On February 17, 2026, the Government of Canada released Security, Sovereignty and Prosperity: Canada’s Defence Industrial Strategy (the DIS). The DIS is framed as a generational “rebuild, rearm and reinvest” effort that ties defence readiness to economic resilience and domestic industrial growth, supported by a new Defence Investment Agency (DIA) and a “Build, Partner, Buy” acquisition approach.

The government describes a major demand signal over the next decade, $180B in defence procurement and $290B in defence-related capital investment, with an estimated $125B downstream economic benefit by 2035 and sets targets including 70% of defence acquisitions awarded to Canadian firms, a 50% increase in defence exports, and 125,000 new jobs.

A key driver is reducing reliance on foreign (particularly U.S.) suppliers, reported as ~70% of Canada’s weapons budget today, with the stated goal of shifting that share toward Canadian firms over time.

In this legal update, John Paul (JP) Smith, Partner at McLeod Law, examines what the DIS means in practice for Canadian and international companies operating in the defence and security ecosystem.

Key takeaways include:

• A new procurement centre of gravity: The creation of the Defence Investment Agency (DIA) signals earlier industry engagement, faster decision‑making, and greater emphasis on fit‑for‑purpose procurement pathways.
• Build, Partner, Buy” as the default framework: Defence procurement decisions will increasingly turn on whether capabilities can be built in Canada, delivered through trusted partnerships, or acquired off‑the‑shelf—with conditions attached.
• Sovereign capabilities matter: Canada has identified 10 priority “Sovereign Capabilities” that are expected to receive build‑in‑Canada preference, increasing scrutiny of IP ownership, manufacturing location, and sustainment capacity.
• ITB and Value Proposition strategies are evolving: Proposed reforms move ITB beyond compliance toward strategic investment, Canadian content value, innovation, exports, and workforce development.
• Security and supply‑chain compliance are gating issues: Faster security clearances and accredited facilities create opportunity—but also raise the bar for compliance, sensitive‑technology handling, and foreign investment screening.
• Immediate steps companies should be taking now: From mapping offerings to sovereign capabilities, to security readiness and ITB playbooks, early positioning will be critical as the DIS is implemented.

Download the full legal update for a deeper analysis of Canada’s Defence Industrial Strategy.

Need help navigating Canada’s Defence Industrial Strategy?

If you are pursuing defence or security opportunities in Canada—or looking to invest, partner, or scale within the DIS framework—we can help you move forward with confidence.

Contact JP to discuss procurement strategy, investment considerations, compliance requirements, and next steps under the DIS.