A federal budget bill now before the Senate Standing Committee on National Finance would create a Defence Investment Agency as a government department and substantially rewrite the Defence Production Act — the statute that governs what Canada buys for its military and who it can buy from.
Bill C-31, the Budget 2025 Implementation Act No. 2, completed second reading in the House of Commons on June 3, according to Borden Ladner Gervais LLP. The amendments to the Defence Production Act that the bill contains are not minor housekeeping. BLG's analysis identifies four definition changes with real scope: the term "associated government" would be expanded to include the European Union and its member states alongside NATO members in good standing; "defence projects" would grow to cover residential communities on federal real property and anything "required for the purposes of national security" — a phrase broad enough to swallow a great deal; "defence contract" would reach any contract with Canada or an associated government that relates to defence services "in any way"; and a new category of "defence services" would be created, defined as anything required or used for national defence or national security, or for co-operative defence efforts with an associated government. That last definition, with its repeated use of "anything," is the one procurement lawyers will be watching most closely, because it sets the outer edge of the whole regime.
The ministerial structure is also being reorganised. Under the current Act, the Minister of Public Works and Government Services holds authority across the legislation. Bill C-31 would split that. Public Works would keep responsibility for Part 2 — the section controlling access to controlled goods — but authority over Part 1, which covers the actual procurement of defence supplies, would shift to a minister designated under the new Defence Investment Agency Act, also created by this bill. BLG notes that the referenced minister is not identified in the text: the designation would come by order-in-council, meaning Cabinet would decide who runs defence procurement without a parliamentary vote on the appointment.
The definition changes matter beyond their legal edges. Bringing the EU and its member states formally inside the "associated government" category means Canadian defence procurement rules would now treat Brussels the same way they treat Washington — at least on paper. Canada signed a security and defence partnership with the EU in March, as BLG's analysis notes in providing context, but Parliament has not voted on what that partnership obliges Canada to do or spend. This bill would embed that relationship in statute, through a budget implementation act, before that broader question has been put to the House. The breadth of the new "defence services" definition — "anything" required or used for national security — also shifts the boundary between ordinary government contracting and the more restricted defence procurement regime. Suppliers and subcontractors currently outside that regime may find themselves inside it once the Act is amended, depending on how the new minister's department interprets the language.
The bill is now with the Senate committee. How tightly the committee reads "anything required for national security" — and whether it asks who, exactly, the unidentified defence procurement minister will be — is still outstanding.