Ottawa defence groups praise feds’ industrial benefits policy

(Photo courtesy Canadian Forces Combat Camera / DND)

The federal government took a lot of heat earlier this year for its decision to strip billions of dollars in near-term spending out of the national defence budget.

But defence industry observers are also willing to give credit to the feds where it’s due, pointing to local firms such as Gastops as examples of Canadian military equipment suppliers that are thriving thanks to an initiative instituted by the previous Conservative regime in 2014 – the Industrial and Technological Benefits policy.

In a nutshell, the program encourages clients of the Department of National Defence – aerospace firms such as Lockheed Martin, for example – to seek out made-in-Canada technology for major projects. Procurement proposals are scored partly on their Canadian content, including how bidders plan to incorporate smaller Canadian technology suppliers into the mix.

Lockheed Martin’s relationship with Ottawa-based Gastops, which supplies sensors and maintenance equipment for the Canadian military’s C130-J Super Hercules aircraft, is a prime example of a local firm benefiting from the policy, experts say. Lockheed Martin recently announced it was investing nearly $5 million in Gastops under the ITB program to help its smaller partner continue to develop cutting-edge products.

“It’s a Canadian company winning this investment on its own merits, but Lockheed Martin is being encouraged to look for companies to make this kind of investment in by the government’s policy,” said Iain Christie, executive vice-president of the Aerospace Industries Association of Canada.

Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, echoes those sentiments.

“The Industrial and Technological Benefits program is one of the more powerful tools the government has available to incent business leaders to drive innovation in the defence industry,” she said in an e-mail to OBJ. “We are hearing from members that in recent contract awards, the amount of innovation and Canadian content – jobs in Canada – has increased from previous versions of submitted bids.”

However, Ms. Cianfarani is less pleased with the Liberals’ recent decision to defer billions of dollars in capital expenditures for defence.

“The constant shifts, whether re-profiling or lapsing funding, is harmful for the Canadian Armed Forces, industry and the government,” she said. “It adversely affects industry’s ability to plan and make investment and partnering decisions related to procurements; it makes Canada a riskier market than it needs to be.”

Mr. Christie said he’s taking a wait-and-see approach to the feds’ spending plans, noting the government is still going through a review of its defence policy.

“Defence spending is a bit of a moving target right now,” he said. “I think it’s a little bit premature to make a lot of pronouncements about government spending on defence until we’ve seen the policy review, because they have promised that will come with a plan for how spending is going to evolve over the next few years.”