Mission streamline: Ottawa launches long-awaited new Defence Investment Agency

Canada has committed to increase its defence spending, first to 2% of its gross national product (GDP) by 2025-26, and to 5% of GDP by 2035 to meet the NATO Defence Investment Pledge. This significant increase in defence spending has amplified the importance of a longstanding objective of successive Canadian governments to improve the country’s defence procurement system, which has been criticized for years as slow, cumbersome and inefficient.

On October 2, 2025, Prime Minister Mark Carney officially announced the creation of the Defence Investment Agency (DIA)¹ to modernize and streamline Canada’s defence procurement system. By centralizing defence procurement expertise in the DIA, the federal government seeks to expedite its defence procurement processes while prioritizing domestic industrial benefits to help grow the Canadian economy.

What we know so far about the Defence Investment Agency

What is the Defence Investment Agency?

The DIA is a new “Special Operating Agency” within Public Services and Procurement Canada (PSPC) comprised of individuals from PSPC, the Department of National Defence (DND) and the Canadian Armed Forces, with the intent of ensuring closer and more efficient collaboration among the three governmental bodies responsible for Canadian defence procurement. 

The DIA will be under the overall responsibility of the Minister of Government Transformation, Public Works and Procurement, the Joël Lightbound, will be led by the Stephen Fuhr, Secretary of State responsible for Defence Procurement, and oversight of its day-to-day operations will be conducted by Doug Guzman, as chief executive officer.

The DIA is scheduled to officially begin operations in fall 2025. This initial phase of the DIA will focus on building its organizational foundation by onboarding personnel, deploying integrated procurement teams, and establishing internal processes. In addition, the DIA will, in this initial phase, focus on certain initial defence procurement mandates, including the Canadian Patrol Submarine Project and others yet to be confirmed by the federal government. While the full extent of the DIA’s mandate remains unclear at this moment, it is expected that the DIA’s role in defence procurement will evolve and expand over time as new procurement models and tools are developed and implemented by the DIA.

Mandate and Powers

The DIA’s mandate is to modernize, simplify and make Canadian defence procurement more efficient, with a focus on rearming, rebuilding and reinvesting in the Canadian Armed Forces.

According to official government statements released to date, the DIA will endeavour to improve the efficiency of Canada’s defence procurement system by:

• Centralizing defence procurement expertise under the DIA.
• Reducing red tape and administrative delays, providing industry with greater clarity and certainty.
• Streamlining and accelerating contract approvals by centralizing the review and approval process.
• Delivering timely capabilities to the Canadian Armed Forces and Coast Guard.
• Driving innovation and industrial growth within Canada.
• Ensuring earlier engagement between the Canadian Armed Forces and Canada’s defence industry so operational needs are communicated and more accurate industry assessments and timelines can be provided.
• Strengthening strategic partnerships with Canadian industry and international allies such as the United Kingdom, France and Australia.

For now, it does not seem that the functions attributed to the DND, the Canadian Armed Forces, Innovation, Science and Economic Development Canada (ISED), and PSPC for defence procurement will be brought under the DIA’s exclusive purview. The federal government appears instead to favour incremental change, rather than a sudden and complete overhaul. In this regard, it is noteworthy there has so far been no indication from the federal government of any plans to table legislation to modify the existing defence procurement framework.

Initially, the DIA will be responsible for procurements valued at over $100 million, although all procurements related to defence, security, and the Coast Guard may receive input from the DIA regardless of the stage in the procurement process or the authorities involved. Such possible broader involvement in defence procurement may signal plans for the DIA to eventually have broader authority and oversight over all matters related to defence procurement in Canada.

Given the DIA’s initially limited mandate, however, PSPC, DND, and ISED will continue to play a significant role in defence procurement at least in the short term. Though, based on the federal government’s official statements, it envisions the DIA as being the nexus of its new defence procurement strategy in the longer term.

Guiding Principles of the Defence Investment Agency

The DIA will be guided by what it calls the FASTER principle, which is as follows:

• Flexible: a range of procurement options and pathways will be used.
• Agile: the DIA will work with industry to identify innovative and timely solutions.
• Strategic: the DIA will encourage early decision-making to allow broader Canadian participation in international partnerships.
• Trusted: long-term partnerships will be cultivated with trusted suppliers, partners and allies.
• Export-enabling: the DIA will consider export potential from the outset of procurement decisions.
• Resilient: Canada’s defence production capacity will be strengthened by prioritizing supply chain redundancy.

In his announcement regarding the creation of the DIA, Prime Minister Carney specifically stated that the DIA will tie procurement more strategically to domestic industrial benefits by leveraging procurement to create new jobs and boost the Canadian economy. This, combined with the introduction in early September of the “Buy Canadian Policy,” clearly indicates the federal government not only hopes to streamline the defence procurement process to strengthen the Canadian Armed Forces, but also intends to deliver a boost to Canada’s domestic defence industry by prioritizing Canadian suppliers to generate economic growth for Canada. It remains to be seen how the federal government will implement these objectives while aligning with the existing public procurement framework.

Stakeholders operating in the defence and security industry in Canada, or businesses interested in entering it, should keep an eye on developments and announcements regarding the DIA.

The authors would like to thank Nathan De Tracey, articling student, for his contribution to preparing this legal update.