Sovereignty-Enabling Exemptions in the DIAA?
Brief thoughts on the tabled Defence Investment Agency Act in the middle of a busy week...
It’s been such a busy week I almost forgot to comment on the tabled Defence Investment Agency Act (DIAA) which will turn the Defence Investment Agency (DIA) into a standalone agency with its own minister and a stronger mandate. Philippe Lagassé wrote a great analysis of the DIAA which everyone should read at the link below.
It seems the DIA will have a lot more autonomy which many had hoped for to ensure it actually has the authority to speed up procurement timelines, invest quickly and determine its priorities without too man cooks confusing the process.
But one decisive area hasn’t received too much attention but will be extremely important for the future of the agency: the list of exceptions to the competitive procurement requirements.
I know it sounds very exciting… I could hardly contain myself. But it is seriously a decisive subsection on which a lot of questions of sovereignty and Buy Canadian outcomes will rest.
The draft Act says that the DIAA permits Minister to skip competitive procurement in several key scenarios with 4 being most interesting for our purposes:
(a) the contract is for the purposes of addressing an urgent operational requirement
(c) the dispensation is warranted in order to support a sector of the Canadian economy that is important to national defence or to national security, including economic security;
(i) the contract is for the purpose of research, development or innovation in relation to defence supplies or defence services;
(j) the contract is for defence supplies or defence services that were the subject of funding provided by the Government of Canada for research, development or innovation;
The first exemption is the classic “we need this now and so we will buy from x country (likely the U.S.) Which is expected but may do a lot of heavy lifting in the coming year or so as DND seeks to rapidly modernize the military and procure new capabilities. It’s a necessary exemption but over-reliance on this might lead to a culture of defaulting to foreign procurement when a Canadian option could be found and so this will be something to keep an eye on.
The latter 3 exemptions point heavily toward building a sovereign Canadian defence industrial base.
Exemption c) allows for privileging strategic sectors and capabilities both on the basis of national security and on the basis of economic security. This is a direct response to U.S. doctrine like the National Security Strategy which have shifted supply chains and economic security into the forefront of U.S. national security policy. This could cause tension with the U.S. in upcoming trade negotiations and on joint projects like the NORAD modernization but it is also a strong sign that Canada is at least keeping options to make sovereign decisions about procurement.
Exemptions i) and j) are the most interesting for thinking about dual-use tech and Canada’s innovation mandate. These both indicate that the DIA could privilege procurement from companies and of technologies that have already been invested in by DND or other government bodies, and for the express purpose of driving innovation and research forward in key sectors. If used, these could be very consequential for enabling the DIA to actual invest in the kind of dual-use deep tech that Canada wants to be investing in.
When we (occasionally) need to buy guns and bullets, maybe we can just procure from foreign multinational incumbents. But when it comes to trying to translate defence spending into long-term economic gains (the promise of Carney’s Defence Industrial Strategy), then ensuring we can actually help budding industries and companies in quantum technologies, applied AI, robotics, and uncrewed systems grow will be essential.
We’ll see how these exemptions are applied in practice. They could be ignored or they could be used as a real bid by DIA to connect with and support Canadian innovative firms in defence and adjacent areas. But for now this proposal at least provides the tools to build the right kind of industrial base that we want long term.