# Canada Reforms Defence Procurement

Canada has pledged to increase defence spending to 5% of GDP by 2035 and allocated more than $63 billion for 2025–2026, while procurement capacity and complex approvals could slow the conversion of that funding into contracts. The new Defence Investment Agency and procurement reforms may open opportunities for Canadian suppliers; the government has stated that 70% of additional defence acquisitions should go to Canadian companies. A separate major procurement item is the planned acquisition of 12 submarines from a German-Norwegian consortium, described as a multibillion-dollar procurement for summer 2026, with no exact value or contract number provided.

- The 70% domestic-sourcing goal gives Canadian contractors a clear strategic signal; suppliers should assess how their capabilities and domestic supply chains align with upcoming defence acquisitions.
- Procurement capacity and approval complexity remain potential schedule risks. Contractors should account for longer lead times and staffing needs when planning bids and delivery schedules.
- The 2025–2026 allocation is a stated funding level, not a guarantee that all funds will be converted promptly into awards. Businesses should factor procurement pace into pipeline and cash-flow planning.
- The submarine procurement is a significant opportunity for the selected consortium and potential suppliers in its industrial base; the signal does not provide an exact contract value or number.

**Jurisdictions:** international
**Industries:** Defense & Military
**Topics:** Grants & Funding
**Published:** October 26, 2026

### Government Entities
- Department of National Defence (DND)
- Public Services and Procurement Canada (PSPC)
- Defence Investment Agency (DIA)
- Innovation, Science and Economic Development Canada (ISED)

### Key Quotes
> it’s difficult to assess pace because the scope of this project is so large.
> — Claire Sturgess, Canada Head of Industrials & CME Investment Banking at RBC Capital Markets

### Sources
- [No spend in sight: Ottawa must pick up the pace on defence procurement reform  - The Globe and Mail](https://www.theglobeandmail.com/business/rob-magazine/article-no-spend-in-sight-ottawa-must-pick-up-the-pace-on-defence-procurement) - The Globe and Mail