Canada’s largest military contractors 2011-12

Kenneth Epps Conventional Weapons

Author
Kenneth Epps

The Ploughshares Monitor Volume 33 Issue 4

This past fiscal year Canada’s largest military prime contractors saw an increase in total contract sales, with the top contractor reaping the most gains

The largest Canadian-based prime contractors were awarded more than $3.5-billion in prime contracts for military work during fiscal year 2011-12, according to official sources (see Table 1).1 The contract total for the top 20 companies represents a five per cent increase over the equivalent total for the previous fiscal year (Epps 2011b). About two-thirds of this total—$2.3-billion—involved prime contracts awarded during the year by the Department of National Defence (DND). The remaining contracts were awarded by the Canadian Commercial Corporation (CCC) on behalf of the U.S. Department of Defense (DoD).

By a wide margin, General Dynamics Land Systems Canada, a manufacturer of armoured transport and combat vehicles based in London, Ontario, was the top prime contractor in 2011-12. GDLS Canada and its predecessor General Motors Canada have been the largest, or near-largest, Canadian military contractor for decades. In 2011-12 the company received contracts that totaled almost $2-billion, or about 57 per cent of the contract value for the largest 20 companies. Its sister organization, General Dynamics OTS Canada, a manufacturer of explosives and munitions that is also wholly owned by U.S.-based General Dynamics, was a distant second in the ranking, with a contract total of $348-million.

The two General Dynamics subsidiaries were awarded major contracts by both DND and DoD. In contrast, the remaining ranked corporations drew a significant majority of their military sales from one client or the other, but not both. Indeed, half of the 20 largest contractors were exclusively dependent on one military customer. This is especially true of shipbuilding and ship repair contractors such as Victoria Shipyards and Peacock, which rely on the Department of National Defence for military shipbuilding contracts. Other companies, such as G.T. Machining & Fabricating, which supplies bridging and container equipment to the U.S. Army, looked to the Pentagon for their military sales.

The contractor ranking for 2011-12 differs significantly from the 2010-11 ranking. Fewer than half of the companies ranked in the top 20 for 2011-12 were on the list for the previous year. The turnover can be explained in part by contracts that are awarded for the delivery of goods or services over several years, creating a sales “spike” for the company in the year of the award that may not be repeated in the following year. Additionally, despite an overall increase in the total contract value for 2011-12, individual values for all table rankings were lower than in 2010-11, except for the highest ranked company.

The value of GDLS Canada contracts in 2011-12 more than doubled from the $764-million in 2010-11. In 2010-11, 10 companies in Canada received military contracts that totaled in excess of $100-million; this past year only five companies surpassed this figure.

And for the first time in 30 years of CCC-reported data, during 2011-12 the Pentagon was the sole source of foreign military prime contracts brokered by the crown corporation.2 A decade ago Canadian companies were awarded CCC-brokered military contracts by as many as 15 foreign governments (Epps 2011a).

The ranking of the table is based exclusively on reported military prime contracts awarded to Canadian-based contractors. The ranking does not include values of subcontracts for military work awarded to Canadian companies by Canadian or foreign (largely U.S.) military prime contractors, which are not generally reported. Reported subcontract values can be substantial and if comprehensive sources were available, the addition of subcontract values would change the volume, order, and makeup of the table rankings.

Notes

1. The contractor ranking was compiled by Project Ploughshares from Canadian Department of National Defence contracts reported by Public Works and Government Services Canada and contracts reported by the Canadian Commercial Corporation, a crown corporation that brokers contracts between Canadian companies and foreign governments and military forces. Prime contracts were compiled from April 1, 2011 to March 31, 2012 for both sources.

2. Since 1982 Project Ploughshares has received prime contract data from the Canadian Commercial Corporation under annual Access to Information requests.

 

References

Epps, Kenneth. 2011a. The military broker: A Crown corporation and weapons sales. The Ploughshares Monitor, 32:1, Spring, pp. 14-17.

_____. 2011b. Canada’s largest military contractors: Military contracting from sea to sea. The Ploughshares Monitor, 32:4, Winter, pp. 8-9.

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