Feds create new Crown corporation ‘to move with urgency’ on defence procurement

OTTAWA — The Carney government announced Tuesday that it will create a new Crown corporation for defence procurement, the latest new wing of the federal bureaucracy at a time of public service cuts.

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Ottawa said it will create new legislation to turn its Defence Investment Agency (DIA), created as a stand-alone organization within a federal department only a year ago, into a Crown corporation so that it will have a permanent structure and a clearer mandate and reporting path. That will make the organization, which is to operate at arm’s length to the Department of National Defence, better able to make quick decisions and reduce “fragmentation.”

“We need to move with urgency,” Defence Minister David McGuinty told reporters.

Five months earlier, the government created the DIA and gave it considerable procurement authority, saying the move would mean improved consolidation and efficiency and would better allow Ottawa to tie its military purchases to Canadian industry.

Government officials said Tuesday that the new Crown corporation will mean that it will be easier to recruit experts and structure contracts so that they’re more like private sector purchases and offer taxpayers better value. The new structure will also mean the organization will be more independent to manage investments and procurement, although the government will still advise and provide oversight.

Officials emphasized the importance of buying Canadian and helping the domestic defence industry gaining greater access to capital. “We have a limited tool kit,” said one official.

Under the model for the new Crown corporation, DND and the Canadian Armed Forces will continue to define Canada’s military needs and priorities, while the Crown corporation will be responsible for procurement, production and investment.

Beyond the creation of the new Canadian Corporation for Defence Investment, the move will also mean the creation of a new cabinet post, the associate minister of national defence for procurement. The organization would also have its own board of directors, chief executive, employees and annual plan.

It’s not the Carney government’s first attempt to make the government more nimble by setting up new structures that don’t have to follow all of the usual public service processes. The government also established a new Major Projects Office last year to make decisions on infrastructure and other key project investments quicker.

But at the same time, the government is reducing the size of the federal bureaucracy, in part to deal with its massive deficit and to pay for new spending on priority matters, such as defence.

The new Crown corporation is also the Carney government’s latest effort to overhaul Canada’s defence, in the wake of both economic and sovereignty threats from U.S. President Donald Trump.

The government has dramatically boosted spending, including on soldiers’ wages, and invested in new technology.

In February, Carney also launched Canada’s first Defence Industrial Strategy (DIS), a long-term plan to strengthen national security and economic growth by supporting Canada’s defence industry. The government says it’s already made strides on that front, through new partnerships and purchases, such as deals to buy new modular assault rifles from Colt Canada and the selection of Saab as the preferred supplier for early warning and control systems for remote regions. Traditionally, procurement at DND has been slow.

The Canadian Army also announced this week that it has adopted a new structure to strengthen defence and readiness. The new structure includes four primary formations: the 1st Canadian Division in Edmonton, the 2nd Canadian Division in Montréal, a Canadian Army Support Division in Kingston, Ont. and a Canadian Army Doctrine and Training Centre, also in Kingston.

The government also announced Tuesday that McGuinty will visit Canadian Forces Base (CFB) Edmonton on Wednesday with Alberta Premier Danielle Smith to “highlight” defence investments.

National Post

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