Ottawa plans Crown corporation to break defence procurement logjam

Doug Guzman, CEO of the Defence Investment Agency, left, listens as Prime Minister Mark Carney takes questions from journalists at the Canadian Association of Defence and Security Industries annual defence industry trade show on May 27.

Photo: La Presse canadienne / Justin Tang

Murray Brewster (new window) · CBC News

The Liberal government plans to turn the fledgling Defence Investment Agency (DIA) into a Crown corporation in order to move military purchases along more swiftly, two federal sources tell CBC News.

The move will potentially give Ottawa substantially more freedom to run defence procurement like a specialized commercial enterprise rather than as a conventional government program.

The confidential sources, who were not authorized to speak publicly, said it's expected the Crown corporation would report to an associate minister of defence for public accountability purposes.

The DIA was created just over a year ago and has functioned as a special agency under Public Services and Procurement Canada. Legislation giving the defence agency broader powers to bypass the decades-old procurement system was put before the House of Commons in the spring and has yet to pass.

However, Public Works Minister Joël Lightbound plans on introducing new, separate legislation taking the DIA one step further into independent Crown corporation status. The title of the proposed bill has appeared in House of Commons documents.

Many defence experts agree the biggest advantage to making the agency a Crown corporation is operational independence. While details of the new legislation haven't been released, it's expected the agency could have its own board, CEO, corporate plan and workforce.

Philippe Lagassé, a defence policy and procurement expert at Carleton University, said the planned move would be significant.

A Crown corporation could reduce the bureaucratic processes involved with multiple departments and central agencies, notably the federal Treasury Board, Lagassé said, pointing to another defence agency that operates independently.

"Based on how Defence Construction Canada operates, DIA as a Crown could be the contracting agent for [the Department of National Defence and Canadian Armed Forces], which would slim down the number of actors involved.

However, that also means that fewer ministers would have their say over major projects involving large amounts of taxpayer money.

For the Canadian Armed Forces, the attraction of dealing with a Crown corporation for its equipment rests in the possibility that what it orders could arrive faster. But on the flip side, there's going to have to be some measure of guarantee that the military's technical requirements are met.

The legislation and later regulations could provide mechanisms to ensure that the technical requirements play a significant part in procurements decisions, Lagassé said.

But if DIA also has a mandate to grow the defence industrial base and foster sovereign capabilities, tensions may emerge.

Since Crown corporations operate at distance from the federal government, there are questions about accountability and transparency that will have to be addressed, Lagassé said.

There might be less internal oversight, but that remains one of the main obstacles involved in speeding up the process, he said.

The DIA could nonetheless commit to significant transparency and the CEO could still appear before parliamentary committee. Ministers would still have to answer for the corporation's activities in Parliament, but they would not be as directly accountable and could use that to deflect difficult questions.

Prime Minister Mark Carney made speeding up defence procurement an important campaign promise in the 2025 election.

When the first bill to formally create the DIA was tabled earlier this year it gave the new agency sweeping powers.

For decades, the federal government could use four exceptions to suspend the normal procurement process.

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In the spring, the government proposed to allow up to 14 exceptions, including procurements of national interest. It also made economic security a key pillar of the DIA mandate.

How those measures will be reflected in the Crown corporation and whether it will have even greater authority is unclear.

Both Defence Minister David McGuinty and Secretary of State for Defence Procurement Stephen Fuhr are scheduled to hold a media availability on Tuesday to answer questions.