The federal government’s new Defence Investment Agency is set to overhaul the military procurement process.
While procurement issues are common for Canadian tech companies across all industries, defence comes with special financing and regulatory hurdles that bring long wait times. The new office will centralize procurement review and approval for defence contracts, removing redundant steps to speed up the process, the Prime Minister’s Office (PMO) said in a statement.
The Defence Investment Agency will also strategically tie procurement to domestic industrial benefits, including prioritizing infrastructure that has both civilian and military applications. It will also ensure earlier engagement between the Canadian Armed Forces and Canada’s defence industry so they can sync up their priorities and timelines.
Housed within Public Services and Procurement Canada, the agency will be 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. The new branch will prioritize partnerships that help Canada meet its recent commitment to increase defence spending among NATO countries.
“All at once, we can drive investment, strengthen our national security, and meet our international commitments,” Guzman said. “We will bring speed and simplicity to the process of arming our military, while building Canada’s industrial capacity.”
The Defence Investment Agency’s first phase of operations will focus on “standing up the organisation,” deploying integrated procurement teams, and advancing a first wave of “high-priority defence procurements,” according to the PMO. The Globe and Mail reported that it will oversee procurements valued at or above $100 million, while smaller contracts will stay under standard processes.
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Council of Canadian Innovators president Ben Bergen said his organization sees “positive indications” that the government will strategically use procurement as a tool of domestic economic growth, but success hinges on cultivating a “resilient” domestic ecosystem.
“This will require communication and close collaboration with industry leaders, as we work to change the culture of Canadian government procurement, which has too often shut out scale-up technology companies,” Bergen said.
Venture and government spending in defence tech has exploded over the past year, particularly following Prime Minister Mark Carney’s military spending commitment. Isabelle Hudon, the president and CEO of the Business Development Bank of Canada (BDC), told BetaKit last month that the Crown corporation is gearing up to serve the country’s defence tech sector in “a less shy” and “more aggressive way.”
As demand increases, the startups and infrastructure to support it follows. Early-stage defence tech firm Dominion Dynamics says it raised a “very substantial” pre-seed round within months of founding. It also partnered with the new Arctic Training Centre in Whitehorse to test its technology. Defence tech venture capital firm One9 and local economic development agency Invest Ottawa struck a partnership to open its research and development complex to defence and security startups. Meanwhile, a new accelerator for defence tech firms, Vimy Forge, also launched in New Brunswick this week.
Feature image courtesy Mark Carney via LinkedIn.