National Defence Committee on May 27th, 2026

[Voices]

Oh, oh!

[The Chair, Liberal, Charles Sousa]

I will turn the floor over to you, sir.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you, Mr. Chair.

I want to thank our witnesses for coming today.

I apologize for showing up only at the end. I had to speak to Bill C-31 in the House. I wanted to talk about the Defence Investment Agency act and the changes to the Defence Production Act, which does provide, if you have a chance to read it through, some powers to the minister that will limit competition on bids. It will give the minister power to reduce the ability of some companies.... They can be disqualified by the minister without giving any reasons. The minister is essentially given immunity from any possible litigation or challenges as to why he would disqualify someone or rig the competition process by moving all sorts of exemptions. It's one thing to use a national security exemption with proper reasoning, because of the time we're in, with conflict and great operational requirements; it's quite another to disqualify companies because they don't want them to bid. It's two different streams that we have to be concerned about.

First and foremost, have any of our witnesses had a chance to read division 16 of the budget implementation act, number two, which is Bill C-31?

[Mike Mueller]

At a very high level, we've looked through it, yes.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Okay, Mr. Mueller.

I encourage all of you to read it in detail, have your lawyers go through it and be prepared to appear at the finance committee. If we can split this off and bring it to defence, it would be a better idea when it comes to committee study.

One thing that we've always been critical of is.... We need certainty in procurement, and the best way to get certainty is to sign contracts.

Mr. Ziadé, can you speak about how many of your member companies have had contracts signed in the last 12 months from this government?

[Paul Ziadé]

We represent a wide range of companies. Most of them are indeed SMEs. We have not collected that data yet. We are still a very small and nimble organization, but if that is of interest, we would be happy to collect that and report back to you.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Mr. Mueller, can you report on how many contracts have been signed by the government in the aerospace industry?

[Mike Mueller]

I wouldn't have an exact number, Mr. Chair, but I know there have been some. There have been other announcements in which there are also lots of negotiations going on.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

It looks as though we heard another announcement today at CANSEC. There is another negotiation but no actual contracts. We don't know how much is being spent. We don't know what is going to be delivered as to AWACS—something we all support getting. I'm rather agnostic on what platform we use, but let's just get it bought, and that's something the air force has identified that we need.

On the SME side, in my time on this file I keep hearing from our entrepreneurs, our innovators, about how tough it is to do business with the government.

Mr. Ziadé, can you provide us with some examples and some solutions on how we can ensure that SMEs are getting opportunities to bid, build and benefit and bring their innovations to the forefront to benefit our Canadian Armed Forces?

[Paul Ziadé]

Yes, sure.

We've talked about ITBs. I've heard about reforms today. I have not yet had a chance to digest that. I want to stress that ITBs are only a small part of a defence industrial strategy. The best way that we can support our SMEs is definitely to provide that strong signal and certainty. That includes contracts for relatively early stage companies. We can find ways to contract with innovative companies with enough off-ramps for the government in case they do not meet certain expectations or validate their technology along the way.

Also, there's denoting Canadian SMEs as some of these Canadian strategic partners that the DIS suggests will be announced sometime this summer. It cannot be just foreign multinationals with a presence here; we need Canadian companies as well.

As I've mentioned before, we need to lower that DIA threshold as well, because in this 21st-century warfare, we cannot go through these 10-year procurement cycles. These things need to happen in weeks and months. We need access to the DIA, which is supposed to accelerate defence procurement. Right now, as far as we know, the threshold is $100 million. That needs to be reduced for SMEs to meaningfully participate.

[The Chair, Liberal, Charles Sousa]

Thank you very much.

Ms. McKelvie, welcome to our committee. You have up to five minutes.

[Jennifer McKelvie, Liberal, Ajax, ON]

Thank you, Mr. Chair. Thank you for welcoming me here today.

My questions are for Mr. Asselin.

Perhaps it's no surprise, but I am also on the science committee. We are looking at dual-use research there as well. As you're aware, central to the government's defence research strategy will be BOREALIS. BOREALIS is the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science. I was certainly very excited to see in budget 2025 that there was an investment of $68.2 million over three years to accelerate delivery of advanced technology, align federal innovation and connect partners from government, academia and industry.

My question for you is, can you speak to the state of readiness and expertise of our Canadian academic community and their ability to accelerate innovation and drive dual-use research?

[Robert Asselin]

On BOREALIS, to be absolutely frank with the members of the committee, so far it's a concept. It's an empty shell. There's nothing there. I would even say it's pretty underwhelming in terms of what has been shown to date. It has been decided that it would be under DRDC, which is the federal lab inside defence. The early signs are that nothing will really be different from before. It's a new entity channelling current programs. I would urge members of this committee to follow BOREALIS's implementation very closely because so far, for the leading research universities, it's very disappointing in terms of the interface and the promise that was communicated. The concept was good. It could have been a Canadian DARPA, or a version of DARPA, but so far it's not, so I want to raise that flag.

In terms of our capabilities, I've spoken to the data, what we represent in terms of the capabilities in the research community. As a country, we have the chance to have this expertise and this intellectual capital. Today's discussion has been focused on procurement, the end of contracts and how that works, but we're not going to have SMEs, we're not going to have companies in defence, if we don't have the talent and the research and development that will allow these companies to be competitive globally.

Again, I would urge the committee to think about the foundations of success for R and D-intensive sectors that represent the defence industry and really focus on the investments that will make this happen. I think we need to build interfaces and pathways that don't exist right now between our universities and the defence department. That is what I'm working on with my group.

[Jennifer McKelvie, Liberal, Ajax, ON]

Great. I absolutely agree. We're very much in early days, and it is exciting to see the academic community wanting to step up and come to the table around that.

One of the things under way, though, is the launch of the defence innovation secure hubs. It has a strong focus on AI, quantum and cybersecurity, among other things. Can you speak to how past federal investments that we've made in the pan-Canadian AI strategy, in quantum, have really ensured that our researchers and our leaders internationally are ready to step up in BOREALIS, step up with the DISH strategy and really work on those collaborations with our defence industry?

[Robert Asselin]

Thank you for the question.

Not to be too discouraging, but to give a sense of scale, the DISH that have been announced are $50 million over two years, and there have been two or three announced. In a scale of billions of dollars' worth of announcements, it's very small and very limited in impact.

I will also say that it's not clear at this point that they will include their best researchers from our universities. It's mostly focused on federal labs. In other words, they are scientists who already work for the government. That, for me, would be another flag.

On the level of technology readiness, these DISH are set up to be at the end—TRL 7, 8, 9 and 10—which is fine for testing and prototyping. Again, we need a pipeline to get to these technologies at the end in this defence industrial strategy. You cannot just put something at the end of the chain. You have to work upstream. I would argue that this aspect is not in the DISH right now.

[Jennifer McKelvie, Liberal, Ajax, ON]

You mentioned Canada's 5% versus the United States' 50% for research and dual use.

Can you speak to how broadly they've cast the net on that definition and maybe to how broadly we should cast that definition here?

I will note things like the Superfund sites for environmental contamination—naval bases, air force bases, and research on cancer, because it was a major outcome for military personnel. The United States has cast that net very wide in the definition of dual-use research.

What should we be doing in Canada as we embark on this early journey that we're starting around BOREALIS and others?

[Robert Asselin]

That's a great question.

As for your point, DARPA in the U.S. funds biotechnology that led to the development of RNA vaccines that saved us in the last pandemic.

It's a very broad view of technology development. I would urge this committee to really focus on that.

This is what we're trying to do as a country: to develop technology that will be Canadian-owned and Canadian-developed. It will come from our talent, our researchers, transfer into our companies, be grown here and scaled here. If we don't connect all of these things together.... Sure, we can change the rules of procurement, but at the end, I don't think we'll be able to scale our companies the way we want.

I would really agree with the premise of your question that we have to have a broad portfolio of research. It's not just defence or military use. It's broad use. I would say, in credit to the government, that the 10 capabilities they have put forward seem to be broad enough to have a broad portfolio.

[The Chair, Liberal, Charles Sousa]

Thank you, sir.

Thank you, Ms. McKelvie.

We're going to our last round of questions. I want to give us about five minutes at the end to talk about something else.

I'll go to Mr. Kibble, Ms. Romanado, Monsieur Ste-Marie and then Mr. Bezan at the end. Try to keep it tight.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Mr. Ziadé, you spoke earlier about the need for stability and decision-making to support and spur on innovation and production. I heard that comment.

Right now, the Liberals are still standing up the Defence Investment Agency and the defence industrial strategy, but as we've heard in testimony, this is without embedded strategic threat assessments in those plans, without consideration of prekinetic threats that we're facing and, indeed, without a national defence strategy—surprisingly enough—that would guide economic, strategic and efficient procurement planning.

In your opinion, in the context of stability, is this harming the stability?

We have this laundry list of shopping that doesn't really seem to have a plan. Is that impacting your decision-making within the industries that you represent?

[Paul Ziadé]

We definitely need to move a lot faster. Are you talking about stability with the United States or...?

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

We have a laundry list of things that we're buying, but we don't have a national defence strategy. We haven't considered prekinetic threats, so we're going to follow this way for a while, and then that way. We don't have that overall guidance. You said you needed stability, and I think that would bring stability.

Can you comment, please?

[Paul Ziadé]

Well, I agree with you that we are in a state of prekinetic threat. I think most Canadians do not realize how real the danger is.

From the stability perspective, we need very strong signals from the government and a sense of urgency. All of my colleagues here would probably agree with that.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Mr. Mueller, would you comment?

[Mike Mueller]

When I was at this committee about a year ago, I was arguing for a national defence strategy that identifies the threat and then informs a defence industrial strategy, which is then operationalized, perhaps through a defence investment agency.

The government has done it the other way. They created the Defence Investment Agency and then the strategy. I do think that a defence strategy for identifying the threats is still a missing piece.

I'm very encouraged by where the government is going on this. We're going in the right direction, but that threat piece to inform the sovereign [Inaudible—Editor] is required.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

I agree with you that we wouldn't be able to go anywhere without that.

Ms. Lussier, would you agree as well that it's a critical component?