When small and medium business (SME) owners hear about working with Canada’s defence sector, they may dismiss the opportunity before looking into it. However, you don’t have to manufacture military equipment to find a place in this industry. In fact, your business may already have the products, services or expertise that defence, a growing market in Canada, needs.
As Canada increases its investment in defence, more of that spending is creating opportunities for Canadian businesses of all sizes. Major defence contracts can generate demand throughout the supply chain, from technology and manufacturing to professional services and specialized expertise.
Canada’s Industrial and Technological Benefits (ITB) Policy also helps ensure major federal defence contracts generate economic growth here at home. Companies awarded certain contracts are required to undertake business activity in Canada equal to the value of the contracts they win, creating opportunities for other Canadian companies to become suppliers, partners and innovators within defence supply chains.
And your business may be more relevant to this market than you think.
Could your commercial product have a defence application?
You don’t necessarily need to develop a new product or become a traditional defence contractor to enter the market.
According to Business Development Bank of Canada (BDC), dual-use goods, services and software are primarily developed for commercial markets but also have potential defence security or intelligence applications.
In other words, something your business already makes, develops or delivers for commercial customers could possibly solve a problem in the defence sector, too.
Potential dual-use areas include:
- Artificial intelligence and machine learning
- Cybersecurity
- Robotics
- Quantum technologies
- Space technologies
- Biotech
- Drones and unmanned systems
- Semiconductors
- Advanced materials
- High-precision manufacturing and equipment
And these are only examples. The more useful question isn’t whether your industry appears on a list; it’s whether the capabilities your business already has could meet a need somewhere in the defence supply chain.
For a B.C. SME, exploring defence can start with a simple question: could something you already make or do solve a problem for a defence customer or supplier?
The answer may open an entirely new market.
Look beyond the prime contract
If defence looks like a potential fit, one of the first things to understand is that opportunities aren’t limited to winning major government contracts.
For most SMEs, entering defence won’t mean bidding directly on a billion-dollar federal procurement.
More often, the opportunity is found in part of the supply chain. For example, Canada’s ITB Policy requires companies awarded major defence and Canadian Coast Guard contracts to undertake business activity equal to the value of the contracts they win. Those large contractors, often called prime contractors or just ‘primes’, need Canadian companies to help them meet their commitments. Generally, 15% of their ITB obligation must involve small and medium-sized businesses.
For a B.C. company, that could mean supplying a component, software solution or professional service; contributing to research and development; or becoming part of a prime contractor’s Canadian or global supply chain.
You don’t have to be the company building the ship, aircraft or defence system. You may be the company providing one of the technologies, products or services that makes it possible.
What does an ITB opportunity look like?
Imagine a major international defence contractor wins a Canadian procurement contract and takes on an ITB obligation.
To meet this obligation, the contractor may need to find Canadian suppliers, invest in Canadian businesses, undertake research and development in Canada or develop longer-term partnerships with Canadian companies.
A B.C. SME with the right technology or capability could potentially become one of those partners.
Canada’s ITB Policy is designed not only to generate work directly related to a defence procurement, but also to build Canadian industrial capacity, encourage innovation, develop Canadian suppliers and increase the international competitiveness of Canadian companies.
That makes it valuable to understand ITBs, even if defence has never been part of your business plan.
Is your business ready for defence?
Finding a potential application is only the beginning.
BDC notes that companies considering a dual-use strategy need to assess whether their technology is ready for defence applications and what changes may be required. A commercial product may need new testing, specifications, components or data before it can meet a defence customer’s needs.
Businesses may also encounter requirements around:
- Cybersecurity
- Controlled goods
- Quality certifications
- Supply chain traceability
- Export controls
- Intellectual property
- Secure and reliable delivery capacity
The sales cycle can be longer than many commercial businesses are used to. Pursuing defence opportunities may require significant time and investment prior to generating revenue.
Before jumping in, ask: is there a genuine defence application for what you offer? What would you have to change to compete? Does the potential opportunity justify that investment? These are important questions to answer early.
Position your business for the opportunity
Start by clearly identifying the problem your product or service solves and how it could fit within defence or security applications. Research major contractors and current Canadian defence projects to understand where your capability may lie existing supply chains. Look at gaps between where your business is today and what the market expects.
You may need to strengthen cybersecurity, obtain certifications, refine your value proposition or adapt how you describe your technology to defence buyers. You may also need to identify whether an ITB opportunity is relevant and determine which prime contractors are looking for capabilities like yours.
The goal isn’t simply to label your company ‘dual-use’. It’s to demonstrate where you fit, what value you bring and why a defence contractor or prime contractor should work with you.
A new market may be waiting for you
For many B.C. SMEs, defence may look like a highly specialized market reserved for established aerospace, marine or military suppliers.
Dual-use opportunities challenge that assumption. The technology, expertise or product you already sell may have applications you never thought of before. The key is finding the right fit before investing the time and money required to pursue it.
Curious if your business could have a place in the defence market? If you’re already an Export Navigator client, talk to your Export Advisor about whether a Technical Specialist could help with your next step. If you’re new to Export Navigator, connect with an Advisor to get started.
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Are you ready to learn more?
Canada’s growing defence sector is creating new opportunities for businesses with commercial technologies, products and services that may also have defence applications. This three-part webinar series will help B.C. SMEs understand what entering the market involves and assess their readiness before investing significant time and resources.
- September 17, 10-11 am PT — Entering Canada’s Defence Market: How to Get Started: Understand the procurement landscape, how government and industry buy, and where your business may fit.
- September 29, 10-11 am PT — Becoming Defence Ready: Contract Security Program and Controlled Goods: Learn when security screening, personnel clearances and Controlled Goods requirements may apply.
- October 6, 10-11 am PT — Becoming Defence Ready: Cybersecurity Requirements: Explore Canadian, U.S. and European cybersecurity frameworks and what preparing for compliance may require.
