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I call this meeting to order.
Welcome to meeting number 39 of the House of Commons Standing Committee on National Defence. Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, February 23, 2026, the committee is meeting to study the impact of the defence industrial strategy.
Today's meeting is taking place in a hybrid format. Before we begin, I ask participants to consult the guidelines on the table. These measures are there to help prevent audio feedback incidents and to protect the health and safety of our interpreters.
Witnesses and members, if you wish to speak, please raise your hand, and please wait until I recognize you by name before speaking.
I will also remind witnesses that the committee members may ask questions in either French or English. If you need interpretation, please take a moment now to prepare your earpiece and select the appropriate channel.
For the purposes of decorum and so forth, I ask that all comments be addressed through the chair.
Let's begin.
I would like to welcome the secretary of state and our witnesses. We have the Hon. Stephen Fuhr, secretary of state for defence procurement. From the Defence Investment Agency, we have Vincent Robitaille, assistant deputy minister of procurement, and Diogo Brandao, senior director of policy and engagement. We also have Paula Folkes, associate assistant deputy minister from the Department of Public Works and Government Services.
We'll proceed now with opening statements of up to five minutes.
Secretary of State, I'll turn the floor over to you, sir.
:
Thank you very much, Mr. Chair.
[Translation]
Good morning, everyone.
I am very pleased to be here today.
[English]
I would like to begin by acknowledging that we are gathered on the traditional and unceded territory of the Algonquin Anishinabe people.
The defence industrial strategy is built on a simple idea: Defence and economic security are mutually reinforcing.
The geopolitical assumptions that have shaped Canada's defence and industrial policies for decades no longer hold. By strengthening the operational readiness of the Canadian Armed Forces, we can also strengthen Canadian industry, support innovation, create good jobs and build greater resilience here at home.
To achieve these objectives, the defence industrial strategy introduced a new build-partner-buy framework. Through the Defence Investment Agency, we are applying this framework by building in Canada where practical, partnering with trusted allies where collaboration strengthens capability and industrial participation, and acquiring proven systems when speed and operational requirements demand it.
Let me begin with operational readiness, the first area examined by your committee. The Canadian Armed Forces requires modern equipment delivered at the speed of relevance. The capabilities identified in “Our North, Strong and Free” remain critical to Canada's security, but the pace of technological and geopolitical change has increased the importance of delivering them sooner.
Over the past year, we've accelerated the delivery of a number of key capabilities for the Canadian Armed Forces. For instance, we've accelerated the Canadian modular assault rifle program by approximately two years. We've accelerated Canada's submarine replacement program and, most recently, advanced Canada's airborne early warning and control capability, a key enabler for both NORAD and NATO operations. Together, these initiatives are helping ensure that the Canadian Armed Forces receive the capabilities they need faster while strengthening Canada's ability to sustain and evolve these capabilities over time.
Canada's defence industry is another key area examined by your committee. The strategy aims to increase the share of defence acquisitions awarded to Canadian firms to 70% over the next decade while increasing defence exports by 50%. This is already being reflected in the DIA procurements we've done. The Canadian modular assault rifle program is built here in Canada and supported by an approximately 80% Canadian supply chain, and Colt is already supporting allied demand, including exports to Denmark. Canadian-built Bombardier Global 6500 aircraft provide airlift capability here in Canada as well. This supports domestic aerospace manufacturing, engineering and sustainment. The Canadian patrol submarine project is placing significant emphasis on Canadian in-service support and supply chain participation.
Innovation is also central to the defence industrial strategy. The selection of Saab as a preferred supplier to provide airborne early warning and control is a strong example of this. It delivers significant Canadian industrial participation from the outset while allowing Canada to participate in spiral development of those systems over time. This also creates an opportunity for Canada to develop and export a finished AEWC capability to allied partner nations, a key defence industrial strategy objective of increasing Canadian defence exports. By bringing more of the missionization and systems integration work back to Canada, the project supports high-value jobs and sovereign expertise here at home. This approach helps ensure interoperability with allies while creating long-term opportunities for Canadian innovation, expertise and industrial participation.
The final area identified in this study is the creation of jobs here in Canada. The defence industrial strategy is expected to generate up to 125,000 new jobs across Canada, and we're already seeing evidence of that impact through the growing production capacity, investment and hiring across Canada's defence and aerospace sectors. As an example, I was told by Colt Canada that they were going to have to double their employee workforce to meet the demand of the Canadian order, plus the Denmark order, and I'm sure there are more coming for that great company in southern Ontario.
Mr. Chair, the defence industrial strategy is not simply about buying equipment. It's about providing capability for the Canadian Armed Forces while building out capacity for Canada. Through the build-partner-buy framework, we are strengthening readiness, supporting Canadian industry and encouraging innovation while creating jobs here at home in Canada.
[Translation]
Thank you.
I look forward to your questions.
[English]
Thank you.
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I hope you have paused the clock.
The witness, being the secretary of state, brought up procurement and particular platforms, including the modular new firearm, the subs and the AWACS planes. He brought up what they're doing. Part of the defence industrial strategy is also talking about getting stuff for Canadian Armed Forces. That's, first and foremost, our responsibility here at this committee.
I think that we are masters of our own domain and, since this has already been brought up by the witness, it's in line to ask the questions.
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If we look at what's going on in the world right now, we've seen a number of conflicts that we thought would end quickly but that just didn't. There are no signs of them ending quickly. Certainly one of them is for sure in that state. What I think we all could admit and agree to is that we need to persist. We have to be able to persist in conflicts, should we get ourselves into one. I hope that doesn't happen, but we have to be prepared to defend our sovereignty.
Supply chain resilience is a big part of that persistence. You can have integrated supply chain resilience with partners. You can have much better personal, sovereign supply chain resilience. Canada has amazing capacity and capability, probably much more than we've ever appreciated before. We want to engage in that supply chain resilience, not only to help us be more resilient and less reliant on others, but to create well-paying jobs and careers for Canadians. Whether it's shipbuilding or aerospace.... Those are big ones, but the small and medium-sized enterprises in this country are unbelievable. There is a ton that they have to offer. We need to ensure that we get them into our supply chains where we can. This document, the defence industrial strategy, really is a road map to do it.
Some of the initiatives are shared. For example, DISHs and BOREALIS are defence department initiatives, but they're still helpful. Build-partner-buy, from the DIA perspective, is how we can help bring these other companies in as we move forward. This document, which is the first of its kind—I think we've talked about this before, maybe even in the House—is the road map to help.
There is absolutely no way we're going to meet the KPIs in this document without bringing SMEs into the conversation. It's more than the conversation; it's bringing them into the process. It has to happen. They represent 93% of our companies in this space and 40% of the workforce. They are critical to making sure that we do this big economic pivot and give our great defence and security companies a chance to participate.
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Yes, I can. With the document specifically, there are, I believe, 10 sovereign capabilities listed. That's a pretty good indicator of where Canada plans to build capacity. I used to be a small business owner myself in this space, and I would be looking at where Canada plans to do more in the 10 areas that are identified in the DIS.
However, as I was saying just a few minutes ago to your colleague, the defence policy and the defence investment plan are also very important documents to signal to industry where we're going. If they want to [Inaudible—Editor] investing in themselves and/or get involved, the three documents—the defence policy, which in this case is an update, because that's what we're working with now; “Our North, Strong and Free”, the defence plan; and then the defence industrial strategy—are very good indicators.
Plus, I would say this: We have really done a lot of work with being available to industry. I take a ton of meetings, and it's not just me. All our colleagues take a ton of meetings with industry, to make sure they know what's going on. That will not stop. That will continue to make sure that small to medium-sized businesses know what's going on.
Secretary of State, I had a conversation recently with your colleague about the Defence Investment Agency. We are trying to see how people in the mining and aluminum sectors can seize opportunities. We have been told that this agency will be created to provide a framework for the supply chain and perhaps develop what goes along with it, a value chain.
You have to understand that there are complex realities right now. In your document, I saw the desire to shift on certain aluminum products that could be used for government contracts.
I am from Saguenay—Lac‑Saint‑Jean, the largest aluminum-producing region in Canada. It's important to understand the dynamics of aluminum. The government often doesn't make the distinction between raw aluminum production, the ingot that comes out of it, and processing, unfortunately. In other words, some processing is needed before a raw aluminum ingot can be used.
Currently, in Quebec, there is no support for aluminum processors. Given the tariffs that are in effect, they are disappearing. In order to use aluminum right now, it has to be shipped to the United States to be milled. Once that is done, the sheets that are needed for military applications can then be used and included in the value chain.
I think that is a challenge. You must be aware that, in Quebec and in the rest of Canada, we don't currently have the industrial capacity needed to meet the needs you seem to be suggesting.
So I'm confused about the role the agency will play, because when I look at it overall, it seems like wishful thinking.
How are we going to make those objectives a reality?
That's a heck of a challenge. You have targeted specific sectors of activity, but are you aware of the challenges related to those sectors?
We are all very aware. Steel, aluminum, auto and softwood are the ones we hear about over and over in the House because it's true that those sectoral tariffs are very damaging to our economy.
On defence procurement, where we can.... I'll use both steel and aluminum as examples. Steel is a good example. We're building armoured vehicles here. We're building ships here. We need a very specific type of steel for that, and we're trying to get some of our big steel producers to pivot. It's the same with aircraft aluminum. We have De Havilland. We have Bombardier. We have some big aircraft manufacturers here. We're trying to see whether there's an opportunity for them to source some of their material from Canada. Again, the aluminum they need may not be exactly what's being produced.
The bigger opportunity is the buy Canada strategy, which is all the building that we're going to do across the country—and it's significant. The Government of Canada will be buying Canadian materials: steel, aluminum and lumber. That's probably the quickest relief you'll see for the aluminum sector. There may be others.
I know the government's also looking for other markets for our aluminum. I think the U.S. will come to terms with the fact that they need us for aluminum. I hope that happens sooner rather than later.
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I totally understand that, and I agree with you. As a sovereignist, I can say that we need to develop local consumption strategies. If there were a buy Canadian policy, even though I am a sovereignist, I would be strongly in favour of that kind of strategy.
That said, we have to be aware of the realities in various economic sectors. What I'm saying is that, when I read this document, I get the sense that you don't understand the dynamics of the aluminum sector. What's happening in that sector right now is that primary aluminum is being produced and but it is not being processed in Canada and Quebec. Most of the aluminum that Canada uses is exported to the United States. We don't even have a mill. You need a mill to produce sheets of aluminum.
Tomorrow morning, you want to use aluminum for defence initiatives, but you don't have the industrial structure to do that. That's my concern. There will be an agency that will be ready to coordinate relationships and contracts with small and medium-sized businesses, but it doesn't seem to be aware of the industrial infrastructure that currently exists in certain sectors of activity.
That's why I'm telling you that, before the agency is set up, we need to take stock of our strengths and weaknesses. It's the same thing in the mining sector. It takes years to get a lithium mine up and running.
So that industrial infrastructure is not going to be in place overnight. I don't know what form it will take, but it seems to me that the challenges will be spread over a number of years. You have a slightly idyllic view of things. I'm not saying this to annoy you, it's just the impression I get. You have a slightly idyllic view of the supply chain in Canada right now.
:
Thank you, Mr. Chair, and thank you for being here, Secretary Fuhr.
In my riding in the Bay of Quinte, we've been quite proud recently of examples of small SMEs that have been getting contracts that they thought they may have been unable to do. A small but innovative company by the name of Kool Koatings was able to secure business with General Dynamics, providing a niche application for its MIL-SPEC certified powder coating for one of General Dynamics product lines in a defence application. For a company of this size, it's quite inspirational to see. This company believes that this is an opportunity that could lead to additional contracts in the future with GD or others.
My questions are for you, Mr. Fuhr.
In your estimation, does this type of success story reflect the goals of the DIS? What steps is the government taking to ensure that more Canadian SMEs like Kool Koatings can connect with major defence contractors and participate in defence supply chains? I think it's a great example of how integrated we can be in providing our Canadian SMEs with a chance to access larger companies like General Dynamics.
:
Yes. Thank you for the question.
As I said earlier, it's critical for us to do this, not only for our economy but for our resilience. If we want supply chain resilience in Canada to support our Canadian Armed Forces, we need to make sure all these small companies, especially like the ones you described, are known about and can participate.
If I were to go through this document, I would point out a couple of things. It removes a lot of barriers, and I speak from experience, because I used to operate in this space. One of the barriers was communication with the government. These SMEs have no chance or the resources to figure out who to talk to. Big primes even struggle with this.
The communication with the government is at an all-time high. I know this because I deal with them all the time, and there was some pretty positive feedback from the group of folks you had here on Monday. I watched the committee meeting, and they were pretty happy with the way things were. Therefore, communication is key, and that happens right at the beginning.
Fiscal supports for SMEs in particular are challenging. You just couldn't get money from anywhere, unless you were going to a venture capital place and are prepared to pay 12%, 13% or 15%. They can't do that all the time. There are a whole bunch of initiatives in financing that have come about. They're identified in there. I think BDC got a total of about $6 billion. The regional development agencies got about $350 million. The NRC got some money. Financing for these small to medium-sized companies is a lot more prevalent than it was before.
Regarding security clearances, I'm not sure if powder coating would necessarily be in that space, but it is an issue. These small businesses that want to work in this space need to have security clearances, and then they need to have a place to work, because you can't have these conversations at the local Starbucks.
All of these things have been addressed. Moreover, another thing we've just taken on, or have done since we've been running, is introducing small companies to big primes. I took 25 companies with me to South Korea. I took 15 to Germany and Norway when I went—there were fewer on that trip because it was just before Christmas. These companies that are working on submarines, or even AEWC, will have billions of dollars in ITB obligations to Canada. They could buy 100 million dollars' worth of rubber boots, but we don't necessarily want that. We want to direct this fiscal resource to where Canada wants the money to go, and we can incentivize this through a points system to make sure that the money coming back is going to the places that actually matter to our supply chain—and we'll certainly do that.
One other thing, really quickly—because not a lot of people are talking about this, but it's going to happen—is that all the ISED stuff, all the ITB policy, will be transferred to the DIA when this agency is stood up as a department.
Now, what does that do? You will truly have one-stop shopping for defence procurement. The DIA—Doug Guzman and his team—will do the negotiation and the total business case for the procurement. All the SMEs will have essentially one phone number to call, and we can do what we can to help. If we have the authority to help, great. If it's something we don't have the authority to do or we can't help them with, we can help find out what to do. I'll give you one quick example.
We will never have the authority or the ability to grant export permits. That's a Global Affairs function, but it's important and matters to us because I have a KPI to increase defence exports by 50%. Small businesses go through the process. They go to GAC, but guess what. We can also help advocate for them from inside to make sure nothing gets lost in the process—because there are tons of files and lots of things are happening—and we can get these companies export permits, as an example.
One-stop shopping is what everybody in this room who was on that committee in 2024 wanted. They also wanted a single point of accountability. That was a supplementary opinion or position of the Conservatives on top of the number of recommendations the committee had, which everybody agreed to, and this is exactly what we're building.
I'm quite excited about it. You've got great feedback from the companies that were here. That's not our talking about it or tapping our own backs. The companies are quite happy with this. Can we do more? Can we go faster? I think we can, and we'll be able to do more when we build ourselves up in our final form.
:
Thank you very much, Mr. Chair.
I'll quickly come back to the aluminum example I was talking about earlier. Back home in Saguenay—Lac‑Saint‑Jean, we just finished refurbishing an aluminum smelter that cost $2 billion to switch from one technology to another. Hydroelectricity provides a huge competitive advantage for aluminum smelters such as Rio Tinto.
So we wanted to make sure, collectively, that we would get the maximum benefit possible for our region. A maximization committee was set up so we could ask equipment manufacturers to prepare for what was going to happen in order to meet Rio Tinto's needs. We didn't want the company to use equipment manufacturers from outside the region. Similarly, the Bagotville base is located in our region. It will be receiving fighter jets, probably F‑35s, and it will have to upgrade its facilities.
Within your agency, will you take the same approach of setting up a maximization committee so that people in the community, which is close to the Bagotville base, can benefit as much as possible from the investments that will be made?
If they are not able to provide the services, it should at least be people from Quebec or the rest of Canada who provide those services.
I would like to hear more about how your agency will operate. I hope you will have that sensitivity and that there will be better communication with people in the community to see what they can offer for equipment manufacturers, service providers and supply chains.
Will there be something like that?
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It's about the same for Canadian and foreign companies. Okay.
Under division 16, the minister can access up to $1 billion dollars and, with that money, purchase equity in private companies and hire and fire boards of companies. Essentially, if you wanted to, or if the minister wanted to, they could simply buy a bunch of companies and call it procurement and Canadian-source it.
You mentioned that this is standard procedure and it will be reported back to Parliament and everything. In fact, it doesn't have to be reported back.
Can you name a single comparable federal procurement authority that allows that sort of expenditure without any accountability whatsoever and without the duty to report back to Parliament?
Through you, I want to say that, at this committee, we often hear primarily from industry witnesses who talk about the importance of the build-partner-buy pillars within the defence industrial strategy, as well as the need for close co-operation among government, industry and the Canadian Armed Forces.
The secretary has great former experience from an SME. I think we did business together in the past. More importantly, the secretary has great knowledge of what the strategy means.
How do the strategy and how it's put together strengthen the relationship between those pillars, contribute to a more effective procurement process and make it more efficient?
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There are a number of programs out there to help workers that are unrelated to this that the Government of Canada is doing and that we've been talking about.
Companies basically will invest in themselves and get out over their skis if they know what's coming. You skate to where the puck's going. If you don't do that, you're going to be playing catch-up all the time.
As I mentioned before, sovereign capability is in this document, specifically the defence investment plan and the defence policy. Those documents exist and are out there, and they give companies some certainty, an idea about where the Government of Canada will be investing. Certainty is what's helpful for business; uncertainty is not. We're saying that we're going to be serious about build-partner-buy. That's us, the DIA.
Then there's the buy Canada policy, which is a PSPC policy. Between those two things, there's certainty built in.
To go back to where the puck's going, with those three documents I just talked about, industry can start to see where we're headed.
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We aren't going to get a chance to do this, because this is being done through the finance committee.
It's just explanations as to why the definitions now go beyond. “Residential communities” means more than military communities. Why do defence services and defence procurement go to just anything and don't necessarily refer to defence at all?
Then you tie that in with financial assistance. The minister will have the power to give up to $1 billion to make “loans to any person”, to “make advance payments to any persons”, to “guarantee the repayment”, to “provide loan insurance or credit insurance” and to “make grants and contributions to any person”, which also means corporations.
Is this just another scandal in the making, where there won't be—
Thank you to the minister for being here, and thank you to the officials for being here.
I would like to get back to more serious conversations about the defence industrial strategy, which we're here today to talk about.
I had the opportunity to see the defence industrial strategy in action. We had a wonderful announcement at L3Harris about the maintenance of the CC-330 Huskys and we have the procurement of the Global 6500s, and there's something I'd like to know.
Minister, you must be talking to companies all over the country. You've been to CANSEC and you've been to all sorts of different countries since you started your mandate. What are companies telling you about the DIS? How is it working for them?
All the witnesses we've heard today and over the last few weeks have been saying it's great. I'd like to hear your perspective.
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I did review the committees before I showed up for the study, and I wasn't surprised. What I heard on Monday was very much what I'm hearing across.... Those are very much Quebec or eastern companies, but I've heard it all over the country. I've heard it in Atlantic Canada. I've heard it in the Prairies. I've heard it in the north. I've heard it out in British Columbia.
What we've done so far is remarkably better than what we had. There's no question about it. You could measure it in any way you want, and you would hear the same thing. It is much better, and it will continue to get better.
There's one thing I want to mention. You mentioned the L3. When we talked about supporting Canadian companies, we ran around and said “Canadian companies”, and that's true, but what we mean is economic benefit to Canada.
Foreign direct investment in Canada is probably at a 22- to 23-year high, which is great, and this is what we want, but we talk about economic benefit to Canada. L3, Lockheed Martin, Boeing—those are examples of companies that have thousands of workers here in Canada. As long as they continue to invest in Canada, that's what we want. Whether it's a born and bred Canadian company or it's a foreign company that is driving economic growth in Canada, we're open to all of it.
To circle back to your question, everybody that I'm hearing from is quite happy with the direction we're headed.
To get back to my Bloc colleague's point, I was at another announcement recently at Nouveau Monde Graphite, which has a mine in Saint-Michel-des-Saints. It is opening now, and they are going to be setting up a plant in Bécancour to do the primary transformation that we need to make sure we have the graphite we need as a critical mineral for our defence industrial strategy. It is one of the 10 minerals identified in the strategy.
I would just like to know, going forward, what metrics we're going to use to determine whether the DIS is successful. How are we going to figure that out?
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There are a couple of KPIs in the document. We're moving towards 70% acquisitions in Canada and 50% exports. I think there's a 240% increase in revenue for small to medium-sized businesses. There's a bunch of them in there.
There's a 10-year window to get there. At the rate we're moving, I'm confident that we're going to get there. That's the important part.
I was really glad to see that you got such positive feedback. We're working super hard to make sure this works, because it really matters right now. We need to find other things for Canadians to do—careers. Our auto industry is getting hammered. Softwood is getting hammered. Steel and aluminum have massive pressure.
Whatever we can do to help...it's not just defence but the Major Projects Office, buy Canadian and Build Canada Homes. These are all pillars of how we're going to keep this economy running, and defence is going to do its fair share.
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We welcome our new vice-chair to the committee. She's been on this committee in prior years. She was a very good member in those years, and we look forward to working with her as we go forward.
Now we're going to proceed in our next round and return to the defence industrial strategy.
We welcome the following witnesses: From the Department of Industry, we have Kendal Hembroff, associate assistant deputy minister of the industry sector. From the Department of National Defence, we have Dr. Kate Kaminska, the director general, BOREALIS joint program office, Defence Research and Development Canada, and Wendy Hadwen, assistant deputy minister for policy and industry.
As for those remaining from the first hour, we have already spoken with regard to them.
We will proceed with the opening statements of up to five minutes, please.
:
Thank you so much for welcoming me back to this committee as part of your ongoing study into the defence industrial strategy. I'm pleased to share my opening remarks with my colleague, Dr. Kate Kaminska.
[Translation]
Last year, Canada invested $65 million in defence and security, as you know. In March of this year, we met NATO's defence spending target of 2% of GDP, and we are well on our way to meeting NATO's new target of 3.5% of GDP.
[English]
To reach this ambitious target, the mobilization and engagement of Canada's defence industrial base is needed, and the defence industrial strategy sets out our path. As we turn to implementation, we are focused on the sovereign capabilities that represent areas in which we have industrial capacity, operational requirements and export potential.
As the said last month, the defence industrial strategy is a unifying, unified national effort. At its core, it's about strengthening our sovereignty and building a more resilient, innovative and secure economy for Canadians. Above all, it's about delivering for the members of the CAF and the Coast Guard, who serve our country every day.
This work will help Canada gain greater strategic autonomy and reduce our vulnerabilities to international pressures and threats.
As we proceed with implementation, we are starting to see some positive impacts and early results. For example, last week, the Department of National Defence and the Ministry of Defence of Ukraine signed an arrangement to support the production of Ukrainian uncrewed aerial systems in Canada. The arrangement establishes a new partnership, Airlogix-Sentinel, between a Ukrainian defence technology company and a Canadian manufacturer of uncrewed aerial systems. We hope that with the support of our two governments, the partnership will combine the companies' expertise to manufacture Ukrainian drone systems in Canada for the armed forces of Ukraine and for Canada's armed forces.
I would also note that on April 30, the Minister of Natural Resources, ,
[Translation]
on behalf of the Minister of National Defence, announced that the Government of Canada is making an initial investment of $40 million to assess the potential of a Canadian-controlled microreactor that could provide heat and electricity to remote and northern facilities and operations of the Canadian Armed Forces.
[English]
Thank you so much.
I'm pleased to turn to Dr. Kate Kaminska to finish our remarks on the part of National Defence.
:
Mr. Chair, thank you for the opportunity to appear before you today.
I am pleased to be here to discuss the bureau of research, engineering and advanced leadership in innovation and science—better known as BOREALIS—and its role in strengthening Canada's defence innovation ecosystem.
As the committee has heard from previous witnesses, Canada has world-class talent, cutting-edge research and globally competitive firms. The challenge is to ensure that sovereign Canadian technologies can move more quickly from research and development to operational use in support of Canada's defence and security.
BOREALIS was created as part of Canada's defence industrial strategy to help accelerate that transition. Its focus is on strengthening the pathways among research, development, testing and operational adoption by better connecting government, industry, academia and military end-users around shared mission priorities.
A key component of this effort is the development of the Defence Innovation Secure Hubs, or DISHs. These hubs provide secure environments in which Canadian companies, researchers and government can work together to design, prototype, test and refine their technologies.
In November 2025, a pilot maritime DISH was established in Halifax, focused on the undersea domain. It includes technology such as autonomous systems, advanced sensing and AI-enabled analytics. The pilot has already supported collaborative testing and experimentation activities, which are helping Canadian companies evaluate and refine their technologies for defence purposes.
BOREALIS is working closely with the IDEaS program to help accelerate the transition of promising Canadian technologies into operational use in support of the Canadian Army's Minerva initiative. The project is advancing practical, cost-effective, drone-based targeting and range-finding capabilities that have the potential to enhance battlefield awareness.
In closing, BOREALIS represents an effort to strengthen Canada's ability to translate research excellence into operational capability.
Thank you. I look forward to your questions.
As you know, Canada published its first defence industrial strategy in February. The release of the strategy serves as a historic first step, setting out a whole-of-government framework that will guide Canada's defence investments. Our focus is now on execution and delivering results for the Canadian Armed Forces and our allies while ensuring that every dollar maximizes jobs, industries and economic benefits for Canadians.
ISED's role in the development of the strategy is to ensure that we are leveraging the full breadth of Canada's economy through a comprehensive package of industrial policy measures anchored within Canada's broader industrial strategy. As the federal government's home for industrial policy and one of the strategy's co-leading departments, ISED is playing a key role in implementing the DIS.
Committee members will have seen that the strategy includes commitments to invest in Canadian research and innovation, with a focus on the 10 sovereign capabilities, through a variety of different federal programs. This includes investments to accelerate cutting-edge defence and dual-use research and development, to anchor top Canadian quantum companies and talent, to bolster access to capital to support commercialization and scale-up, and to help integrate Canadian small and medium-sized businesses into defence supply chains, among other things.
[Translation]
For example, that includes the Business Development Bank of Canada's defence platform, which provides up to $6 billion in financing, venture capital and advisory services to help SMEs innovate and grow.
As announced by the Business Development Bank of Canada earlier this year, the platform has already provided more than $91 million in financing, and it recently made its first investment through its NordFort venture capital fund to support the development of stratospheric drone technologies.
Programs such as Innovative Solutions Canada and the strategic response fund also play an important role in furthering Canada's defence and dual-use technology objectives. Since May 2025, for instance, Innovative Solutions Canada has worked with national defence to provide over $128 million to Canadian companies to further the development, testing and adoption of made-in-Canada defence, dual-use and quantum solutions.
[English]
In recognition of the challenges that many companies face in navigating federal programming, the defence industrial strategy also committed to establishing the launch of a new concierge service, which was officially launched at CANSEC last week. This service will build on ISED's existing expertise to support those Canadian companies working on defence technologies that are linked to the sovereign capabilities by serving as a coordinated, single-window approach to navigating government programs, provincial partners, services and export opportunities.
The strategy also included a commitment to modernize Canada's industrial and technological benefits policy, or ITB policy. Updates to this policy were announced last week by the . In alignment with the defence industrial strategy, these updates will maximize the economic and industrial benefits that we derive from procurement. Key changes to the ITB policy are designed to direct investments by contractors to areas that will have the greatest impact on creating a more dynamic, competitive and resilient Canadian defence industrial base.
This includes, among other things, enhanced incentives for working with and investing in small and scaling firms, as well as leveraging Canadian supply chains. It also includes credits for strategic investments that will grow domestic production and IP transfer, as well as new multipliers for workforce development, including indigenous training and development.
This is the current ISED function that Secretary of State Fuhr mentioned will be transferring to the Defence Investment Agency later this summer.
[Translation]
The strategy also sets out a vision to work differently with Canadian industry, and we have achieved some early results on this front.
As announced by the at CANSEC, the government has published a new strategic partnership framework. This framework sets out how the government will work more closely with industry to advance key sovereign capabilities, through more structured and sustained engagement, aligned with our defence and security priorities.
The defence investment agency will lead the identification of new strategic partners in collaboration with ISED and national defence, as opportunities arise.
[English]
The strategy recognizes that strong returns on our investments will be critical. To this end, the strategy sets clear and ambitious targets to measure success.
Do you want me to stop here? I can.
I'm happy to answer any questions about the economic targets.
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It meets all NATO standards. In the NATO standard, it says that coast guards would be required to deploy to an operational theatre. They need to have that capability to be counted under that 2% spending, whereas our Coast Guard, as we've heard under testimony, is definitely not capable.
I'm giving that as one example of not meeting the proper spending in it's self-reporting to NATO. In fact, I would refer to the Stockholm International Peace Research Institute, which is the global standard on determining government spending. They've singled out Canada, saying that we've only actually spent 1.5% that has met the NATO spending requirement. We have not met it, according to the Stockholm International Peace Research Institute's study, and we have been singled out by them.
What makes up that other...? That's a lot of money—another 0.5% of our GDP—that doesn't qualify as NATO spending, according to them.
Is there anyone else on the panel who could explain how that half a per cent of Canada's GDP simply does not meet the requirements of NATO? Is there no one?
Okay. I'd like to move on to a different topic.
We talked about maximizing spending and the efficient spending of dollars for the defence investment strategy, and I think that's commendable. We also want to get the right things that we need.
However, testimony from industry leaders we had here earlier at the committee was that there was no national security plan. They agreed with me that with no national security plan and no national capability inventory, it makes it very difficult for them to work together and to determine what we need to purchase for Canada.
Would you agree, then, that we are missing a national security plan as the underpinning to determine what we need in terms of the proper equipment and the capabilities that we wish to bring forward?
Perhaps Ms. Folkes can start.
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Thank you for the question.
As you know, establishing a national security plan would be under the purview of departments such as the Department of National Defence and, obviously, with international ramifications, Global Affairs Canada would likely play into such a strategy.
I understand that we're here today to talk about the defence industrial strategy, and all I can say is that build-partner-buy involves not only a domestic focus, but also a broadening of our trade relationships and, when we must, buying from trusted partners—
Very quickly, then, a national security plan would look at things like cognitive warfare, prekinetic threats, coercive trade, election interference and organized crime. These are things that would determine the threats Canada is facing. I see none of that in the defence investment strategy. Industry has pointed out that we need this national security plan to efficiently guide us. We can buy these tanks, these ships or those rifles, but if we don't know what it is that we need, it does not seem to meet....
I don't know if anyone would agree, but as Ms. Hembroff said, we want to maximize the efficient spending of our money. Without that underpinning, without assessing all these multiple threats that we face, it seems to be willy-nilly. Would anyone agree or disagree with that? If you disagree, why?
Qujannamiik to the witnesses for appearing.
It's June and it's National Indigenous History Month. Naturally I'll be asking about indigenous peoples. I wonder if each of the witnesses can share with us what government and industry can do to make sure there are increased indigenous opportunities.
How can they take more opportunities to make sure they are more engaged? I think we all know that there are challenges when it comes to increasing the engagement of indigenous peoples: first nations, Métis and Inuit. I would love to hear from each of you about how we can make sure there is an increased engagement from first nations, Métis and Inuit.
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I suspect that probably we will all have things to add, but I'll start, and I'll try to be brief.
The concierge service I mentioned, which was recently launched, will be especially beneficial to SMEs, and I would certainly encourage indigenous businesses to reach out. It is intended to help those companies pathfind through the federal system.
The second thing I'll mention is that I talked about changes to the industrial and technological benefits policy. We introduced a brand new multiplier for workforce development, which is a five-times multiplier. We also increased the current multiplier that we have for indigenous skills and training to 10 times, and that is the largest multiplier we have under the ITB policy, in recognition of its importance.
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The success of the defence industrial strategy will definitely require working more closely and differently with indigenous partners, particularly because indigenous partnership in the defence industrial base will position us well for the activities we have planned for the north.
I can speak about the northern operational support hubs, which will establish a dispersed network of principal hubs and secondary nodes to provide critical infrastructure and logistical support for military operations in the north. Colleagues are regularly doing consultations in all communities and with rights holders, organizations and delivery partners to make sure that everything we do is something we are doing in collaboration with communities.
The northern operational support hubs emphasize collaboration with indigenous partners, communities and regional governments to align the military operational requirements with shared regional priorities. Specifically, these concern dual-use infrastructure: airports, seaports, medical capacity and alternative power generation. The northern operational support hubs will not only strengthen Canada's defence posture but also enhance community well-being, resilience and economic opportunity.
This is very interesting. I'm always surprised to hear you talk about BOREALIS. I don't know if you have the rights to that. BOREALIS is a nursery that has existed in Saguenay—Lac‑Saint‑Jean for many years. So we'll see whether they take issue with you on that.
I would like to come back to a subject that I think is very important, namely the links between the various strategies. Over the past seven or eight months, the federal government has announced an electrification strategy. It has also announced a critical minerals strategy. Today, we saw the report of the task force on the forestry industry. All of these strategies exist to create industrial clusters. In these various strategies that are expected to create industrial clusters, there is the possibility of contracts with the military sector, because substantial military spending will be forthcoming.
To my mind, however, the devil is in the details. I wonder how those clusters will be created. There are people in my riding who have very interesting solutions and whom I am trying to put in touch with ministers' parliamentary secretaries. To get concrete results, however, I sense that we have a long way to go.
I would like to know if you have a strategy for successfully creating those clusters. It's not a trick question, and I'm not trying to make anyone look bad. I'm asking you this because, for each element I mentioned, there could be some interesting solutions to develop industrial clusters that will be part of the military strategy.
What are your thoughts on that?
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Thank you for the question.
The defence industrial strategy represents a very important paradigm shift. In the past, decisions were made based on best value. Now, the Defence Investment Agency is responsible for giving significant weight to the economic benefits of projects. Two things are needed to do that properly. First, we need to structure our procurements and contracts to promote those benefits by using evaluation criteria that take them into account. Second, we need to know the industry and what it has to offer in order to create those links. So there's work to be done with our colleagues. Many of them are at the table today.
We have already started increasing our knowledge of the industry, and we will continue to do so quickly in order to create those links. When we establish partnerships and meet with various suppliers, we need to provide direction. That's certainly true for Canadian suppliers, but it's especially true for foreign suppliers. The secretary of state mentioned Saab, for example. In some cases, they don't know everyone. So we have to direct them. For example, for such and such an artificial intelligence capacity, we tell them they can go to such and such a place. So it's partly a question of helping major suppliers really understand what Canada can offer, by paying particular attention to the foreign companies we do business with.
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Thank you, Mr. Robitaille.
You're putting your finger on something that I think is very important. I don't know if that's going to show up in the report.
Let me give you a very concrete example. There is a company called IDEA Contrôle that we are in discussions with at the Standing Committee on Natural Resources. That company stores energy. It will be able to reduce diesel consumption in the north by 25% to 30% using storage strategies. The people who know about this—I'm not an engineer—say this is a turning point for the industry.
So we start with those people and ponder how to connect with someone from the soon-to-be-established defence agency. That's where it becomes difficult for a politician. How do we take the next step?
This is not a criticism, but I get the sense that, right now, for politicians or entrepreneurs in that situation, the system is not user-friendly, in the sense that it is difficult to make those initiatives known. I understand that there is a whole validation process at your end, but it seems to me that that is missing right now.
Madame Hadwen, Sudbury has a strong cluster of companies involved in mining technology, automation, advanced manufacturing, engineering and critical minerals. Many of those capabilities have potential defence applications, so they are dual-use technology.
As the defence industrial strategy is implemented, where do you see opportunities for regions like northern Ontario to contribute to Canada's defence industrial base?
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Thank you for the question.
There is a chapter in the defence industrial strategy on supply chains, which in some measure also answers Mr. Simard's question. I expect Kendal will want to add to this.
As we begin to unpack the sovereign capabilities and look at what it means to build-partner-buy in order to deliver an advantage for the Canadian Armed Forces, or an industrial advantage, we notice that a lot of materials science is coming to bear to give us the chance to do experimental things, for example, or to try to marry up the needs of the armed forces with the production capabilities of industry.
I will take the opportunity to highlight that we have already announced and stockpiled scandium and graphite. Those were the first two examples of some work we did together with NRCan on the critical minerals strategy implementation that lined up very much with the defence industrial strategy. As you know, in NATO, we are mapping the supply chain. We agreed on a project at NATO last year at the summit. I would expect more work to come out this year at the NATO summit.
Altogether, this amounts to reducing our dependence on foreign suppliers and doing more to increase our resilience with respect to our own supply chain. This work is just starting, and I can see it going in big directions.
I'll turn to Kendal.
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Maybe I'll give one quick comment.
Defence is a somewhat unique sector, in that there are opportunities and capabilities across the entire country. Certainly, our objective is to make sure that when we grow the defence industrial base, we're doing it in a way that includes regional considerations.
I will say that in the three short months since the strategy has come out, the government, through a range of different programs, has invested directly in a number of companies across the country—over 500 to date. Unfortunately, I don't have a full breakdown regionally, but if there's interest, we could provide that at a later date.
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Thank you for the question.
As my colleague from Innovation, Science and Economic Development mentioned, it's very important to have this concierge service. It's going to provide the support that small and medium-sized enterprises—and I would even say micro-businesses—need in those innovative sectors, whether it's defence, security or dual use, to understand how to navigate the federal procurement system—where to go first.
The other thing is that within our strategic partnerships, when we identify a strategic partner, we expect them to work collaboratively with the Government of Canada to help small and medium-sized enterprises and micro-businesses in Canada get into the supply chain. Within PSPC, as you know, we've implemented the buy Canadian policy, which prioritizes Canadian companies and federal procurement. Beyond that, we also have indigenous participation plans, which is another avenue to get small and medium-sized enterprises that are also indigenous into the supply chains.
We expect our strategic partners to integrate as many Canadian enterprises into their supply chains as is practical to deliver the capability to the CAF on time and on budget.
Thanks.
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I think that both ADM Robitaille and I are excited to answer this question.
One thing, to be very frank with the committee, is that moving towards 2% and then 3.5% of GDP for defence spending, and then to 5% of GDP for defence spending, will really help with sending long-term demand signals to Canadian industry.
It will also help accelerate procurement. We've seen some procurements that have not had funding allocated in the early days of those procurements, whether it's in the identification phase within the Department of National Defence or options analysis, and we haven't been able to advance the projects or move to a contract award. Now, with sufficient funding, particularly when expenditure authority and contracting authority are granted quickly, we'll be able to move quickly to the procurement phase. The new authorities that the Defence Investment Agency will have will also help accelerate that.
I'll turn it over to ADM Robitaille to provide a further response to this question.
Thank you, Mr. Chair.
Since we have people from the Department of Industry with us, I'd like to go back to what I asked the minister earlier.
In this desire to reorient aluminum production, I sometimes get the impression that there is a misunderstanding at the Department of Industry. The aluminum sector is part of a very specific industrial dynamic. There's primary production, which provides ingots, billets and sometimes spools. There's secondary processing, which is done by extrusion. Billets are pushed into a matrix to form various pieces. We cast aluminum. You need a mill to make aluminum foil.
Unfortunately, the aluminum processing sector is very weak in Canada right now. There's no mill in Canada. So wanting to use even more aluminum in applications, without a mill, is kind of wishful thinking. A mill costs about $2 billion.
So I understand your strategy. It's all well and good to want to redirect aluminum production to Canadian uses, but we have to be aware of the existing ecosystem. I don't mean to criticize, but I sometimes get the feeling that we're not aware of our aluminum ecosystem. We are major aluminum producers, but we mostly export it. The added value is created in the United States. It's unfortunate, but that's a fact.
I've witnessed that for 30 years, in Saguenay—Lac‑Saint‑Jean. My father, a former Alcan worker, keeps saying that everyone in aluminum processing has fallen flat. I don't see how we're going to get there in the short term.
Are you aware of that?
Do you have a strategy for that?
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Yes, I can confirm that my department is working very closely with aluminum producers in the country, both primary and secondary. I would say that we are aware that tariffs have had different impacts on those two segments, in part because of a traditional U.S. reliance on Canadian aluminum. However, the impact of tariffs over time is also having a fairly significant impact.
The secretary of state talked about buy Canada as an important policy measure designed to support aluminum producers in addition to other sectors. I can also mention the strategic response fund, which was announced by the government with a very clear focus on helping those companies and sectors that are most exposed to tariffs, and that does include the Canadian aluminum sector.
We engage very regularly with aluminum producers. We already announced one project under that program, the Elysis project involving Rio Tinto, just last month. We have more that we are actively evaluating right now, but we're very much seized by the challenges facing that sector.
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Thank you very much, Mr. Chair.
I'd like to thank the witnesses for being here and for their patience today.
Before I start asking questions of the witnesses, I wanted to make an offer to my colleagues across the way. My Conservative friends were looking for the coordinates of the DIA. If they Google it, they can find the email. With respect to the NATO expenditures, page 4 of the NATO press release issued in April identifies all the countries that have met the 2% target. It's out there. NATO provided that press release back in April, identifying Canada as having met that 2% target.
[Translation]
I'll now turn to my Bloc Québécois colleague. You asked some questions about how we can work together. Luckily for you, I am the parliamentary secretary to the . I am a Quebecker. It's a pleasure to be with you to discuss how we can work together for this sector in your riding.
[English]
I think there's some confusion in terms of how we came to where we are with the defence industrial strategy, so I want to map it out.
In 2017, we brought forward—I believe it was after 20 years—the first defence strategy, “Strong, Secure, Engaged”. We provided an update in 2024 with ONSAF—“Our North, Strong and Free”—which fed into a defence industrial strategy.
Of course, we all know how this works: The Canadian Armed Forces identifies the needs that they have based on threat assessments. They don't just come out and say, “I need widgets.” They have a need for something based on threat assessments that are constantly being undertaken. At that point, they provide the statement of requirements to National Defence, which now works with the Defence Investment Agency to get those widgets or whatever it is that they need.
My question, I believe, is for the ADM and about how we work. Again, while we're talking a lot about the defence industrial strategy and how that is going to help revolutionize our industrial base in terms of defence, my focus is always on making sure that the brave men and women in uniform have what they need. I know that historically we haven't been able to get them what they need in a timely fashion. I wonder if the ADM can walk us through how we're working with ISED and the DIA to make sure that we get the brave men and women in uniform what they need when they need it, and how we are going to engage with industry to make sure that we're buying from Canada. If we're going to buy, let's eat our own cookies.
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Thank you so much for the question.
As you describe, when we began looking at the ingredients of a defence industrial strategy for Canada, we listened to as many industries as were willing to talk to us. That surfaced many challenges. One of them is that we do not communicate our demand signal very clearly as a Department of National Defence. There are outlooks and there are blueprints, but most industries struggle to understand exactly what they have that we might need. This led us to focus on the articulation of sovereign capabilities in the document. There are 10. They unpack into 31 specific things—capabilities that get to the heart of electronic warfare and the heart of the challenges that confront the Canadian Armed Forces and the Coast Guard today.
We did not develop those things in isolation. We worked very closely with everybody who is at the witness table today and others from Global Affairs Canada with respect to export controls and export opportunities, as well as with Natural Resources Canada, because of the importance of supply chains—not just critical minerals but also energy and forestry.
Ultimately, all the tools of government are now orienting towards helping us deliver on a defence demand signal. We know that there is an opportunity to provide more detail where it says “digital systems” and even when they unpack into quantum computing. There is room for us to be clearer about what exactly we need and how we intend to inject Canadian raw materials and Canadian small and medium-sized businesses into the supply chain for what we might develop.
If we get this right, we have the opportunity to build on a whole lot of leading-edge capability in Canada. This will provide the Canadian Armed Forces an operational gift, something that will be an advantage for them in a military context but that will also give us an industrial advantage that allows us to compete on the global scale as many countries are busy investing in rearmament and in their armed forces.
There is one area in particular that stands out, although all 10 sovereign capabilities will seek to have this connection. I want to pass it to Kendal, who can speak about how her programs are oriented to support. One area I might highlight is medical countermeasures. The surgeon general of the Canadian Armed Forces....
I will not say more.
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I'm sorry, but the time has passed.
I want to thank the witnesses for being here. We have some housekeeping to do, so you're free to leave.
I'm going to proceed with three items that I want to get through really quickly.
In regard to the study of the contaminated sites for DND and the CAF, is it agreed to provide the recommendations for a report before Friday, June 12, at 4 p.m.?
Some hon. members: No.
The Chair: Do you want more time? Is the 19th okay?
Some hon. members: Agreed.
The Chair: Is it agreed that the evidence and documentation received by the committee during the first session of the 44th Parliament on the subject be taken into consideration by the committee in the current session?
An hon. member: Do you mean the contaminated sites?
The Chair: No, we've already closed the study on contaminated sites. There will be no more submissions.
Some hon. members: Agreed.
The Chair: For the study of the francophone and indigenous CAF members, is it agreed to provide the recommendations for a report before Friday, June 12, or do you prefer June 19?
Okay, it's June 19.
Some hon. members: Agreed.
The Chair: A number of people want to go to the Governor General's installation on Monday. I'm looking for a consensus. Who from the opposition is going to the GG's event?