Canada Rearms: Defence Procurement Opportunities for Foreign Companies

Canada’s defence sector is undergoing a procurement transformation. The shift is anchored by Canada’s first Defence Industrial Strategy (the “Strategy”) released in February 2026, and supported by significant public investment. This includes the $81.8 billion identified in the federal Budget 2025 to rebuild, rearm and reinvest in the Canadian Armed Forces.[1]

Over the next decade, the Strategy positions Canadian industry to take advantage of approximately $180 billion in defence procurement opportunities and $290 billion in defence-related capital investment.[2] By 2023, the Strategy is expected to generate $125 billion downstream economic benefits, including a 50% increase in upcoming defence exports, an increase in the share of defence acquisitions awarded to Canadian firms to 70% and a 240% increase in Canadian defence industry revenues.[3]

The Strategy relies on the new “Build–Partner–Buy” approach where Canada intends to:

• Build domestically in areas of existing Canadian strengths (such as shipbuilding, aerospace, space, land systems and digital technologies);
• Partner with trusted allies and global companies where Canada lacks domestic capability; and
• Buy from allies where building or partnership is not feasible, subject to conditions supporting Canadian reinvestment, jobs, domestic supply chains and sovereign control over operations.

Recent federal defence policy emphasizes faster acquisition, allied industrial partnerships, domestic production and supply-chain resilience.[4] In addition, certain defence goods are covered by Canada’s Controlled Goods Program under the Defence Production Act, which requires any business, organization or individual handling controlled items to register and pass certain security assessments. This can include items such as military equipment, firearms, vehicles, technology and any technical data related to those items. Even companies that come into momentary contact with a piece of a controlled good (e.g., painting the wing tip of a fighter jet) may be covered by the Controlled Goods Program. Investors that are seeking to acquire or partner with an entity handling ‘controlled goods’ should be cognisant of the additional regulatory requirements.

A Broader Defence for Canada

The 2025 Budget includes major commitments across the defence ecosystem, such as $10.9 billion over five years for the Department of National Defence, Canadian Armed Forces and cyber defence, $17.9 billion to expand military capabilities, $19 billion to repair and sustain capabilities and $6.2 billion to expand defence partnerships.[5] Other recent initiatives include Canada’s 2026 accession to the European Union’s Security Action for Europe (“SAFE”), allowing Canadian industry to participate in contracts with up to 80% Canadian content.[6] This includes an Arctic Security Plan backed by more than $40 billion (with over $35 billion in federal investments) to defend, build and transform Canada’s Northern region[7] and negotiations to join the NATO Innovation Sub-fund for emerging, advanced defence technologies.[8]

Under the Strategy’s third pillar, Canada also contemplates significant defence and dual-use innovation funding, including a $4 billion Defence Platform at the Business Development Bank of Canada, a $379.2 million Regional Defence Investment Initiative and $656.9 million for technology development and commercialization.[9] Recent updates to Canada’s Industrial and Technological Benefits (“ITB”) Policy require companies awarded major defence contracts to undertake Canadian business activity equal to the contract value, introducing enhanced credit multipliers to push investment toward strategic Canadian capability. The highest multipliers are reserved for establishing facilities (5x), equipment (4x), work with small and medium-sized businesses (2x), skills development (5x) and Indigenous workforce development (10x).[10]

Recent Deals Signalling the New Procurement Era

1. Lockheed Martin Canada and HENSOLDT: CMS 330 for the German Navy

In November 2025, Germany selected Lockheed Martin Canada’s Canadian Combat Management System 330 (“CMS 330”) for the German Navy surface fleet under a government-to-government contract, facilitated by the Canadian Commercial Corporation and projected to exceed $1 billion. HENSOLDT will act as Lockheed Martin Canada’s Germany-based contractor, supporting integration of the CMS 330 into select German naval platforms beginning in early 2026. This deal demonstrates how Canadian technology can anchor allied procurement while generating economic and industrial opportunities for Canadians, international partners and foreign defence suppliers.[11]

2. FLYEYE, GLADIUS and WARMATE

On May 28, 2026, Poland’s Armament Agency signed three contracts with WB Group for the delivery of more than 400 WARMATE loitering munition systems, nearly 200 FLYEYE reconnaissance systems and 12 fire units of the GLADIUS unmanned system. The deal is described as the largest procurement of such capabilities in the history of the Polish Armed Forces and across Europe. The contracts are financed through the European Union’s SAFE instrument and mark the transition to the international contract phase. The deal underscores how SAFE-funded procurement and local industrial participation are shaping allied opportunities that increasingly extend to Canada.[12]

3. Saab GlobalEye: Airborne Early Warning and Control Capability

On July 7, 2026, Canada announced that it was entering into discussions with Saab of Sweden as the preferred supplier for the Airborne Early Warning and Control capability, as part of a joint procurement project involving Canada and 10 other NATO countries. The proposed GlobalEye solution is built on the Canadian-manufactured Bombardier Global 6500 aircraft and is expected to support Canadian aerospace production, highly skilled jobs, integration opportunities and participation in global defence supply chains.[13]

4. Kongsberg Joint Strike Missiles for Canada’s Future F-35 Fleet

On July 8, 2026, Canada announced an approximately $800 million procurement from Norwegian company Kongsberg Defence & Aerospace for Joint Strike Missiles to be integrated into Canada’s future F-35 fighter aircraft fleet.[14] Canada is expected to become the sixth operator of the weapon, following Norway, Japan, Australia, the United States and Germany.[15] For foreign defence suppliers, the transaction confirms that Canada’s allied procurement opportunities will be assessed alongside ITB obligations, sustainment needs, technology integration, Canadian participation and long-term strategic value.

5. Thyssenkrupp Marine Systems: Canadian Patrol Submarine Project

In July 2026, Canada selected Germany’s Thyssenkrupp Marine Systems as the preferred supplier for the Canadian Patrol Submarine Project. The project is intended to replace Canada’s aging Victoria-class submarine fleet with up to 12 modern submarines and has been described as potentially the largest defence procurement in Canadian history, with total costs expected to be $100 billion or more when maintenance and sustainment are included.[16]

What This Means for Foreign Companies

For foreign companies, Canada has signalled that it is keen to do business in the defence sector, as a buyer, seller and partner. Canada is becoming a market where procurement success will increasingly depend on Canadian industrial participation, supply-chain integration, intellectual property strategy, financing, regulatory readiness and credible local partnerships. European companies are particularly well-placed where NATO interoperability, SAFE participation and industrial cooperation converge, especially as the European Commission has described SAFE as a defence instrument capable of providing up to €150 billion in loans for joint procurement.[17]

Capturing opportunities will require early, well-structured legal and commercial planning around ITB obligations, Canadian content, corporate structure, regulatory clearances and national security review, making Canada a market that rewards those who plan for local participation at the outset. Related foreign investment should be assessed early for Investment Canada Act (“ICA”) risk, particularly as investments into the defence industry, or industries tangential to it, may attract additional scrutiny through the national security review powers under the ICA. Foreign investors may want to submit notifications of an acquisition or formation of a new entity to the Canadian government prior to closing to allow for the 45-day review window to expire.

How Wildeboer Dellelce Can Help

Wildeboer Dellelce LLP is well-positioned to assist domestic and foreign companies, investors, lenders and advisors seeking to participate in Canada’s defence and dual-use economy. Our lawyers advise on a broad range of cross-border business transactions, including inbound investments and acquisitions, private equity and venture capital investments, joint ventures, securities and corporate finance, banking and secured lending, commercial contracts, licensing arrangements and complex multijurisdictional transaction management.

More broadly, the firm regularly advises domestic and international clients on corporate, securities, mergers & acquisitions, regulatory & compliance, financing and commercial matters in Canada and on cross-border transactions. The firm has been recognized as one of Canada’s Best Law Firms for 2026 by The Globe and Mail, recognized by the Chambers Canada 2026 Guide for Corporate/Commercial, listed in the 2026 Canadian Legal Lexpert Directory and its lawyers have been recognized by Best Lawyers in Canada. The firm works across all industries including mining, energy & natural resources, technology, financial services, industrial & consumer goods, life sciences, healthcare & pharmaceuticals, agribusiness, food & beverage, automotive, cannabis and fintech.

If you have any questions about the above or wish to request a consultation, please contact Marcus Hinkley ([email protected]), Michael Rennie ([email protected]) or Peter Volk ([email protected]). The authors gratefully acknowledge the assistance of articling student Adele Gurm and summer student Ashley Jefferies in the preparation of this update.

This update is intended as a general summary only and should not be regarded or relied upon as legal advice for any particular client or circumstance.

If you would like further information about the matters discussed in this update, or wish to discuss how they may apply to your circumstances, please contact us.

[1] Prime Minister of Canada, “Prime Minister Carney launches Canada’s first Defence Industrial Strategy to strengthen security, create prosperity, and reinforce strategic autonomy” (17 February 2026), online: Prime Minister of Canada <Prime Minister Carney launches Canada’s first Defence Industrial Strategy to strengthen security, create prosperity, and reinforce strategic autonomy | Prime Minister of Canada>.

[2] Ibid.

[3] Ibid.

[4] Government of Canada, “Our North, Strong and Free: A Renewed Vision for Canada’s Defence” (2024), online: Department of National Defence <https://www.canada.ca/en/department-national-defence/corporate/reports-publications/north-strong-free-2024.html>; Public Services and Procurement Canada, “Defence Procurement Strategy” (2024), online: Government of Canada <https://www.canada.ca/en/public-services-procurement/services/acquisitions/defence-marine/defence-procurement-strategy.html>.

[5] Government of Canada, Budget 2025: Canada Strong, “Chapter 4: Protecting Canada’s sovereignty and security” (2025), online: Department of Finance Canada <https://budget.canada.ca/2025/report-rapport/chap4-en.html>.

[6] Vanguard Canada, “McGuinty in Europe: Reinforcing NATO, deepening Arctic cooperation and expanding Canada’s defence industrial footprint” (2026), online: Vanguard Canada <https://vanguardcanada.com/mcguinty-in-europe-reinforcing-nato-deepening-arctic-cooperation-and-expanding-canadas-defence-industrial-footprint/?amp=1>.

[7] Prime Minister of Canada, “Prime Minister Carney announces ambitious new plan to defend, build, and transform the North” (March 2026), online: < Prime Minister Carney announces ambitious new plan to defend, build, and transform the North | Prime Minister of Canada>.

[8] Supra note 1.

[9] Ibid.

[10] Innovation, Science and Economic Development Canada, “Industrial and Technological Benefits” (2026), online: Government of Canada <https://ised-isde.canada.ca/site/industrial-technological-benefits/en>.

[11] HENSOLDT, “New CMS for the German Navy – Lockheed Martin Canada and HENSOLDT cooperate on harmonising the German CMS landscape” (9 December 2025), online: HENSOLDT < https://www.hensoldt.net/news/new-cms-for-the-german-navy-%E2%80%93-lockheed-martin-canada-and-hensoldt-cooperate-on-harmonising-the-german-cms-landscape >.

[12] WB Group, “GLADIUS, FLYEYE and WARMATE – The Largest Unmanned Systems Contracts Ever Signed” (2 June 2026), online: WB Group <www.wbgroup.pl/en/aktualnosci/gladius-flyeye-and-warmate-the-largest-unmanned-systems-contracts-ever-signed/>.

[13] Defence Investment Agency, “The Government of Canada selects preferred supplier for Airborne Early Warning and Control discussions” (27 May 2026), online: Government of Canada <https://www.canada.ca/en/defence-investment-agency/news/2026/05/the-government-of-canada-selects-preferred-supplier-for-airborne-early-warning-and-control-discussions.html>.

[14] Prime Minister of Canada, “Prime Minister Carney secures new defence partnerships at the 2026 NATO Summit” (8 July 2026), online: Prime Minister of Canada <https://www.pm.gc.ca/en/news/news-releases/2026/07/08/prime-minister-carney-secures-new-defence-partnerships-2026-nato>.

[15] David Cenciotti, “Canada To Become Sixth Operator Of Kongsberg Joint Strike Missile” (11 July 2026), online: The Aviationist <https://theaviationist.com/2026/07/11/canada-joint-strike-missile/>.

[16] Catherine Cullen, “Canada selects Germany’s Thyssenkrupp to build submarine fleet as it boosts NATO spending” (6 July 2026), online: CBC News <https://www.cbc.ca/news/politics/submarines-germany-canada-norway-south-korea-9.7259709>.

[17] European Commission, “SAFE: Security Action for Europe” (2025), online: European Commission <https://defence-industry-space.ec.europa.eu/eu-defence-industry/safe-security-action-europe_en>.