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December 3, 2020 | Local, Aerospace, Naval, Land, C4ISR, Security

After agreeing to $2B in deals with U.S.-based defence companies, Liberals ask DND for list of Canadian firms to quickly buy from

After agreeing to $2B in deals with U.S.-based defence companies, Liberals ask DND for list of Canadian firms to quickly buy from

David Pugliese • Ottawa Citizen

Dec 03, 2020

Companies must be based in Canada and the work has to be completed relatively quickly, creating or maintaining domestic jobs.

After committing to spend more than $2 billion with American companies, the Liberal government wants to give a major boost to homegrown defence firms by moving ahead on projects that can purchase equipment for the Canadian military quickly from domestic companies to either create or shore up jobs.

Department of National Defence officials began looking in late April at options to provide support to the defence industry as the new coronavirus pandemic rocked the economy. DND and the government hoped the fast-tracked purchases would help Canada's economic recovery.

But so far, the four major purchases over the last several months for the Canadian military saw the Liberal government make major commitments with U.S.-based companies for work that will be done almost entirely in America and create or support hundreds of U.S. jobs. That includes the acquisition of new surveillance aircraft for Canadian special forces, the purchase of new systems and missiles for the air force's CF-18s, missiles for the navy and parts and equipment for C-17 transport planes.

The particular equipment ordered isn't built in Canada. In some cases, the U.S. firms receiving the work are exempt from the government's requirement to match the value of the contracts with the reciprocal purchasing of services or supplies from Canadian companies.

Now, the government has ordered DND officials to draw up lists of equipment that can be bought from Canadian firms. Companies must be based in Canada and the work has to be completed relatively quickly, creating or maintaining domestic jobs.

DND spokesman Dan Le Bouthillier confirmed options are being examined to help minimize the impact of COVID-19 on the defence industry. “We are looking at ongoing procurement projects to determine what we may be able to prioritize in order to ensure our defence industry partners are supported,” he said. “This is ongoing at this time, though no decisions have been made at this point.”

But Tamara Lorincz, a peace activist and PhD candidate in Global Governance at the Balsillie School for International Affairs, says many more jobs could be created in Canada if the money was directed into non-defence sectors of the economy.

She pointed to the 2009 U.S. study by University of Massachusetts, which examined the impact of spending $1 billion on both military and non-military areas. The non-military areas included clean energy, health care, and education, as well as for tax cuts which produce increased levels of personal consumption. The study concluded substantially more jobs were created by non-military sectors.

Lorincz noted that there were no comparable independent studies which have looked at the Canadian situation.

Lorincz and various peace groups are also questioning the Liberal government's plans to spend $19 billion on new fighter jets in the coming years. The money should instead go towards programs like national pharmacare or child care, she added.

Lorincz noted it costs $40,000 an hour to operate a F-35, one of the fighter jets being considered by the Liberals. That amount is close to the yearly salary of a long-term care facility employee, she added.

Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, said the country's defence industry can play an important role in the federal government's COVID-19 economic recovery plan.

The association has recommended to government that it accelerate military equipment project approvals, favour domestic firms as much as possible for future work, as well as focus on Canadian-based cyber firms for associated purchases as the government moves its employees to more remote work. Construction projects on bases could also provide local contractors with work, she added.

Canada's defence industry actually fared better than other economic sectors during the pandemic, Cianfarani noted. There were no significant layoffs and most firms have been able to continue operations and production. In addition, some companies switched to producing medical equipment or protective gear for use by hospital staff during the pandemic.

The Liberal government announced Monday it wants to spend up to $100 billion between 2021 and 2024 to help the economy recover from COVID-19.

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