Ottawa is at the centre of a growing debate over Canada's defence industrial strategy, with federal policymakers pushing to build up large, domestic defence champions capable of competing on the world stage. But according to a sharp opinion piece published in The Globe and Mail, that ambition may come with a steep and largely hidden price tag.
The Case Against Big Defence Champions
The argument, at its core, is one of economics and incentives. When governments pick winners in capital-intensive, politically sensitive sectors like defence, the results tend to favour connected incumbents over innovative newcomers. Critics warn that funnelling procurement dollars and policy support toward a handful of large players risks entrenching inefficiency, inflating costs, and crowding out the smaller Canadian firms, including many Ottawa-area tech companies. That are often more agile and innovative.
Canada's defence sector has historically leaned on a mix of large primes and a deep ecosystem of small and medium-sized enterprises (SMEs). Many of those SMEs are clustered in the National Capital Region, where cybersecurity, aerospace, and defence-adjacent tech firms have built a quiet but significant presence over the decades.
What's at Stake for Ottawa's Tech Ecosystem
For Ottawa's tech community, the direction of federal defence policy matters enormously. The city is home to a dense concentration of firms working in areas like signals intelligence, secure communications, drone technology, and AI-driven logistics, all sectors where defence contracts can be transformative for a young company.
If Ottawa tilts its procurement toward a small club of large champions, those smaller firms may find themselves squeezed out of meaningful contract opportunities, forced to become subcontractors on less favourable terms, or to relocate to jurisdictions with more open defence markets.
The Globe and Mail's analysis suggests that the better path is a more competitive, open procurement model that rewards capability over size, one that would arguably benefit Ottawa's diverse tech ecosystem far more than a champion-picking strategy.
The Geopolitical Pressure Behind the Push
To be fair to policymakers, the pressure to build defence capacity isn't coming out of nowhere. NATO allies, and Canada's most important trading partner, the United States, have been increasingly vocal about Canada's lagging defence spending. The current geopolitical environment, from the war in Ukraine to rising tensions in the Indo-Pacific, has accelerated calls for Canada to meaningfully scale up its industrial defence base.
The instinct to create large, vertically integrated champions that can deliver complex systems domestically is understandable in that context. But as the Globe piece argues, good intentions don't always produce good industrial policy.
A Smarter Path Forward?
Rather than betting on a few large players, some analysts suggest Canada, and by extension, Ottawa, would be better served by investing in the connective tissue of the defence innovation ecosystem: funding for R&D, faster procurement timelines, and genuine pathways for SMEs to compete for prime contracts, not just subcontracts.
For a city like Ottawa, which punches above its weight in defence-adjacent technology, the stakes couldn't be higher. The decisions made in the next few years about how Canada structures its defence industrial base will shape the region's tech economy for a generation.
Source: The Globe and Mail via Google News Ottawa Tech RSS feed.
