As part of its 2019 election platform, the federal Liberals announced a plan for the creation of a new Crown agency that would be responsible for conducting procurements on behalf of the Department of National Defence and the Canadian Armed Forces, dubbed "Defence Procurement Canada."
Since the election, few details have been released about Defence Procurement Canada although it may have a structure to a similar Crown corporation: Defence Construction Canada.
What We Know
Earlier this year, Prime Minister Justin Trudeau sent mandate letters to the four ministers responsible for the creation of Defence Procurement Canada:
- Minister of Public Services and Procurement, Anita Anand;
- Minister of National Defence, Harjit Sajjan;
- Minister of Fisheries, Oceans and the Canadian Coast Guard, Bernadette Jordan; and
- Minister of Innovation, Science and Industry, Navdeep Bains.
The Minister of Public Service and Procurement was instructed to lead the project. Her mandate letter instructed her to ensure that Canada's biggest procurements were delivered on time and with greater transparency. Specifically, Minister Anand was told "This priority is to be developed concurrently with ongoing procurement projects and existing timelines."
Specific timelines have yet to be released with respect to the creation of Defence Procurement Canada. It is not entirely clear whether the new agency would assume responsibility for procurements that have already begun, namely the Future Fighter Capability Project and the National Shipbuilding Strategy.
What to Expect
The proposed Defence Procurement Canada is being created along side the implementation of another important policy, the United States-Mexico-Canada Agreement (USMCA). At the time of publishing, the Government of Canada has introduced Bill C-4, An Act to implement the Agreement between Canada, the United States of America and the United Mexican States. Both the United States and Mexico have already ratified the agreement.
Once the USMCA comes into force, the trade agreements applicable to Canadian procurements will change. Unlike NAFTA, the USMCA chapter for government procurement does not apply to Canada. Instead, Canada's government procurement with the United States and Mexico will fall under two trade agreements that are already in force. Procurement between Canada and the United States will be governed by the WTO Agreement on Government Procurement (AGP). Procurement between Canada and Mexico will be governed by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force at the end of 2018.
With a view to conducting more streamlined procurement processes for defence purposes, the Government of Canada may seek to conduct Defence Procurement Canada's procurements under the national security exceptions of the AGP and CPTPP. In 2019, the Government changed the regulations of the Canadian International Trade Tribunal to require it to dismiss complaints where a national security exception has been invoked by the procuring entity. This change requires complaints to be reviewed in the Federal Court where the timelines are considerably longer and the remedy does not necessarily include the correction of an unfair procurement practice. Rather, the Federal Court has the remedies available to it under judicial review including the ability to quash a contract award.
A new procurement agency with specialization in defence procurements could go a long way in improving the efficiency of important purchases by the government. However, there are currently few details. Gowling WLG will continue to provide updates on the creation of this new Crown corporation.