No spend in sight: Ottawa must pick up the pace on defence procurement reform

Canada’s Trump-induced pledge to boost our NATO commitment to 5% of GDP by 2035 is easily one of the priciest and most ambitious policy pivots in recent memory, with over $63 billion allocated in 2025-2026 alone and billions more to come. Question is, does Ottawa have the administrative chops to spend all of that dough?

The answer for decades, infamously, has been a resounding no. The reason: a long-established multi-step process for military procurement, laid out in a daunting 400-page read known as the Project Approval Directive (PAD).

PAD progresses from “identification” (i.e., what do we want) to “options analysis” (project costing and making the business case), to “definition” (RFPs and getting Treasury Board approval) and finally “implementation” (awarding a contract and spending the money). Each stage has several sub-stages, and those sub-stages have their own strata, like a Russian doll. For example, there’s a “project complexity and risk assessment” scoring rubric with 64 questions, which sounds complex. The Department of National Defence does the scoping, but the procurement is overseen by Public Services and Procurement Canada, with input from Industry Science and Economic Development Canada.

Ottawa could go further to boost access to capital for defence businesses, BMO chief executive says

Officials come and go, while the procurement journey can be side-tracked in myriad ways, from a veto from “the centre” (i.e., the prime minister’s office) to political or lobbying asks from contractors and influential regional constituencies.

Prime Minister Mark Carney named three cabinet ministers (David McGuinty, defence; Mélanie Joly, industry; and Stephen Fuhr, defence procurement) to at least partially streamline this bureaucratic Rube Goldberg machine, while promising that 70% of additional defence acquisition will flow to Canadian companies. Early this year, Ottawa launched Canada’s first defence industrial strategy and established the Defence Investment Agency (DIA) to deliver on it. The DIA — soon to be a Crown corporation — is headed up by a former RBC executive named Doug Guzman, who worked with Carney at Goldman Sachs. This past summer’s multibillion-dollar 12-submarine deal with a German-Norwegian consortium looked like an early win because, well, it didn’t take forever.

The heavy lifting set in motion by procurement reform will draw on the work of the platoon of scholars who built their careers scrutinizing this gnarly system.

One of the most active of these academics is a Carleton University political scientist named Elinor Sloan, whose recent paper in Canadian Public Administration concisely describes the status quo and proposes ways to bypass several of the steps involved in getting to yes, generally by purging all the duplication in the process. (Sloan, who serves on a federal defence acquisition advisory board, declined an interview.)

Sloan’s analysis reveals how the remnants of earlier reform efforts—such as using procurement to deliver regional jobs—are still entombed in the process, like those mummified bodies that sometimes turn up in peat bogs. Her paper concludes with a clinical diagram that itemizes the 26 reports and 10 stages involved in a large procurement, and then includes actual strikethroughs for 13 of them. “This is a first cut and is based almost solely on what the PAD tells us; those who work within the project approval process could provide a more fulsome assessment,” she writes.

Jeff Collins, another member of this odd fraternity, brings a more insider perspective. He completed a PhD in political science in 2018, went on to work at DND and wrote a 2023 book entitled Canada’s Defence Procurement Woes. His diagnosis begins with the observation that it’s difficult to draw blanket conclusions or even assign blame. Despite the serpentine decision-tree laid out in the PAD, each large procurement comes with its own dynamics, dramas and timelines.

Canada making progress on defence strategy, but key aspects remain a challenge, industry members say

Nevertheless, looking back at the longer arc of Canada’s military history, Collins does see patterns emerge. “Anytime there’s a major arms buildup in Canadian history or a conflict that’s on the horizon, the Government of Canada retooled its machinery of government,” he says.

Collins is well aware that Ottawa’s current messaging—lots more dollars, the promise of more domestic spending, a dedicated procurement minister, a new defence procurement Crown corporation—has uncorked a lot of interest. “Canadian companies want to grow the defence industrial base,” he says, describing the DIA as “a real game-changer.”

The wrinkle is that the editing process Sloan and others have recommended (and which is only partially in place) hasn’t caught up with all the pent-up private sector demand and the fire hose of new money. Nor, Collins notes, are there enough bodies in procurement departments to handle all the traffic. “People and ideas and businesses flood in and, weirdly enough, it can end up jamming things down,” he says. “I don’t think we fully grasp what those challenges represent down the road.”

Other experts confirm Collins’s assessment. The DIA “is not yet all of the things that agency is supposed to be in terms of being a single point of accountability because they haven’t even brought over all of the live new procurement files to that agency yet,” says veteran Ottawa defence analyst David Perry, president and CEO of the Canadian Global Affairs Institute. Like many in military circles, he’s taken by the way defence has shot up the political priority ladder.

“In my career, 20 years, I’ve never seen the federal government have any kind of focus like that on defence, absent fighting the war in Afghanistan,” Perry says. “The PM’s attachment of time and a clear articulation of priority makes a whole lot of things possible in Ottawa that weren’t possible.”

But if there’s anything that takes longer than buying, say, fighter jets, it’s fixing the system tasked with buying fighter jets. Which raises some philosophical questions about the nature of bureaucracies: What happens if the political energy currently on display dissipates? And what to do if the ship of state manages to alter its course, only to discover that the destination has moved?

“I don’t think we substantively know yet how much real, enduring, meaningful change there already has been and will come,” says Perry. “The way our system works right now, it just can’t handle an expanded volume like we’ve been trying to deal with for the last 20 years.”

Opinion: As Carney remakes defence procurement, he builds the plane as he flies

The acid test for all this lies with the private sector’s response. Eyeing those massive contracts, Canada’s banks have eagerly teed up billions of dollars in new or expanded financing lines focused on defence. RBC, for example, has launched a $1.4-billion fund to focus on, among other sectors, dual-use technology and defence verticals, like aerospace.

But attracting new investment pivots in no small way on de-risking defence procurement, which, paradoxically, requires the system to be less risk-averse. This new DIA, in short, will be under the political microscope. “I do feel they’re going in the right direction,” says Claire Sturgess, Canada head of industrials & CME investment banking at RBC Capital Markets. But, she cautions, “it’s difficult to assess pace because the scope of this project is so large.”

Collins, for his part, is cautiously optimistic. He points to Carney’s decision to appoint a minister for procurement (Fuhr) and a cabinet committee that will focus on the same—an idea, incidentally, first bruited a decade ago by Queen’s University political scientist Kim Richard Nossal, the eminence grise of procurement scholars.

The X-factor is how Ottawa will re-orient its expanded DND procurement to better align with the Carney doctrine, given that many of the big military equipment supply chains are just as integrated across the U.S.-Canada border as those in the auto sector.

“If I have a new interest that builds upon defence procurement research,” muses Collins, “it is understanding the foreign policy aspect of connecting defence acquisition to non-U.S. partnerships and alliances.” Hopefully, he’ll share what he discovers as soon as possible.