The Government of Canada last week took a first significant step to remedy the long-standing problems associated with

defence procurement in this country by creating an agency to oversee it. This, however, is not a silver bullet and there is much more work to be done.

The creation of yet another agency within an already oversized and arguably inefficient public service will no doubt cause some to scoff at whether this is a serious or responsible decision. Although some skepticism is understandable, this is a significant step forward for Canada and we need to give it a chance to deliver results.

The problems with defence spending in Canada are so deeply embedded into the machinery of government that fixing them will take a concerted effort over several years. That doesn’t mean Canadians shouldn’t expect and ultimately see measurable progress sooner rather than later.

At the risk of oversimplifying the complexity of the problems with the legacy system, there are three primary contributors to the inefficiency that has led to this recent decision:

  • Diffuse and often competing authorities and responsibilities across disparate agencies of government;
  • Cumbersome and Byzantine approval and challenge mechanisms that promote obstruction at the expense of delivery;
  • Exorbitant, excessively detailed and painfully slow military requirements processes.

All these obstacles must be attacked with equal vigour in order for this new agency to have even a modicum of potential success.

I am optimistic that the initial step to create an independent agency will go a long way toward addressing the first of the three problems above. Even the most enthusiastic and competent leadership will have only limited success without a concerted effort to tackle the other two issues.

Beyond just fixing the delivery of new capabilities for the Canadian Armed Forces (CAF) so that it gets the right equipment when it needs it, the government is also committed to investing in the technologies, innovation, domestic production and resilience that are needed in the defence sector.

We should strive to look after our own needs where possible and become leaders amongst our allies in those sectors where we already have, or could create, capacity, competency and competitive advantage. This is where the real opportunities lie.

Naming it the Defence Investment Agency is not by accident and it reflects the intent of the government and the underlying opportunity for growth of the Canadian economy in a sector that has heretofore been undervalued and under-resourced.

Furthermore, appointing Doug Guzman as the inaugural chief executive, someone from the private sector with a background in banking, is a decision that I applaud. The perspectives of an outsider to the traditional machinery of government will hopefully challenge the status quo and bring new and innovative ideas.

Concurrent with the recent commitments to increase spending and stimulate the Canadian industry, there appears to be a palpable shift of attitude in key financial sectors in Canada.

Specifically, I sense a reversal of the longstanding exclusion of defence and security from lending or investment instruments. This is a positive signal that the private sector is recognizing potential opportunity in the defence sector. Whether this shift in mindset is ideological or simply practical is immaterial as long as we start to acknowledge that defence and security companies in Canada are potential winners that deserve our support.

Beyond the shift in attitude, there are two important policy changes necessary for this opportunity to be fully realized, and they both involve elements of protection.

The first relates to the need for a safety net of sorts that protects those who are prepared to assume the risk in bringing capabilities to the market that would have traditionally been underwritten by direct government investment in the past. This is where government can easily generate a significant multiplier from private capital with a relatively small backstop.

Secondly, we must do more to protect our intellectual property. We need to be much more ruthless and less naive about the risks of foreign investment and/or takeovers, even for companies that might not be directly in the sector, but whose protection is in the national interest.

I don’t know Guzman, but by all accounts he is extremely capable. I respect his willingness to take on such an important responsibility. I fear, however, that his competence will only get him so far. He will need to be ruthless, innovative and steadfast if he has any hope of delivering on the government’s intent. He will also need the government to aggressively tackle the two other major obstacles to success. This is my view of a “no fail” mission. The future of our way of life is in the balance.

  • Mark Norman: It’s time Canadians paid attention to the opportunities in the defence sector
  • Michael Wernick: Canada needs a Defence and Security Tax to meet its new NATO commitments head on

Mark Norman is a retired vice-admiral who commanded Canada’s Navy and was vice-chief of Defence. He advises several Canadian defence companies.