New legislation to transform Ottawa’s Defence Investment Agency into a Crown corporation is a positive step, industry members say, but concerns about slow-moving procurement remain as the agency pursues a new business model.
A ballroom inside of the Halifax Convention Centre was packed on Wednesday afternoon, as Wendy Hadwen, assistant deputy minister of policy and industry who recently moved into the DIA, got up on stage to talk about the progress her agency has made and answer questions from stakeholders.
“We have no time,” she said in her opening remarks. “It is a situation that is quite urgent, and Canada must now quickly become the kind of country that can marry up its industrial advantages with its operational needs, put them together in line with the defence demand signal, and get out in the world, compete and win.”
It’s been almost exactly a year since the federal government launched its defence-procurement arm, dedicated to streamlining the multidepartment process that has long been criticized for its sluggish pace and inaccessibility to small- and medium-sized businesses.
Since then, the agency has made several announcements about projects expedited under its watch, some of which were already under way and moved over to the DIA after its founding. But its work is yet to be felt in broad strokes across the Canadian defence industry, owing to a $100-million floor on the contracts it can award, cutting out smaller companies from benefiting directly.
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This could all be about to change. Legislation tabled on Tuesday in the House of Commons proposes making the agency a Crown corporation, alongside the likes of the Business Development Bank of Canada and the Canadian Broadcasting Corporation. This would make the DIA distinctly different from a typical government department, giving it freedom to operate more like a business. It would also help the agency procure military goods faster, according to chief executive officer Doug Guzman.
This move would come with a slew of changes, including a hiring process more akin to the private sector and different governance structures, such as a board of directors.
All Crown corporations generate resources, Ms. Hadwen said in an interview on Wednesday, and the redesignated DIA will be no different. Part of the new legislation would allow the agency to make investments for the purposes of national defence – something it’s not able to do in its current capacity, housed within Public Services and Procurement Canada.
The agency’s investment mandate would likely generate some returns, but where those go or how they would be used is something the DIA will have to negotiate with the Minister of Finance, Ms. Hadwen said.
Agency spokesperson Le Nguyen said in a statement that it will not operate as a profit-making business under this new structure. However, she added that “it will have the tools to play a greater commercial role beyond simply buying equipment.”
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Overall, the agency will continue to be funded “primarily through government appropriations approved by Parliament,” she said.
Some of the DIA’s new powers would be facilitated through something called a consolidated revenue fund, the legislation states. Through this, the corporation would be able to make loans and advance payments, for example. The Finance Minister would also be able to use the fund to make loans to the corporation itself. However, the amount paid out of the fund for any of these use cases cannot exceed $1-billion at any time.
In terms of staffing, the new legislation explicitly states that any employee currently with the agency will not have their status affected by the passing of the bill. This includes their pensions, Ms. Hadwen said.
Kevin Toderel, chief executive of Remote Robotic Systems Inc., a technology company based in Mississauga, said he’s glad to see the DIA becoming a Crown corporation, with independence from other government departments and more of a for-profit motive.
“Having it be free to do what they need to do is going to have a huge impact,” he said, referring to how defence procurement is done in Canada.
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Until then, however, he said he’s still anxious for things to move faster, in terms of procurements and getting the agency closer to its final form.
Josh Ogden, CEO of Aerial Vehicle Safety Solutions Inc., told The Globe and Mail the day after the legislation was tabled that he still had several questions about how the agency would work if it became a Crown corporation, and how that would affect him in turn as someone who runs a Canadian defence company selling drones and their components.
Those concerns include who will be on the board and how they will balance expertise and conflicts of interest. He said that like many, he is wondering: “How do you make money and how do you be sustainable?”
This legislation is the latest in a series of proposed changes to affect the agency over the past several months.
In May, legislation to implement certain provisions of the 2025 federal budget was tabled and included several sections about the DIA and bringing it out from under the PSPC umbrella. Then, in September, The Globe reported that Mr. Guzman was planning to step down. A couple weeks later, Mr. Guzman sent an e-mail to staff stating his intention to stay.
While the flurry of news stories has had little impact overall on the agency’s daily operations, many in the industry have been left questioning what’s to come, and when they can realistically expect the DIA to follow through on its mandate to make all Canadian defence procurement move at the speed of relevance.