Canadian Procurement Pulse: Your Weekly Contractor Insider

June 14-21, 2025

Canada just signed its declaration of independence from US defence suppliers. The new Canada-EU defence partnership opens access to €150 billion in European procurement opportunities, while new steel policies slam the door on non-allied suppliers. Our analysis of $120B in Canadian defence spending over the past five years reveals exactly where US dominance can be challenged—and where it's practically unbreakable.

Note on Data: We analyzed the Government’s Open Data catalogue, which is limited by the quality of what is entered. As a result, any issues or variances with reality can be blamed on bad data entry by the government ;). Directionally, it is correct. 

The €150 Billion Game Changer

Canada-EU Defence Partnership Signed Source: CTV News | Date: June 16, 2025

What's Happening: Canada signed a landmark security and defence partnership with the EU on June 23, 2025, during the Brussels summit. The agreement provides Canadian contractors access to the €150 billion Security Action for Europe (SAFE) program and enables participation in the ReArm Europe initiative for joint defence projects.

What It Means For You:

• Massive market access: €150B in European defence procurement opportunities now available to Canadian contractors 

• Technology transfer pathways: Joint defence industrial cooperation agreements create access to advanced European technologies 

• Supply chain diversification: Reduces dependency on US suppliers while opening European alternatives 

• Strategic positioning: Canada becomes bridge between North American and European defence markets

We are going to be adding European opportunities to the Publicus platform in October (or sooner), as this is a great market opportunity for Canadian contractors.

Steel Policy Reinforces the Shift Source: Government of Canada | Date: June 19, 2025

What's Happening: Starting June 30, 2025, federal procurement access is limited to "suppliers from Canada and from our reliable trading partners that provide reciprocal access to suppliers from Canada through trade agreements." New tariff rate quotas cap steel imports from non-free trade agreement countries at 100% of 2024 levels.

What It Means For You: 

• Compliance requirements: Contractors must verify material sourcing and country of origin for all federal contracts 

• Canadian steel advantage: Domestic producers gain significant competitive edge in government-funded infrastructure

• Non-allied suppliers blocked: Countries without reciprocal trade agreements face effective procurement ban

What’s Really Happening?

This is tacit confirmation that the trade barriers we have with America around Steel and Aluminum are the first casualty of an upcoming trade agreement. This signals a deal is incoming, as well as where Carney is making sacrifices. I view this as a win - I don’t think protecting our Steel/Aluminum industry, or even Dairy/Eggs for that matter are worth a trade war with the US. I get we didn’t start it, but we obviously will have to be the bigger people and end it.

The Canadian Defence Market Reality: US Dependence and Displacement Opportunities

Our analysis of $120B CAD in Canadian government defence spending over the past five years reveals exactly how dependent Canada has become on foreign suppliers—and where the Canada-EU partnership creates displacement opportunities.

Massive US Capture of Canadian Government Contracts

Defence Equipment & Vehicles ($15.05B CAD over 5 years): US Monopoly in Canadian Procurement 

• 96.1% of Canadian government spending goes to General Dynamics Land Systems-Canada Corporation 

• Only 3.7% stays with Canadian companies despite 1,667 Canadian contracts awarded 

• Hundreds of Canadian vendors competing for scraps while one US company dominates 

• Displacement opportunity: $14.5B CAD over 5 years in Canadian government spending currently flowing to US suppliers

Military Aircraft & Systems ($7.10B CAD over 5 years): US Control of Canadian Procurement 

• 94.3% of Canadian defence spending goes to F-35 Program (62.1%) and Bell Textron (32.1%) 

• Just 5.5% remains with Canadian companies like Bombardier Inc. 

• Displacement opportunity: $6.7B CAD over 5 years in Canadian government contracts currently controlled by foreign suppliers

European Suppliers Already Established in Canadian Procurement

Aircraft & Aviation Systems ($8.48B CAD over 5 years): EU Companies Winning Canadian Contracts 

• 74% of Canadian government spending already goes to EU companies (Airbus, Leonardo UK) 

• 22.4% captured by US suppliers represents potential displacement target 

• Canadian companies hold just 2.7% of our own government's spending 

• Partnership advantage: EU suppliers already proven in Canadian procurement, creating pathways for reciprocal access

Canadian Strengths in Domestic Procurement: Export Platforms for EU Markets

Training Systems & Services ($13.74B CAD over 5 years): Canadian Dominance at Home 

• 96.2% of Canadian government spending stays with Canadian companies 

• SkyAlyne Canada controls 81.7% ($11.2B CAD) of domestic training procurement 

• Strong Canadian depth: Calian Ltd dominates this market successfully 

• EU market opportunity: Proven domestic capabilities create platform for European expansion through SAFE program

Ships & Marine Vessels ($9.79B CAD over 5 years): Canadian-EU Partnership Already Working 

• 68.2% Canadian, 31.7% EU suppliers winning Canadian government contracts 

• Zero US presence in Canadian marine procurement 

• Canadian leaders dominating: Chantier Davie (41.1%), Irving Shipbuilding (13.5%), Victoria Shipyards (13.0%) 

• Existing EU relationship: Babcock Canada Inc (a European subsidiary). (31.5%) demonstrates successful Canada-EU collaboration model

Displacement and Access Opportunities

The Canada-EU partnership creates a two-way opportunity for Canadian contractors:

Displacing US suppliers in Canadian procurement: The data shows $21.2B CAD over five years in Canadian government spending currently flowing to US companies across defence equipment ($14.5B CAD) and military aircraft ($6.7B CAD). EU alternatives through the SAFE program could redirect this spending to European suppliers, potentially including Canadian companies as subcontractors or partners.

Accessing EU markets with Canadian strengths: Canada's 96.2% dominance in training systems ($13.74B CAD over 5 years domestically) and 68.2% control of marine vessels ($9.79B CAD over 5 years) represent exportable capabilities. The partnership provides access to €150B in European procurement where these proven Canadian competencies could compete.

Leveraging existing EU relationships: European companies already capture 74% of Canadian aircraft systems procurement ($8.48B CAD over 5 years), demonstrating established technical compatibility and relationships that facilitate two-way market access.

The Contract Size Reality

The data reveals how foreign suppliers capture Canadian government spending through different contract strategies over the past five years:

Key insights: 

• US contractors capture 58x larger average contracts from Canadian government than domestic companies 

• $21.2B CAD over 5 years in Canadian defence spending flows to US suppliers

• Canadian companies average $706K CAD contracts while competing against billion-dollar foreign integrators

The Reality Behind Canadian "Defence Champions"

Canadian companies that dominate domestic government procurement represent a more complex picture than simple competitive advantage:

• SkyAlyne Canada: $11.2B CAD in training contracts—largely domestic necessity rather than exportable competitive advantage 

• Irving Shipbuilding: $8.0B CAD in naval contracts—geographic captive market (ships built where they're based) 

• Vancouver Shipyards: $5.8B CAD in contracts—West Coast shipbuilding monopoly by necessity 

• CAE Military Aviation: $4.5B CAD in training systems—genuinely positioned for global expansion 

• Chantier Davie Canada: $4.0B CAD in contracts—regional shipbuilding protected by logistics

The hard truth: Most Canadian "dominance" in training and shipbuilding reflects geographic necessity rather than competitive superiority. You can't outsource naval construction to foreign shipyards, and military training largely requires domestic delivery for security reasons.

The real opportunity: Canada's defence spending should stimulate a new generation of innovative companies like Kraken Robotics and other defense tech upstarts that can compete globally on merit, not geographic protection. While established players serve essential domestic functions, breakthrough growth requires companies building exportable technologies and capabilities.

The Bottom Line

The data reveals Canada's striking dependence on foreign suppliers for its own defence procurement. Over the past five years, US companies captured $21.2 billion CAD from Canadian government contracts, while European firms took another $6.3 billion CAD.

The Canada-EU partnership creates opportunities for displacing US suppliers in categories like defence equipment ($14.5B CAD over 5 years) and military aircraft ($6.7B CAD over 5 years) while providing access to €150B in European markets. However, Canada's domestic "champions" largely reflect geographic necessity rather than competitive advantage.

The real opportunity lies in using new defence spending to stimulate innovative Canadian companies like Kraken Robotics that can compete globally on merit. While established players serve essential domestic functions, breakthrough growth requires developing exportable technologies and capabilities rather than assuming shipbuilding and training dominance translates to international success.

The partnership's greatest value may be providing market access for Canada's next generation of defence tech innovators, not its current geographic monopolists.

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