QUESTION PERIOD — National Defence
Defence Industrial Strategy
March 12, 2026
Senator Moreau, earlier this week, the government announced that the National Research Council would commit over $900 million to drone innovation as part of Canada’s Defence Industrial Strategy. This is a welcome investment that provides a clear signal of support for the scaling of dual-use technologies in Canada.
However, the newly created Defence Investment Agency will only streamline procurement projects over $100 million, primarily benefiting large incumbents, including foreign entities. Meanwhile, Canada’s SMEs continue to face significant barriers with programs such as the Innovative Solutions Canada, or ISC, Testing Stream and Innovation for Defence Excellence and Security, or IDEaS, contracting at a ceiling of $10 million. This leaves a substantial gap for companies trying to scale.
Does the government intend to introduce additional funding mechanisms under the Defence Industrial Strategy that specifically focus on Canadian SMEs seeking to scale their growth in that gap of $10 million to $100 million?
Senator Deacon, you are highlighting the important contribution that small- and medium-sized businesses and enterprises bring to our economy and defence procurement.
Your concern is actually answered by the Regional Defence Investment Initiative, which aims to support small- and medium-sized enterprises to integrate into our defence supply chain, enhance industrial and innovation capacity in support of Canada’s defence and security needs, adapt dual-use technologies and capabilities for defence applications, and develop projects that improve the productivity and readiness of Canada’s regional defence ecosystem.
The program is delivered by Canada’s regional development agency but is in coordination with the Defence Industrial Strategy.
I have been informed that the funding under the Regional Defence Investment Initiative is available for activity undertaken between April 1, 2025, and March 31, 2028.
Thank you, Senator Moreau. The reality we have seen on the battlefield in Ukraine is that modern, agile, small-scale tech — which Canada has plenty of — is crucial to success and has dual-use benefits.
I’m pleased to hear your affirmation that this is a focus. I have not seen it as of yet, but I look forward to learning more. Perhaps your office, if they could be so kind, will make sure that we receive that documentation.
Yes. Let me reiterate that the government continues to work with industry and regional partners to ensure that Canadian small- and medium-sized enterprises can successfully scale up so that they can participate in the growing defence supply chain, with the massive investment that the government has made in that area.
