New defence industrial strategy provides opportunity to grow domestic industrial base, say lobbyists
(Hill Times photograph by Andrew Meade)
Minister of National Defence David McGuinty speaks with reporters before the Liberal cabinet meeting in West Block on Feb. 3, 2026.
Following years of underwhelming policies, the Canadian defence industry welcomed the federal government’s Defence Industrial Strategy which lays out a clear plan to revitalize a domestic industrial defence base, say lobbyists.
“The Defence Industrial Strategy was welcomed quite unanimously across the defence sector and across the companies that we work with [at the Council of Canadian Innovators],” said Dana O’Born, chief strategy officer at the council and managing partner at Signa Strategies. “The things that stand out to me that are very positive is just this strategic approach to procurement [and] that there’s a real push for stronger Canadian capability, this is something we haven’t traditionally been very good at in Canada.”
Duncan Hills, senior advisor on defence and security at NorthStar Public Affairs, told The Lobby Monitor that Canada has not had a real defence industrial strategy since the early ‘90s.
“Taking the defence industrial base seriously as something you have to manage is a fundamental shift for Canada,” said Hills. “The [Brian] Mulroney government was the last government that really thought about this as something they had to manage and what happened at the end of their time in government? The Cold War ended, the Berlin Wall fell, and they didn’t feel there was a big threat anymore.”
“A lot of [the industrial defence base] we used to have in Canada, is smaller and owned by other people,” continued Hills. “The fact that they’re thinking about it again and thinking about who controls it again stands out to me as a positive and a big change.”
Canadian sovereignty and national defence has been at the centre of federal politics since the 2025 general election, where the issue gained momentum following U.S. President Donald Trump’s threats against Canada and growing global tensions fueled by Russia’s invasion of Ukraine.
This led to Prime Minister Mark Carney’s new Liberal government to give national defence a significant focus, leading to the creation of a new role in the cabinet, the secretary of state for defence procurement; a new government agency, the Defence Investment Agency; and now a brand new industrial strategy.
The strategy alone is set to provide the Canadian defence industry with “$180 billion in defence procurement opportunities and $290 billion in defence-related capital investment opportunities” over the next 10 years.
“The amounts of money that are being talked about here between now and 2035 are truly
transformational, not only to the Canadian Armed Forces, but also to the defence industrial base,” said Hills. “I would say everyone’s going to benefit, [but] the more Canadian you are, the more you’re likely to benefit.”
While the goal of the strategy is to grow domestic capabilities, including helping start-ups and small and medium enterprises grow, Hills explained that in the short-term those benefiting the most will be companies with existing procurement contracts.
“Already you can see money flowing to companies in the defence industrial base doing existing contracts, as [the government] didn’t have time to do new procurements,” said Hills “They did maintenance that they’ve been delaying, or they bought spare parts, or they increased the supply of ammunition, or things like that.”
“What’s interesting is once you fill the bins with spare parts, you can only do that once…and then you have to go looking for other places to spend your money. That’s where we’re going to see the real expansion,” he continued.
O’Born noted that while much of the attention is on “big, flashy” purchases such as the acquisition of new submarines for the Royal Canadian Navy and a new fighter jet fleet for the Royal Canadian Air Force, a significant portion of funding is spread over a large supply chain.
“The [Department of National Defence] is probably one of the biggest purchasers of goods in government, writ large,” she said. “Think of military bases and everything that goes into equipping what a military base is required to have and then you take it all the way up to the front lines of battle. There is a huge, huge space for a number of procurement opportunities and then inside that space there’s a whole series of supply chains.”
The government’s pursuit of dual-use technology is where existing Canadian companies have an opportunity to step up and fill in existing gaps, said O’Born.
“We surveyed the defence ecosystem this summer and came back with about 430 dual-use companies that have capability to contribute into the defence space, a lot of those companies are already exporting globally, which tells you that they’re not just a startup” she said. “Once Canadian companies are put at the front of the line, at least on a number of these initiatives, they will be able to start fitting into some of those supply chains with the technology that already exists.”
As an example, Hills pointed to Canadian companies focusing on new technologies such as quantum computing and photonics.
“These are all areas which have commercial applications, but also military applications. They’re cutting edge technology where there is some Canadian leadership, in terms of research,” he said. “Some of these people have started companies, but all the companies are really small, and are looking to grow commercially and now defence spending can help those companies.”
One such company that is likely to benefit from dual-use technology funding is Ottawa-based Dominion Dynamics, led by CEO Eliot Pence. The company is developing a dual-use, Arctic sensing network that aims to serve both military and civilian purposes. The goal of the technology is to fill gaps in the Canadian Armed Forces ability to maintain intelligence, surveillance, and reconnaissance capabilities in remote regions.
Pence, who is also the co-chair and co-founder of the newly established Alliance of Canadian Defence Companies, told The Lobby Monitor that the government’s strategy will benefit many companies such as his, but that investment will also support the economy and the strategy itself, which is “meant to be self-reinforcing.”
READ MORE: Alliance of Canadian Defence Companies launches to give voice to domestic defence industry
In addition to new funding opportunities, federal officials are much more receptive to hearing proposals from Canadian companies, according to O’Born.
“There is definitely more of a willingness to welcome and usher Canadian companies into the room and have these conversations,” she said. “There’s a lot of willingness to better understand the technology that a lot of the Canadian companies offer, to be able to fill some of these supply chains, and be able to share what the procurement opportunities are.”
