The Role of SMEs in Sovereignty & Security
BY LORENZO MARANDOLA
For decades, Canada has depended on foreign suppliers to meet its defence requirements. The last fighter jet designed and built in Canada was the Avro Arrow in 1958. Since then, we have become dependent on purchasing weapon systems and advanced military technology from abroad. This dependence places Canada in a vulnerable position, limiting our ability to act independently in times of crisis.
One of the most pressing issues facing the Canadian defence industry is the absence of an aerospace and defence strategy. Canada needs a defined roadmap outlining which technologies should be developed. Without a strategic vision, SMEs—the backbone of technological innovation—are left without direction or meaningful support.
DEFENCE PROCUREMENT
An improvement in Canada’s defence procurement system is required. Unlike in the United States, where SMEs can contract directly with the military under small business set-asides, Canadian SMEs must go through prime contractors that manage the programs for Canada.
This structure limits the ability of smaller firms to contribute to national security with the Department of National Defence (DND). SME’s need to be included at the onset of the program with defined work contracts and develop relationships with DND.
In other countries, governments have taken steps to level the playing field. The US actively prioritizes SME participation in defence contracts, recognizing that smaller firms are agile and innovative. Canada must adopt policies to ensure its SMEs have fair opportunities to contribute and grow.
Government funding programs in Canada need to be agile, adaptable, and beneficial to the SMEs and Canada. While banks can provide loans, SMEs require funding to develop capabilities.
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Other nations have already taken bold steps to support their defence SMEs. Australia, for example, has committed significant funding to its domestic defence industry, recognizing that such investments create high-skilled jobs, drive economic growth, and strengthen national security. Canada must follow suit by providing direct funding allowing SMEs to grow, innovate, and remain competitive.
A strong domestic defence industry is not just about economic benefits—it is about sovereignty. If Canada does not invest in its own industry, we cannot expect other nations to buy from us, nor can we expect to be self-reliant when the next crisis arises. The enemy will not give us six months’ notice to prepare. We must act now!
Supporting SMEs and OEMs means supporting Canada. It ensures that Canadian engineers, scientists, and manufacturers have the resources to develop world-class defence technology. It strengthens our defence industry so that we are leaders in marketable innovation.
Canada’s commitment to meeting NATO’s 2% defence spending target needs to include SMEs. These businesses drive technological advancements, create jobs, and contribute to national security. Canada must invest in its domestic defence industry not just for economic reasons, but to ensure we remain a sovereign nation capable of protecting Canadians.
ACTION PLAN
Canada has an opportunity to build a stronger, more resilient defence sector that benefits our economy and national security. With the support and collaboration of the government, we must act decisively by:
- Developing and implementing rapidly a Comprehensive Defence and Aerospace Strategy – Define critical technologies, set realistic timelines, and collaborate with industry and academia.
- Reforming Procurement Policies within a Year– Allow SMEs to contract directly with the DND, fostering a more competitive defence industry while increasing in-country capability.
- Regularly Investing in Domestic Capabilities – Provide direct funding and subsidies to SMEs and industry. This will drive growth, innovation, and create high-paying jobs.
- Accelerating Project Decisions Timelines – Streamline the process to accelerate decisions and rapid deployment of defence technologies.
Canada has the talent and capability to grow its aerospace and defence industry effectively. Past programs may have worked in different geopolitical conditions, but they are no longer suited to the realities we face today. If Canada is to meet and exceed NATO’s 2% defence spending target, it must overhaul these programs quickly.
As Canadians, we take pride in our history of innovation and resilience. It’s time to apply that same determination to the defence industry. With the right policies, investment, and leadership, Canada can reclaim its place as a leader in the export of aerospace and defence technology.
The time for debate is over—the time for action is now! Let’s get to work!
Lorenzo Marandola is President of M1 Composites Technology. The views expressed here are his own and do not necessarily reflect a CDR editorial position.
