On 6 October 2026 the government introduced Bill C-40, An Act respecting production, procurement and investment in relation to national defence and national security, short title the Strengthening Canada’s Defence Sector Act. According to Journals No. 146, Secretary of State (Defence Procurement) Stephen Fuhr moved it on behalf of Public Works and Procurement Minister Joël Lightbound. It was read a first time and carries a royal recommendation, which means it authorises new spending. Second reading has not started.

The bill’s default is competitive bidding. It then lists 13 grounds on which the minister may skip it, each triggered “in the Minister’s opinion.”
Citizen impact: Ottawa calls its defence build-up a “generational investment.” This bill decides who signs those contracts and under what rules. The new corporation could lend money, make advance payments, guarantee debts and buy shares, all backed by the Consolidated Revenue Fund. The minister could skip competitive bidding for reasons including support for “a sector of the Canadian economy” important to defence or security. Taxpayers carry the risk; suppliers and their workers get the contracts.

What Part 1 creates

  • A new Crown corporation. The Canadian Corporation for Defence Investment would keep operating as the Defence Investment Agency (DIA). It is an agent of His Majesty, but cabinet may declare that it is not an agent when carrying out activities cabinet specifies (s. 7). It is added to Part I of Schedule III of the Financial Administration Act, the list of parent Crown corporations.
  • Mandate. Production, procurement and investment for the Canadian Forces and the Department of National Defence. It may do the same for “associated governments” at the minister’s request, and take on any other activity cabinet assigns (s. 8).
  • Ministerial control. The minister may direct the corporation to do or not do any procurement activity, after consulting the Defence Minister. The corporation must comply, and complying is “deemed to be in the best interests of the Corporation” (s. 9).
  • Financial powers. It may make loans and advance payments. With the Finance Minister’s approval it may guarantee debts, provide loan or credit insurance, and acquire or dispose of shares. With cabinet authorisation it may enter “any other financial agreement or arrangement” (s. 10).
  • Money. The Finance Minister may pay the corporation money out of the Consolidated Revenue Fund, but the total outstanding “must not at any time exceed $1 billion.” Repayments and sale proceeds are deducted, so the limit works like a revolving line. An appropriation Act can raise it (s. 15). Separately, up to $30 million may be paid within 180 days of coming into force to cover start-up costs.
  • Governance. Cabinet appoints a part-time Executive Chairperson and a full-time Chief Executive Officer, both during pleasure, plus up to two part-time directors for terms of up to four years. The supporting deputy minister sits on the board ex officio, and cabinet may add up to two more deputy heads. The bill also amends the National Defence Act to create an Associate Minister of National Defence for Procurement. The government says this minister would answer to Parliament for the corporation.

What Part 2 changes in the Defence Production Act

The Defence Production Act becomes the Defence and National Security Production and Procurement Act. Its reach extends to supplies and services related to national security as well as defence. Stockpiling may be done for national security purposes, including economic security. The procurement minister gets new financial authorities, including financial transactions for investment in the defence and security sectors.

New sections 27 to 29 set the procurement rules. The minister “shall conduct a competitive procurement process” before entering into a covered contract. The minister may skip that process if, in the minister’s opinion, one of 13 conditions applies. These include an urgent operational requirement; military operations, critical defence projects or national security; support for “a sector of the Canadian economy that is important to national defence or to national security, including economic security”; interoperability with allied equipment; sensitive technology; only one capable supplier; interim operational needs; research and development; contracts with other governments; and “any other exception prescribed by regulation.” The minister may also exclude a bidder whose involvement poses a risk to defence, security or public safety, and “is not required to provide” reasons.

What the bill says about transparency

Its only Access to Information Act changes are to Schedule II, the list of statutory secrecy provisions. The listed provision moves from section 30 of the old Act to new section 3.2. Section 3.2 bars disclosure, without the business’s consent, of information about an individual business obtained under the Act. Disclosure is allowed to other departments that need it, or for prosecutions and, with the minister’s consent, civil proceedings. We searched the bill and found no amendment adding the new corporation to the Access to Information Act or the Privacy Act. Part 3 requires a ministerial review within five years of coming into force, with the report tabled in both Houses.

How it relates to C-31 and the existing agency

The DIA was created in October 2025 as a special operating agency inside Public Services and Procurement Canada. The government’s backgrounder says C-40 differs from Bill C-31 by making the DIA a Crown corporation, while keeping the procurement Act with the Public Works minister. If C-31 (Budget 2025 Implementation Act, No. 2) receives royal assent, C-40 repeals that Act’s Defence Investment Agency division. Most of C-40 comes into force on dates set by cabinet. The release lists contracts already made under the Defence Industrial Strategy. Among them: Colt Canada’s rifle contract, committing to at least 80% Canadian content; TKMS as preferred supplier for up to 12 submarines; and 190 more armoured support vehicles from GDLS-Canada, taking the fleet from 360 to 550.

What this piece refuses

Do not write that C-40 “abolishes competitive bidding.” Competition remains the default, with listed exceptions. Do not write that it “exempts defence from access to information.” The bill does not say that. What it does not do is add the new corporation to the Act; whether and how the Act will apply is a question for the government and for committee. Do not treat the $1 billion as the corporation’s budget. It caps outstanding Consolidated Revenue Fund advances, separate from appropriations and from contract values.

Contested: The government says a Crown corporation can move faster because it “is not subject to the same layers of approvals,” and that it stays accountable through a minister. Critics of past defence buying have blamed slow approvals for delays. Others have warned that sole-source and national-security exceptions are where cost overruns hide. Both points apply here. The verified record is the bill text and the government’s release and backgrounder.

Bottom line

Verified as of 7 October 2026 (C-40 first reading text; Journals No. 146; Defence Investment Agency release and backgrounder of 6 October): C-40 would create a Crown corporation that buys, lends, guarantees and invests for defence. It would have a $1 billion revolving drawing limit and $30 million in start-up money. A ministerial power to skip competitive bidding would rest on 13 grounds, one of them open-ended by regulation. Watch second reading, the committee study, and whether amendments address the corporation’s coverage under access-to-information law.