The federal government tabled Bill C-40 on 6 October, proposing to turn the Defence Investment Agency (DIA) into a Crown corporation. The legislation would give the corporation authority to make loans and acquire shares in companies.
Procurement Minister Joël Lightbound sponsored the Strengthening Canada’s Defence Sector Act. The bill passed first reading in the House of Commons on 6 October and is awaiting second reading. Anvil North reported on 5 October that the government was expected to introduce the legislation.
The bill would establish the Canadian Corporation for Defence Investment, which could continue using the Defence Investment Agency name. Since October 2025, the DIA has operated as a special operating agency within Public Services and Procurement Canada.
According to the government, the corporation would operate at arm’s length in the National Defence portfolio, reporting to a new Associate Minister of National Defence for Procurement. The bill would amend the National Defence Act to permit that appointment. National Defence and the Canadian Armed Forces would retain responsibility for setting capability requirements, operational priorities and acceptance criteria.
The proposed board would comprise an executive chairperson, a chief executive officer, the deputy minister of the responsible minister’s department and up to two other directors. Cabinet would be able to appoint up to two additional federal deputy heads as directors.
After consulting the Minister of National Defence, the responsible minister designated by cabinet could instruct the corporation to undertake or refrain from activities for the Canadian Forces and National Defence. The responsible minister could also make approval a condition of continuing an activity. The bill requires the corporation to follow those directions.
The corporation would have the power to make loans and advance payments to any person. Approval from the Finance Minister would also allow it to guarantee financial obligations and acquire shares in a corporation.
Acting on the corporation’s recommendation, the Finance Minister could provide it with money from the Consolidated Revenue Fund for procurement, stockpiling, loans and advance payments. Total payments would be capped at $1 billion at any time, after deducting amounts repaid.
At the minister’s request, the corporation could undertake production, procurement and investment for associated governments. The bill would expand that category to include the European Union and its member states. The government said the corporation would support joint procurement programs, including initiatives aligned with Security Action for Europe (SAFE).
Bill C-40 would repeal the agency model proposed in the spring. Under clause 47, royal assent for Bill C-31 would trigger the repeal of its division titled “Defence Investment Agency Act and Defence Production Act”. Bill C-31, the budget implementation bill, is still at committee stage in the House of Commons.
Bill C-40 would separately amend the Defence Production Act and rename it the Defence and National Security Production and Procurement Act. The government said responsibility for that Act would remain with the procurement minister.
The revised Act would establish a requirement for competitive defence contracting, alongside 13 grounds allowing the procurement minister to dispense with competition. These include urgent operational requirements, interoperability with Canadian or allied equipment, sensitive technology and support for an economic sector important to national defence.
The procurement minister could exclude a person from a competition on reasonable grounds to believe that the person, a related person or anything used in the contract presents a risk to national defence, national security or public safety. No reasons would have to be provided, and the minister responsible for the corporation would have the same authority.
The legislation would move the DIA’s property, obligations and employees to the corporation. Existing agency contracts would be interpreted as naming the corporation.
Crown corporations are outside the Procurement Ombud’s mandate. Asked whether the mandate would be extended, Secretary of State for Defence Procurement Stephen Fuhr said he did not have an answer and described DIA oversight as ministerial. The government said the corporation would be subject to legislated requirements for governance, finances, audits, reporting and parliamentary oversight.
The corporation’s Act would take effect on dates established by cabinet order. Within five years, the bill requires a review of that Act and the amendments to the Defence Production Act, with a report to Parliament to follow.
Related coverage: The DIA is advancing the Canadian Patrol Submarine Project. Federal contract awards to US-controlled suppliers are covered in the Buy Canadian contract analysis.