Government Operations Committee on Nov. 6th, 2025

[Marie-Hélène Gaudreau, Bloc, Laurentides—Labelle, QC]

Thank you very much, Mr. Chair.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

We're going to add a couple more interventions.

We'll go to Mrs. Block for five minutes, please.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much for the opportunity. We'll see if I can use up the five minutes.

The government announced a new policy, the buy Canada policy, which would apply to contracts given out by the federal government. How many Canadian suppliers are expected to replace suppliers from other nations with the buy Canada directive in effect? Do you have any idea of the displacement that might take place?

[Emilio Franco]

I don't have the specific numbers in front of me. On the policy that was announced back in September, the specific details of how that will be implemented are being finalized. The commitment in the announcement was by the end of November. That should be forthcoming.

I think what's important to highlight is that right now the government does most of its business with Canadian suppliers, but the opportunity through the buy Canadian policy and strategy is to look at how we support inputs, materials and the use of Canadian content in the procurements that we're conducting. One of the announcements spoke to how we can support Canadian materials—aluminum, steel, wood—by making sure that those are components of the things we're buying. We're buying from a Canadian company and looking at how that Canadian company can leverage inputs from Canada in the delivery of that work.

I think that's an important piece of that. The specific details will follow, but as I mentioned, I think the vast majority of our current contracts are with Canadian companies. This is about how we work with those Canadian companies to support more Canadian content and inputs.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much.

The national shipbuilding strategy sought to ensure that all provinces would be able to participate in the supply chain of the shipbuilding initiative. Can you tell us how that might impact what we're seeing with the new Defence Investment Agency? For example, over the last couple of years, the committee has learned that oftentimes contracts are constructed in ways that favour particular companies and exclude others. Are you contemplating what the rules may need to look like for contracting through the Defence Investment Agency to ensure that smaller companies, perhaps, continue to have the chance to seek those opportunities to procure with the Government of Canada?

[Emilio Franco]

I think there are two aspects to this. First, it's important to highlight that National Defence remains responsible for setting its requirements. It needs to determine the technical capabilities and needs of the forces. Those are articulated to the Defence Investment Agency to then determine the procurement.

The Defence Investment Agency does have a mandate—it was one of the core objectives in its announcement—to work with the Canadian industry. I would expect that, in those conversations, they're looking at how procurement can best support domestic industry, either through the prime contractors or through the broader supply chain. That will be a factor, I expect, in how they determine the procurement approach, which should ultimately result in the broader supply chain across Canada being supported through these activities.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Mr. Gasparro, go ahead, please.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Great. Thank you.

Can you get into how the primary objectives of the organization will contribute to Canada's GDP growth? What multiplier effect is expected from defence-related industrial activity?

[Dominique Blanchard]

I don't have the metrics in terms of those targets. The intention is to use procurement in support of equipping the forces as a tool or mechanism that can also support Canadian domestic industry. I don't have the metrics. We've mentioned that the agency will have to establish its own targets, and those would be good questions to be put to the DIA.

Again, from the perspective of Treasury Board Secretariat, it's only one component of what is a much larger procurement process chain.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

It's probably safe to assume that if you're streamlining waste, you're making it more efficient for large procurement. As an offshoot of infrastructure development, it will provide a positive impact to our gross domestic product. It's safe to assume it will be positive. The fact that we've attracted talent to the agency to help drive that is something that should be viewed as positive.

[Dominique Blanchard]

I would agree with you.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

How will the Defence Investment Agency, from your perspective, operationalize its goal to tie procurement to domestic industrial benefits?

We can then talk about some of the metrics that could be used in that regard.

[Dominique Blanchard]

I might turn to Emilio.

There is an industrial and technological benefits policy that is in place. The way the DIA is structured, it's going to be helpful in terms of executing on some of the commitments and requirements under the ITB policy.

Did you want to add to that, Emilio?

[Emilio Franco]

I think you hit on it, but I'll just highlight that the ITB policy requires that defence procurements over a specific threshold look at the benefits that will be created within Canada by virtue of the work. It actually requires that suppliers comply with that policy for contracts. For every dollar of contract value, there's a dollar of investment in Canada, whether it's direct industrial input, training programs or other kinds of spinoff benefits.

The key commitment here is that for every dollar we spend on the contract, benefits need to be generated for Canada in some form. That becomes a commitment from the supplier. It is tracked and managed throughout the life of the contract. I think the DIA will play a key role.

We've seen that ISED personnel will be joining the DIA to support the delivery and execution of those benefits for Canada.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

Are you comfortable that Canadian firms will benefit from these major defence contracts where appropriate?

[Emilio Franco]

That's one of the key objectives of the DIA. It is intended to work with Canadian industry to look at opportunities, and how to leverage and build our procurement process in a manner that supports work for Canadians and Canadian businesses.

One of the things that we see with this approach is that.... Canadian companies have seen, in the past, challenges with booms and busts and short-term contracts that made it difficult to build capacity and strong footholds. The agency will be looking at contract approaches—more long-term contracts and more contracts that allow for more sustained economic growth—to see what opportunities there are to drive both the delivery of equipment to the forces and the Canadian economy.

[Vince Gasparro, Liberal, Eglinton—Lawrence, ON]

I'll yield the rest of my time to my colleague.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

Is there another round?

[The Chair, Conservative, Kelly McCauley]

No. You have 20 seconds.

[Pauline Rochefort, Liberal, Nipissing—Timiskaming, ON]

I'll just make a quick comment to follow my colleague's questioning.

Regarding Mr. Guzman's background, I noted that the mandate of the agency is not just purchasing. It's also to help Canadian companies scale up, so that they can develop cutting-edge capabilities and compete globally. Mr. Guzman's background really fits that ability to help Canadian companies. In that sense, he's an excellent choice.

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Colleagues, that's it.

Witnesses, thank you for being with us.

Just very quickly, I have a question. You mentioned that Mr. Guzman would be subject to the one-year cooling off period. My understanding is that this is the general rule, unless overridden or excused by the Ethics Commissioner. Do you know if that has been the case for Mr. Guzman?

[Donnalyn McClymont]

I'm not aware. We could certainly try to follow up for you, but usually that happens bilaterally between the commissioner and the reporting public office holder directly, so we don't often have that direct information.

[The Chair, Conservative, Kelly McCauley]

If you have it, would you provide it, positive or negative?

[Donnalyn McClymont]

For sure, we can check and see what we have on our records.