This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 9/30/2019

Overview

According to the Stockholm International Peace Research Institute, Canada’s military spending reached US$21.6 billion in 2018, and ranked 14th amongst other large spenders in the NATO alliance. In a 2018 study by Innovation, Science and Economic Development, the department reported that in 2016 the Canadian defense industry contributed US$ 4.7 billion to Canada’s GDP and employed close to 60,000 workers (27,000 of which worked directly in defense programs.) Industry revenues in 2016 reached US$ 7.7 billion, with US$ 4.4 billion resulted from export sales. The sector also invested US$ 307 million in Research and Development (R&D,) with most of the funding allocated to academia (66%), suppliers (61%), and government (58%). To support R&D activities, Canada launched in 2017 the Innovation for Defence Excellence and Security (IDEaS) program, a US$ 1.2 billion initiative over a 20 year-period that supports the development of innovative defense and security capabilities. U.S. companies are encouraged to review past challenges and to participate in future opportunities in the Canadian defense R&D sector.

After the release in 2017 of the Strong, Secure, Engaged (SSE) Defense Policy, the Department of National Defence (DND) released its 2018 Defense Investment Plan. The document identifies projects and outlines projected capital spending of US$82.5 billion on an accrual basis (US$ 126 billion on a cash basis,) operating expenditures of US$ 218.9 billion, and sustainment costs of US$ 81.3 billion over a 20-year period. Further, DND projects annual cash defense spending to grow from US$ 14.5 billion in 2016-17 to US$ 25.2 billion in 2026-27, with a total defense spending projected to reach US$ 426.7 billion in 2038 (on a cash basis.)

U.S. exporters can review current and upcoming capital equipment projects from a total of 13 capabilities posted in the Defence Capability Blueprint, an online tool that lists projects in the land, sea, air, space and cyber domains, infrastructure projects over US$ 3.8 million, and in-service support programs. Key Industrial Capabilities (KICs) include:
 

  • Advanced Materials

  • Aerospace Systems and Components

  • Armor

  • Artificial Intelligence

  • Cyber Resilience

  • Defense Systems Integration

  • Electro-Optical/Infrared (EO/IR) systems

  • Ground Vehicle Solutions

  • In-Service Support

  • Munitions

  • Marine-Ship Borne Mission and Platform Systems

  • Remotely-piloted systems and autonomous technologies

  • Shipbuilding, design and engineering services

  • Sonar and Acoustic Systems

  • Space Systems

  • Training and Simulation


U.S. exporters can find current and upcoming defense opportunities on the Buyandsell website (https://buyandsell.gc.ca,) Canada’s official tender portal, managed by Public Services and Procurement Canada (PSPC.) U.S. firms can subscribe to, and receive online notifications on procurement projects, industry day announcements, requests for qualifications, advance contract awards, and general tutorials on how to do business with all Canadian federal government agencies.

Industrial and Technological Benefits (ITB) and Value Proposition (VP)
Under the ITB Policy, companies awarded defense procurement contracts are required to undertake business activities in Canada, equal to the value of the contract. The ITB Policy applies to eligible defense and Canadian Coast Guard (CCG) procurements valued at over US$ 77.1 million when procurements are exempt or excluded from international trade agreements. Procurements valued between US$15.4 and US$77 million are also reviewed for the application of the ITB and VP Policy. The VP is a key component of the ITB policy where a bidder’s proposal must include investment commitments to leverage economic benefits, advancement under Key Industrial Capabilities (KICs), skills development and training, and gender and diversity plans.

Increase in Spending Authority by DND
DND has increased its spending authority, allowing the department to contract projects valued up to US$3.9 million without the need to go through Public Services and Procurement Canada. This procurement modernization program will allow DND to complete 80% of its procurement programs independently, however exceptions will apply to large and more complex defense programs.

Major Defense Procurement Programs

In December 2017, the Government of Canada officially launched a formal competition under the Future Fighter Capability Project (FFCP) to acquire a new capability of 88 advanced fighter jets, along with associated equipment, weapons and sustainment capability at an approximate cost of US$14.6 billion. Three agencies share responsibility for this procurement: Public Services and Procurement Canada (PSPC,) DND's Royal Canadian Air Force, and Innovation, Science and Economic Development. The final RFP was released on July 23, 2019. The program’s timeline indicates that Canada plans to award a contract in 2022, with the first delivery to take place beginning in 2025, and for FFCP to reach full operational capability by 2031.

In the Naval domain, U.S. exporters can find business opportunities under the National Shipbuilding Strategy (NSS) created to recapitalize the combat and non-combat ships for the Royal Canada Navy and the Canadian Coast Guard. On Canada’s East coast, Irving Shipbuilding Inc. (ISI) was selected as the prime contractor for the construction of eight Artic Offshore Patrol Ships and 15 new Canadian Surface Combatant (CSC) ships. The CSC is the largest combat project under the NSS, valued at US$46.3 billion. In early 2019, PSPC confirmed the selection of Lockheed Martin Canada and its team for the design of the CSC to be based on the BAE Systems Type 26 Global Combat Ship. The non-combat package of the NSS was awarded to prime contractor Seaspan Vancouver Shipyards, to build three Offshore Fisheries Science Vessels, two Joint Support Ships, one Offshore Oceanographic Science Vessels, one Icebreaker, and 16 multi-purpose vessels to conduct light icebreaking, environmental response and offshore search and rescue operations. Québec’s largest shipyard Chantier Davie Canada Inc. currently performs repair, refit and maintenance work of legacy ships, while small capacity shipyards (with examples of these being Hike Metal Products and Chantier Naval Forillon) deliver the small vessels portion of the NSS. Read the most recent update on the NSS at https://www.tpsgc-pwgsc.gc.ca/app-acq/amd-dp/documents/rapport-report-2018C-eng.pdf

Other Key Defense Procurement Programs:

  • (AIR) Remotely Piloted Aircraft System (RPAS)

https://buyandsell.gc.ca/procurement-data/tender-notice/PW-RPS-002-27338

  • (AIR) CH-149 Cormorant Mid-Life Upgrade (CMLU)

 http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=1227

http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=1228

  • (AIR) Cormorant Mid-Life Upgrade

https://buyandsell.gc.ca/procurement-data/tender-notice/PW-18-00827470

  •  (AIR) Future Fighter Lead-In Training (FFLIT)

http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=1621

  • (AIR) Future Aircrew Training (FAcT)

https://buyandsell.gc.ca/procurement-data/tender-notice/PW-NP-002-27096

http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=943 and https://buyandsell.gc.ca/procurement-data/tender-notice/PW-VCM-002-27335

  • (NAVAL) Multi Role Boat

http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=941 and https://buyandsell.gc.ca/procurement-data/tender-notice/PW-MC-031-27100

  • (NAVAL) Naval Electronic Warfare System

http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=1283

  • (NAVAL) Remote Mine Hunting and Disposal System

http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=1642

  • (LAND) Ground Based Air Defence

http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/project-details.asp?id=940

Upcoming Events and Trade Shows in Canada

DEFSEC Atlantic
http://defsecatlantic.ca
Halifax, Nova Scotia
October 1-3, 2019

Best Defence Conference
http://bestdefenceconference.com
London, Ontario
November 5-6, 2019

CANSEC 2020
www.defenceandsecurity.ca/CANSEC
Ottawa, Ontario
May 27-29, 2020

2019 Aerospace, Defence & Security Expo
https://adse.ca
Abbotsford, British Columbia
August 9-10, 2019

Web Resources

Defence Investment Plan 2018
https://www.canada.ca/en/department-national-defence/corporate/reports-publications/defence-investment-plan-2018/sse.html#1.1
Canada’s Strong, Secure and Engaged (SSE) Defence Policy
http://dgpaapp.forces.gc.ca/en/canada-defence-policy/docs/canada-defence-policy-report.pdf
Defence Capabilities Blueprint - http://dgpaapp.forces.gc.ca/en/defence-capabilities-blueprint/index.asp
Future Fighter Capability Project
https://www.canada.ca/en/department-national-defence/services/procurement/fighter-jets/future-fighter-capability-project.html
National Shipbuilding Strategy
https://www.tpsgc-pwgsc.gc.ca/app-acq/amd-dp/mer-sea/sncn-nss/index-eng.html
Buyandsell website - https://buyandsell.gc.ca
Innovation for Defence Excellence and Security (IDEaS) program
https://www.canada.ca/en/department-national-defence/programs/defence-ideas.html

For additional information on this sector, please contact Commercial Specialist Luz Betancur at Luz.Betancur@trade.gov, tel: (613) 688-5411
 

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.