Author Ken Epps
The 20 largest Canadian military contractors were awarded a total of $2.1-billion in prime contracts during fiscal year 2012-13, according to official sources (see Table 1). This year’s total represents a 39 per cent decline from the $3.5-billion contract total for the top companies in the previous year (Epps 2012).
The contracts were awarded to the Canadian-based companies by the Department of National Defence (DND) and by the U.S. Department of Defense via the Canadian Commercial Corporation (CCC) in Ottawa. DND and CCC are the sole public sources of military prime contract data in Canada.
Canadian companies were contracted for additional military work during the year, but any related contract information was irregular, incomplete, or unreported. These other contracts included prime contracts awarded directly by foreign governments (bypassing the CCC as an intermediary) or, more commonly, subcontracts for military goods and services awarded by Canadian and foreign prime contractors. The value of subcontracts with U.S. military prime contractors alone was likely substantial—when last reported in the 1990s the government estimated their annual total value to be similar to that of U.S. prime contracts—but they remained unreported again this year under defence trade agreements with the United States.
The value of prime contracts awarded by DND to the largest 20 Canadian companies declined from $2.3-billion in the previous year to $1.8-billion in 2012-13—a 22-per cent decrease. More dramatically, the value of Pentagon prime contracts to the top companies fell from over $1.2-billion to less than $0.4-billion—a decrease of 70 per cent. Both drops reversed an earlier rise in contract totals for the largest companies. They are evidence of recent reductions to core and supplementary military spending by both Canada and the United States.
Textron Systems Canada Inc. of Ottawa, which did not appear in the 2011-12 ranking, was the largest military contractor during the period. It was awarded two DND contracts totalling $802-million for the production of 500 “tactical armoured patrol” vehicles and for five-years of in-service vehicle support for Canada’s army.
Again this year, General Dynamics OTS Canada in Quebec was the second-largest contractor, with Pentagon and DND contracts totalling $254-million, a total significantly down from the previous year’s $348-million. A manufacturer of military explosives and munitions, General Dynamics OTS Canada has supplied Canadian and U.S. combat troops in Afghanistan, and U.S. operations in Iraq. Troop withdrawals from both war zones have reduced demand for its products.
Lockheed Martin Canada moved up the table from twelfth last year to third in 2012-13. It contracted with DND to provide combat systems integration as part of the modernization of Canada’s 12 Halifax-class navy frigates.
As the fourth largest contractor, Irving Shipbuilding is also a supplier to the Canadian navy. It was awarded a DND contract during 2012-13 for the design of offshore patrol ships.
Meanwhile, General Dynamics Land Systems Canada dropped to fifth place from a dominant first last year. It continues to supply armoured vehicles to the Canadian and U.S. armies, but this year it did not win the billion-dollar contracts of earlier years.
Ten of this year’s 20 top-ranked contractors were in the top 20 last year. The turnover rate is not as high as it was between 2010-11 and 2011-12, when more than half of the top names changed. However, a small group of Canadian companies—perhaps fewer than 10—consistently make the list.
Beyond the core top contractors are dozens of Canadian companies, situated across the country, which receive contracts worth tens of millions of dollars to supply military equipment to both the domestic and export markets.
Epps, Kenneth. 2012. Canada’s largest military contractors 2011-12. The Ploughshares Monitor, Winter, pp. 3-5.