Executive Summary – The Evolution of Defence Procurement in Canada: A Hundred-Year History

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(Disponible en français : Résumé – L’évolution de l’approvisionnement en matière de défense au Canada : une histoire centenaire)

In Canada, defence procurement currently involves several federal departments and agencies, including the Department of National Defence; Public Services and Procurement Canada; Innovation, Science and Economic Development Canada; and the Treasury Board of Canada Secretariat. Each department or agency is responsible for different stages of the defence procurement process.

That said, over time, Canada has had various defence procurement processes, each with its own challenges and successes. To date, these processes have included procurement by individual armed services (army, navy and air force), by centralized federal departments or agencies and by Crown corporations.

During the 20th century, the general trend in Canada in times of war or national emergency was to centralize defence procurement in a single federal department with its own Cabinet minister in order to improve control and coordination when acquiring defence products. For example, this approach was used during the Second World War with the Department of Munitions and Supply (1940–1945) and the early stages of the Cold War with the Department of Defence Production (1951–1969).

For about the last 50 years, Canada has had a decentralized, multi-departmental approach to defence procurement. Since 1969, the process has involved several federal departments and agencies with specific roles and responsibilities. Introduced at a time of significant organizational change within the federal government, this process was originally established with the goals of maximizing the use of resources, achieving better administrative efficiency and realizing significant cost savings.

Over time, Canada’s defence procurement process has become more complex and bureaucratic as additional federal departments and agencies have become involved. Despite delays, cost overruns and other challenges encountered with defence procurement projects over the past 20 years, the federal government has retained the current decentralized, multi-departmental process.

While a number of reform measures have been introduced in recent years to improve Canada’s defence procurement process, some commentators remain concerned about governance and accountability. They maintain that both could be improved if Canada were to centralize defence procurement in a single federal organization, as it did on several occasions before 1969.

In 2019, the federal government announced its intention to create Defence Procurement Canada as a centralized procurement entity and mandated the ministers of the Department of National Defence, Public Services and Procurement Canada and the Department of Fisheries and Oceans to bring forward “analyses and options” for its creation. While no timelines were established and several questions remain to be answered, one thing is certain: the creation of Defence Procurement Canada would mark a significant shift in the way defence procurement occurs in Canada, ending more than five decades of decentralized, multi-departmental defence procurement.

Regardless of the federal government’s future approach to defence procurement, it is likely that the billions of dollars spent to procure defence products and services will continue to attract significant political, media and public attention. As a result, calls for reform of Canada’s defence procurement process are likely to be ongoing.

Read the full text of the Background Paper: The Evolution of Defence Procurement in Canada: A Hundred-Year History

Author: Martin Auger, Library of Parliament

Categories: Economics and finance, Executive summary, International affairs and defence

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