Strengthening Canada's Defence Sector Act

This bill, called the Strengthening Canada's Defence Sector Act, makes significant changes to how Canada buys, builds, and invests in defence and national security capabilities. It has two main parts. First, it creates a new federal corporation called the Canadian Corporation for Defence Investment (which may also operate as the "Defence Investment Agency"). This corporation's job is to handle production, procurement, and investment activities for the benefit of the Canadian Forces, the Department of National Defence, or allied governments. It will be run by an Executive Chairperson and CEO appointed by the government, can make loans, advance payments, loan guarantees, and buy or sell shares in companies, and has access to up to one billion dollars from public funds for these purposes. The bill also creates a new position of Associate Minister of National Defence for Procurement.

Second, the bill significantly rewrites the existing Defence Production Act (renaming it the Defence and National Security Production and Procurement Act) to expand its scope beyond traditional defence supplies to also cover national security, including economic security, and services related to both defence and security. It gives the responsible Minister broader authority to acquire supplies and services for any federal department, stockpile goods not just for Canada but for allied countries' defence and security needs, and engage in financial transactions such as loans, advance payments, and guarantees to support investment in defence and security sectors. It also sets out new rules for government procurement contracts in this area, generally requiring a competitive bidding process but listing numerous exceptions, such as urgent operational needs, national security concerns, sole-source situations, or research and development contracts. The Minister can exclude bidders deemed a risk to national defence or security without having to give reasons, and a new system of financial penalties is created for companies that violate related regulations.

Finally, the bill includes consequential changes to other laws such as the Access to Information Act, the Financial Administration Act, and the Customs Tariff to reflect these new structures, and it requires a review of how well these changes are working within five years of being brought into force.

This bill creates the Canadian Corporation for Defence Investment (also operating as the Defence Investment Agency) and amends the Defence Production Act (renamed the Defence and National Security Production and Procurement Act) to expand ministerial powers over defence and national security procurement, stockpiling, financing, and investment.

• New corporation and leadership — the Corporation is run by a board including an Executive Chairperson and Chief Executive Officer, both appointed by the Governor in Council (Cabinet) to serve "during pleasure" (removable at will), plus up to two other directors and ex officio deputy ministers; it is a Crown agent with the legal capacity of a natural person.
• Financial powers — the Corporation and the Minister of Public Works and Government Services may each make loans, advance payments, guarantees, loan/credit insurance, and other financial arrangements for defence and national-security purposes, drawing on the Consolidated Revenue Fund up to $1 billion at a time (a cap changeable by a future appropriation act, not this bill).
• Ministerial direction — the Minister may direct the Corporation to carry out or refrain from specific activities, and the Corporation is legally deemed to be acting in its own best interests whenever it follows such direction.
• Procurement exceptions — the Minister may bypass competitive procurement for reasons including urgent operational need, national security, economic security, sensitive technology, or single-supplier situations, and may exclude any person from a procurement process without giving reasons.
• Stockpiling and designation powers — the Governor in Council may designate goods for stockpiling for national defence, national security (including "economic security"), or the security of an "associated government," a term itself expandable by Cabinet to include any country it designates.
• Enforcement and rule-making left to regulation — violations of the Act or its regulations can draw fines up to $25,000 (and up to 12 months imprisonment) or administrative monetary penalties up to $2,000,000, with the detailed penalty scheme, procurement procedures, and stockpiling rules to be set later by regulation rather than in this text; the only built-in oversight is a review of the Act's operation within five years, with a report tabled in Parliament but not subject to a vote.