Grengine, an Edmonton company that develops modular, scalable battery energy storage systems that replace diesel generators. Amid Canada’s push for increased military self-reliance, Grengine’s product has attracted significant interest as a dual-use technology, earning the startup entrance into NATO’s Defence Innovation Accelerator for the North Atlantic. Stacey is also a member of the federal government’s defence industry advisory group.
Stacey said Naugle’s seminar was a worthy resource for startups, noting the challenges that come with navigating Public Services and Procurement Canada (PSPC), which acts as the central purchasing agent for federal ministries.
“One of the things with PSPC, and probably even more with defence, is they’re very segmented,” Stacey said. “You end up with innovation programs where the CAF is saying … ‘we want to buy this,’ but then it will go to procurement.”
During the procurement process, there are mandatory criteria included in federal solicitation contracts, and not meeting those exact specifications can be enough for an application not to be considered. Stacey said that rigidity, alongside siloed government departments, can be a real stumbling block for founders looking to get their foot in the door of a defence contract.
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“You end up with a process that’s kind of like telephone tag. It gets thinner and thinner as you go through the different departments,” Stacey said. “[In some cases] we wouldn’t qualify [for a contract], even if we could actually provide something that the CAF has clearly said: we want this.
“It creates this long, cumbersome process where the actual experts are no longer the purchasers,” she added.
Canada has made efforts at modernizing procurement already, most recently with the creation of the Defence Investment Agency, a carve-out within the PSPC for defence contracts that the federal government is now attempting to turn into a Crown corporation. But Stacey thinks there’s more that can be done, with her experience with NATO serving as inspiration.
“DIANA has this program called the Rapid Adoption Service,” she said. “Under that framework, any of the 32 NATO countries can say ‘we’d like to buy that,’ and they can write a contract through this mechanism.”
The Rapid Adoption Service creates a fast-track pathway between innovators and military end users by allowing member states to bypass competitive bidding rules, effectively treating DIANA’s initial vetting process as having met the legal requirements for a fair and open competition.
“I don’t think it’s an intent problem, but simply old legacy systems we’re dealing with,” Stacey said.
BetaKit’s Prairies reporting is funded in part by YEGAF, a not-for-profit dedicated to amplifying business stories in Alberta.
Feature image courtesy Unsplash. Photo by Filip Andrejevic.