Defence sector guide

What is the defence sector?
Getting started in the defence sector
Contracting with the Government of Canada (Procurement)
Selling to defence companies
Regulations and requirements in the defence sector
Federal departments and agencies working with the defence sector
Active and future defence projects
Industry associations in the defence sector
Trade events

What is the defence sector?

The defence sector produces goods and provides services that support national defence and security. It includes manufacturing, research and development, and service provision for three main domains:

Air & Space Systems - aircraft, radar, sonar and visual sensors, unmanned air systems and vehicles, etc.
Marine Defence - boats, ships, shipborne systems, etc.
Land Defence - ground vehicles, weapons and munitions, land-based simulation systems and software, military training, etc.

Other businesses that play a role in Canada’s defence industry include those that provide goods and services to defence companies. These products and services can range from specialized manufacturing and protective clothing to prepared foods or training services, cyber threat assessments, shelter systems, and more.

The industry contributes significantly to Canada’s economy and national security. Defence firms are often active in global supply chains, exporting products and providing services internationally.

If you are looking to pivot your existing business into the defence sector, or expand your role in this sector, this guide will provide you with a general overview of things to consider.

This guide is intended to provide information to businesses that are already established. If you are looking for information how to start a business, please refer to our Starting a business guide.

Getting started in the defence sector

The specific steps and regulations that may apply to a business entering the defence sector will vary based on the specific products or services you plan to provide.

Two common ways that a business may choose to enter the defence sector are:

searching for and bidding on government defence procurement contracts directly
working with defence companies to provide products or services that they need to fulfill defence contracts

In addition to determining if you will bid directly on contracts or sell to defence companies, also consider the following:

Will you develop new products or services or offer your current products or services?
Do you have the capacity, finances and human resources to manage additional product demand or provide new products or services?
Will you need to make equipment upgrades, do training or complete certification?
Are you aware of the regulations and requirements for the defence sector and the products you want to sell?

Once you know what you will offer and who you will offer it to (government contracts or defence companies), you can explore what regulations will apply to your products or services and the steps for bidding on contracts or supplying to defence companies.

Contracting with the Government of Canada (Procurement)

Government defence contracts are managed online through the CanadaBuys website. You will need to register your business to bid on government procurement opportunities and contracts.

You will need:

A Canada Revenue Agency (CRA) business number
An SAP Business Network account to bid on opportunities posted by Public Services and Procurement Canada.
A Procurement Business Number if you receive a Government of Canada contract that isn’t processed through SAP Business Network.

You can find more information and instructions on registering on the CanadaBuys website: Preparing to sell to the government

Defence contracts

Before you bid on defence contracts, you should also familiarize yourself with the Government of Canada's Industrial and Technological Benefits (ITB) Policy. Under the ITB Policy, companies awarded large defence and security procurement contracts are obligated to undertake business activities in Canada equal to 100 percent of the value of the contract.

Contractors that bid on major defence contracts must also submit an economic proposal to Canada, called a Value Proposition. The Value Proposition is a weighted and rated element of the bid selection process and is scored alongside technical and cost requirements.

You can find more information on the Industrial and Technological Benefits (ITB) Policy website.

Selling to defence companies

Defence contractors often rely on sub-contractors to fulfil large portions of work and meet their Industrial and Technological Benefits (ITB) Policy obligations. This includes partnering with small businesses, and represents a potential avenue for small businesses to get involved in the defence sector.

Marketing your business to defence contractors is one way you may choose to enter the defence sector.

When looking to approach contractors, consider the following:

Research the defence contractor and its capabilities: Doing your homework on the contractor and its products, having targeted marketing materials ready, and explaining how you add value as part of a specific project or wider supply chain can result in a better response from the contractor.
Update your website: One of the first things defence contractors do is visit your website. Make sure that it is professional and current. The website should accurately reflect your company’s capabilities and clearly provide the information that might be of interest to the contractor.
Contact the defence contractor: Large defence companies often have someone dedicated to managing their ITB obligations. You can search the ITB obligations page if you are looking for a specific company’s ITB contact.

FedDev Ontario’s Defence Services team can help broker relationships between southern Ontario businesses and defence contractors.

Regulations and requirements in the defence sector

Specific regulations and requirements that may apply to bidding on government defence contracts or selling to defence companies will vary based on the specific types of products or services you sell. Make sure that you research what requirements apply to your specific products.

Some of the regulations and requirements that apply to the defence sector include:

Controlled goods

Goods that have military or national security significance are called controlled goods. Controlled goods, including components and technical data, are regulated domestically by the Government of Canada and defined in the Defence Production Act.

Controlled goods can include products or services that have commercial and civil applications but can also be used for military purposes. These products and services are commonly called “dual use” technologies.

For more information on controlled goods and the required registration, refer to What are controlled goods and the Controlled Goods Program roadmap.

Security screening

Your business or your employees may need to obtain security screening and comply with contract security requirements if you:

Plan to bid or work on a government contract with security requirements
Have employees who will be involved in certain activities or areas of the defence sector, such as accessing controlled sites or handling sensitive information.

The type and level of screening depends on the kind of work and access that will be needed.

For more information and to ensure that you get the proper clearance, refer to the Security screening and Security requirements for contracting with the Government of Canada websites.

Joint Certification Program

Contractors must be certified by the Joint Certification Program to bid and work on contracts involving controlled unclassified military technical data in Canada and the United States. To find out if you need to be certified, and how to apply and comply, visit the Joint Certification Program website.

ISO 9000 certification

ISO 9000 is an international quality standard developed by the International Organization for Standardization (ISO). While the certification is not specific to the defence industry, and is only one of many certifications, some defence contracts or contractors may require that you have the certification. Certification can help to ensure that you meet internationally recognized standards.

You can learn more about ISO 9000 certification here: ISO 9000

Exporting regulations

Canada’s defence and security industry is part of a global market. The United States is Canada’s largest trading partner for this industry, accounting for nearly half of Canada’s defence exports.

If you are already familiar with exporting, the Trade Commissioner Service may be able to help you with market insights, key contacts and business opportunities. You can refer to their website for more information: Defence and security

You can get support for selling to the U.S. Department of Defence and other foreign governments through the Canada Commercial Corporation (CCC). You can find more information on their website: For Canadian Businesses

If you are new to importing or looking for information on how to start exporting, the following guides provide information on the process, requirements and regulations:

Federal departments and agencies working with the defence sector

Some of the main Canadian federal departments and agencies that buy products and services from the defence and security sector are:

Please refer to the individual websites for more details on each agency or department and the work that they do.

Active and future defence projects

Information specific to active, completed and future defence projects is available online.

Defence equipment purchases and upgrades

For information about the Department of National Defence's (DND) current projects, procurement process, strategy and announcements, refer to the Defence equipment purchases and upgrades website.

ITB Branch – Contractor progress

The annual ITB report has information on active defence contractors, including the projects being worked on, the stage of the projects and their overall value. You can find the Report on contractor progress online.

Industry associations in the defence sector

Industry associations organization that represents the interests of companies within a specific sector or industry.

Some of the associations for defence sector include:

While it is not required to join an association, they can be a valuable resource for networking, information sharing, standards and certifications for activities in the defence sector.

Trade events

Attending trade events can help defence companies connect with potential partners, suppliers, and clients, allowing them to gain insights into industry trends and emerging technologies. There are also opportunities to showcase products, build brand visibility, and learn about procurement processes and regulatory updates.

You can find more information trade events on the following websites:

• Trade events and training – (TCS)
• Calendar of International Trade Programs and Events – MEDJCT

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