By Harshivam Bawa, Senior Consultant
Canada has launched its first formal Defence Industrial Strategy (DIS), organized around a clear framework: Build–Partner–Buy. Supported by the newly created Defence Investment Agency (DIA), it marks a material shift in how Ottawa intends to procure defence capabilities.
This is more than procurement reform.
It is an industrial policy that ties defence spending directly to domestic capacity, supply chain resilience, and long-term economic growth. In a more contested geopolitical environment, and following years of supply chain shocks, the government is explicitly linking operational readiness to sovereign industrial capability.
Why This Is Different
Canada has long used Industrial and Technological Benefits (ITBs) and regional considerations in procurement. What distinguishes the DIS is its explicit recognition that capabilities that can’t be sustained or controlled domestically are a vulnerability while acknowledging that this shift may increase costs and extend timelines, but positions that trade-off as strategically necessary.
Anchored to Budget 2025 defence reinvestments, the DIS frames industry as central to what the government describes as a generational effort to rebuild and rearm. Procurement is intended to deliver not only equipment for the Canadian Armed Forces (CAF), but also durable industrial ecosystems.
The Strategy
The DIS is structured around five pillars, but three shifts are most consequential for industry.
1. Sovereignty as a Procurement Requirement
The strategy places sustained operational control at the centre of acquisition decisions. It sets explicit serviceability targets across maritime, land, and aerospace fleets. This signals greater emphasis on in-service support capacity, parts availability, skilled labour, and resilient supply chains.
It is equally direct on intellectual property and software access, as platforms become increasingly software defined. Data rights, source code access, and assured update pathways underpin “freedom to operate”— the ability to upgrade, repair, and adapt systems without external constraint.
2. Build–Partner–Buy, Applied
The framework is hierarchical:
- Build where capabilities are deemed sovereign and essential.
- Partner where allied collaboration can strengthen domestic capacity and returns know-how to Canada.
- Buy externally where necessary, but with stronger conditions around reinvestment and sustainment in Canada.
The DIS provides an initial list of sovereign capability areas prioritized for build-in-Canada approaches (e.g., aerospace systems, munitions, digital and secure communications, and in-service support). It is an early signal of where domestic suppliers and Canadian sustainment are likely to be prioritized.
3. The Implementation Levers
Strategies matter only if they reshape decision-making. Three levers will determine how the DIS translates into practice:
- The sovereign capabilities list. Over time, how it is defined and updated will influence evaluation weighting and eligibility.
- Use of the national security exception. In “build” lanes, authorities may direct procurements to Canadian firms, implicating competition and legal design.
- ITB modernization. The DIS commits to reforms aligning ITBs more closely with sovereign capability development, exports, innovation, and skills, with updates expected in 2026.
The Governance Shift: The DIA
The Defence Investment Agency is positioned as the central integrator of Build–Partner–Buy. Its mandate includes streamlining processes, coordinating allied initiatives, and improving engagement with industry.
The DIS also commits to a permanent Defence Advisory Forum, accelerated security clearances, concierge-style support, and a regularly updated forward procurement inventory. If implemented effectively, these measures could make the system more navigable and predictable.
Execution, however, will determine credibility.
Where The Strategy Will Be Tested
Three pressure points are likely to emerge in 2026–27:
- Cost and schedule trade-offs. The first major procurement where government absorbs a premium or schedule risk in the name of sovereignty will test political durability.
- Designation of “strategic partners.” A forthcoming framework to identify select Canadian defence firms will raise governance and market fairness questions.
- IP and sustainment control. Efforts to secure data rights and software access may challenge traditional OEM models, particularly for advanced networked systems.
These tensions will reveal how firmly sovereignty is embedded in procurement design.
What Organizations Should Do Now
As the DIS moves from high-level direction to program guidance and RFP language, organizations should anticipate greater emphasis on resilience, sustainment, and Canadian control.
Key actions include:
- Clarify your freedom-to-operate value. Be explicit about how you help Canada to sustain, upgrade, repair, or securely operate capabilities.
- Map your Build–Partner–Buy position. Identify where you can credibly build domestically, where partnerships are required, and where external sourcing is unavoidable — and align strategy accordingly.
- Strengthen procurement readiness. Ensure security posture, quality systems, subcontractor controls, and delivery capability meet heightened scrutiny.
- Build partnerships early. In sovereign capability lanes, teaming decisions made before RFP release often determine competitiveness.
- Tighten IP and sustainment strategies. Know what rights you control and what access you can offer. In a software-defined environment, contractual architecture can be as decisive as hardware performance.
Conclusion
The DIS represents a structural inflection point in Canadian defence procurement. Organizations that adapt early to the sovereignty and sustainment lens embedded in Build–Partner–Buy will be best positioned as the framework becomes operational.
As always, TSA is here to help — whether by refining positioning, supporting engagement strategies, building partnerships, or tracking implementation signals as the strategy moves from policy to practice.
