In March 2025, the federal government of Canada announced a substantial CAD $6 billion contract to procure an Arctic Over-the-Horizon Radar (A-OTHR) system from an Australian consortium. While this move was framed as a necessary step to bolster Canada’s military capabilities in the increasingly contested Arctic region, it has raised serious concerns among domestic stakeholders about the implications for Canadian innovation and industry.
The investment signifies more than just monetary expenditure; it points to a missed opportunity for nurturing homegrown technological advancement. Canadian companies like D-TA Systems have been at the forefront of radar and electronic defence systems since 2011, developing technologies that not only meet national security needs but are also recognised and employed by major global defence contractors, such as those working with the U.S. Air Force. The decision to opt for an offshore solution, despite the local availability of capable technology, has understandably left many in Canada’s defence and tech sectors questioning the government’s commitment to supporting domestic innovation.
Critics argue that this is not merely an isolated incident but part of a troubling trend. As global investment in domestic manufacturing rises, Canada’s procurement strategy appears increasingly misaligned. Reports indicate that billions in public funding are being directed offshore, effectively subsidising foreign labour and reinforcing non-Canadian intellectual property portfolios. Such dynamics come at a time when economic nationalism and supply-chain vulnerabilities are more pressing than ever, putting Canada at a strategic disadvantage in the long term.
The necessity for a more coherent and principled procurement strategy cannot be overstated. As noted by Michael Wernick, a former clerk of the Privy Council, government procurement has historically been tasked with achieving multiple policy objectives, including supporting emerging industries and addressing regional economic disparities. Yet, the current framework seems inadequate to meet these complex demands effectively. An approach that prioritises expedient solutions over systemic growth has belied any real measure of progress.
Jack Mintz, a leading Canadian economist, pointed out that nearly 10% of research spending is directed towards the defence and aerospace sectors. Despite this investment, Canada struggles with commercialising its research and development efforts, largely due to a federal tendency to overlook local innovations that could rival or exceed foreign solutions. This failure to capitalise on homegrown expertise could have profound consequences, as exemplified by D-TA Systems founder Dipak Roy’s metaphor of wearing flip-flops in a blizzard to describe the deal with the Australian consortium. Such choices not only undermine the capabilities of Canadian firms but also risk relegating them to subordinate roles in sectors they have historically helped to pioneer.
The government does have processes in place for due diligence, particularly within its Treasury Board. However, without seasoned business and technical expertise involved in critical decision-making, there remains a persistent risk of misallocation of public funds. The result is not just financial inefficiency but also the gradual erosion of Canada’s industrial capabilities.
As the geopolitical landscape shifts and modern technologies like artificial intelligence redefine operational paradigms, the Canadian government stands at a pivotal juncture. The recent announcement of the A-OTHR system comes alongside a CAD $420 million investment aimed at enhancing Canada’s year-round military presence in the Arctic. Prime Minister Mark Carney’s assertion underscores a determination to adapt Canada’s military strategies in response to growing external threats, particularly amid increasing tensions over Arctic interests with the United States.
For Canada to avoid being relegated to a junior partner in the high-tech global economy, a fundamental reevaluation of procurement processes is necessary. Rather than remaining a bureaucratic hurdle, procurement should be viewed as a cornerstone of national strategy, a means to create jobs, nurture intellectual property, and reinforce Canada’s standing on the world stage. This transformative approach could position Canada not only as a resilient player in Arctic sovereignty but also as a beacon of innovation in the global defence sector.
By investing wisely in domestic capabilities, Canada can not only improve its strategic posture but also foster an ecosystem of innovation that benefits both national security and the broader economy. The time for such reform is not just imminent; it is urgent.
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Source: Noah Wire Services
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