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Canada is entering a new era of defence, security and industrial investment. Budget 2025: Canada Strong, with the establishment of the Defence Investment Agency and an allocation of CA$81 billion in investment in the Canadian Armed Forces, as well as the federal government’s Defence Industrial Strategy, announced in February 2026 with a projection of approximately CA$290 billion in defence-related infrastructure investment by 2035, have crystalized the dawn of this era.1
Most recently, Bill C-31, introduced by the federal government on May 6, 2026, has operationalized key aspects of the Defence Industrial Strategy through the proposed formal establishment of the Defence Investment Agency (DIA). Launched in October 2025 as a special operating agency within Public Services and Procurement Canada (PSPC), the DIA would, under Bill C-31, become a standalone statutory entity with broad procurement, financing and investment powers relating to national defence and national security.2
Key elements regarding the DIA, its framework and other related defence considerations are outlined below.
The DIA’s expanded role
The DIA currently operates as a special operating agency within Public Services and Procurement Canada (PSPC). Its mandate is to accelerate defence procurement, reduce administrative approval processes and coordinate major defence acquisitions across the government.
Bill C-31 would significantly broaden that role through the proposed Defence Investment Agency Act, which would:
- make the DIA a standalone statutory entity with its own designated Minister and Chief Executive Officer;3
- expand the Minister’s mandate beyond procurement to include production, investment and broader national security coordination;4 and
- grant the DIA Minister greater flexibility to award certain defence and national security related contracts without a traditional competitive procurement process.5
Furthermore, Bill C-31 would significantly broaden the scope of projects and activities falling within the DIA framework, in particular:
- “defence projects” would extend beyond works tied to the production, maintenance or storage of defence supplies to capture works required for national security purposes more broadly;6
- “defence supplies” would extend beyond traditional military equipment to capture anything, including data, intangible property and technology, required or used for national defence or national security purposes;7
- “defence services” would be defined for the first time, covering services required for national defence or national security and for the construction of defence projects;8 and
- multi-purpose projects serving both civilian and national security functions are expressly permitted under the DIA framework.9
These changes signal a broader shift toward a more investment-oriented and coordinated defence framework, away from a model focused primarily on procurement modernization. The DIA is positioned to play a broader role in mobilizing Canada's industrial and economic capacity in support of its defence and national security objectives.
The DIA’s procurement and financing powers
Bill C-31 would provide the DIA with significantly broader procurement and financing powers than it currently holds as a special operating agency within PSPC.
On the procurement side, the proposed framework would:
- give the DIA Minister greater flexibility to award certain defence and national security related contracts without a competitive procurement process, including for the construction, maintenance and operation of critical defence projects;10 and
- place Defence Construction Canada, the federal body responsible for managing defence infrastructure contracts, under the authority of the DIA Minister.11
Together, these changes would make the DIA Minister the primary federal agent for defence infrastructure contracting in Canada, with discretionary authority to direct contracts to preferred suppliers in defined circumstances of national security.
On the financing side, the DIA would be authorized to deploy:12
- loans and advance payments;
- loan guarantees and credit insurance;
- grants and contributions;
- equity investments in corporations; and
- other financial arrangements.
In practice, this would allow the DIA to engage with the private sector as a strategic partner across multiple layers of a project’s development and financing structure, moving beyond its traditional role as a procurement body engaging suppliers through competitive tenders.
In its investment role, the DIA would be required to consider factors such as stimulating investment, research and development, innovation and the protection of intellectual property.13 Nevertheless, many aspects of the framework remain subject to future regulations and implementation decisions, including financing conditions, eligibility criteria and investment parameters.14
Practical implications for infrastructure participants
For infrastructure sponsors, lenders and institutional investors, Bill C-31 raises a number of practical questions. The DIA’s broad mandate across procurement, financing and investment suggests that projects with a national security nexus may increasingly attract federal interest in sectors such as Arctic infrastructure, critical minerals, transportation, energy and digital infrastructure. Perhaps most importantly, certain dual-use infrastructure projects, traditionally viewed as commercial assets, could increasingly qualify for federal investment, financing and procurement engagement as assets tied to national security objectives.
As the DIA framework develops, infrastructure participants operating in sectors aligned with Canada’s evolving defence priorities should monitor these developments closely. For more information on Bill C-31 and related defence and infrastructure measures, please contact the authors of this article, Dominique Babin, partner in Dentons Montréal’s Corporate group with significant experience in the defence sector, or Anoosh Loertscher (Montréal), senior associate in Dentons’ national Infrastructure and PPP group.
Footnotes
1. Canada, Department of National Defence, Security, Sovereignty and Prosperity: Canada’s Defence Industrial Strategy 2026 (Ottawa: DND, 2026) at 7 online: <https://www.canada.ca/en/department-national-defence/corporate/reports-publications/industrial-strategy/security-sovereignty-prosperity.html>. ↩
2. Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025, 1st Sess, 45th Parl, 2026, cl. 290 (first reading 6 May 2026). ↩
3. Ibid., cl. 290 (ss 3-7 of the proposed Defence Investment Agency Act). ↩
4. Ibid., cl. 290 (s 5 & s 11 of the proposed Defence Investment Agency Act). ↩
5. Ibid., cl. 322 (proposed s 28 of the Defence Production Act). ↩
6. Ibid., cl. 307. ↩
7. Ibid., cl 307. ↩
8. Ibid., cl 307. ↩
9. Ibid., cl. 308. ↩
10. Ibid., cl. 322 (proposed s 28 of the Defence Production Act). ↩
11. Ibid., cl. 331. ↩
12. Ibid., cl. 316 (s 15.1 of the proposed Defence Investment Agency Act). ↩
13. Ibid., cl. 290 (s 12 of the proposed Defence Investment Agency Act). ↩
14. Ibid., cl. 32
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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