By Kevin Budning

May 21, 2026

By the end of next month, it is widely expected that the Government of Canada will make one of the most consequential military procurement decisions in modern Canadian history under the Canadian Patrol Submarine Project (CPSP).

The contract for the acquisition and in-service support of 12 new submarines to replace the aging Victoria-class fleet is estimated to cost approximately $80 billion CAD and will fundamentally shape Canada’s defence posture for decades to come.

But the decision is about far more than technical capability.

The two leading contenders — South Korea’s KSS-III, offered by Hanwha Ocean, and Germany’s Type 212CD, put forward by ThyssenKrupp Marine Systems (TKMS) — both meet Canada’s defence requirements for long-range patrols in the Atlantic, Pacific, and Arctic, stealth and intelligence gathering, and integration into NATO/allied operations.

Indeed, the overlap between the two platforms is significant enough that Canada’s Commander of the Royal Canadian Navy (RCN), Vice Admiral Angus Topshee, has stated that either submarine would represent a viable choice for Canada.

The decision, then, will likely rest on three broader considerations: delivery timelines; economic and industrial incentives; and strategic and geopolitical signalling.

When it comes to delivery, the RCN’s requirement for a new submarine capability is long overdue. With only a single Victoria-class submarine currently operational, the Canadian Armed Forces (CAF) are increasingly constrained in their ability to contribute meaningfully to allied operations and deterrence in both the Indo-Pacific and Atlantic theatres, while also struggling to adequately patrol and defend Canada’s own waterways — including the increasingly contested Arctic.

Here, Hanwha appears to hold a significant advantage. Assuming a contract award in 2026, the South Koreans have projected delivery of the first KSS-III by 2032, with four submarines delivered by 2035 and subsequent boats arriving annually thereafter. Crucially, the KSS-III is not a conceptual design or developmental platform: it is already operational and rolling off active production lines – one arriving in Victoria later this month for a full display.

Whether Canada can fully absorb the fleet, crew the submarines, and adapt existing infrastructure to accommodate the larger KSS-III class within that time frame remains a separate question.

TKMS, on the other hand, enters the competition with a far more crowded industrial pipeline. The company already has multiple Type 212CD submarine orders from Germany and Norway, with additional submarine programs underway for Singapore, Turkey, and India.

While TKMS possesses a strong reputation in submarine design and engineering, the 212CD itself remains a newer, untested, platform only now entering production. The company has also been less transparent when it comes to delivery timelines; however, some estimates project that Canada would only receive its first submarine by the mid-to-late 2030s.

Industrial and technology benefits (ITB) will be another critical factor for decision-makers when evaluating the CPSP. Under the ITB, companies awarded major defence contracts are required to undertake business activity in Canada equal to the value of the contracts they have been awarded.

The CPSP will also be assessed under Canada’s Defence Industrial Strategy. Prime Minister Mark Carney has made clear, both in recent remarks and through the strategy itself, that major defence contracts will be expected to stimulate direct economic activity across the country.

The South Korean bid has been compelling in this regard, framing the CPSP not only as a platform acquisition, but as a long-term industrial partnership. Hanwha has sought to sweeten its offer through a range of proposed direct and indirect investments designed to grow the Canadian economy and create domestic jobs.

As Canada motors toward a CPSP decision, it will need to weigh carefully the delivery timelines, industrial benefits, and geopolitical signalling.

Some of these include partnering with Algoma Steel to support a proposed structural steel beam mill in Canada valued at up to $345 million; establishing long-term in-service support centres for maintenance and repair on both coasts; integrating Canadian firms into its global supply chain; collaborating with universities and research institutions, and, more recently, signalling potential co-production opportunities for mobile howitzers, rocket artillery systems, and infantry vehicles — an approach that could inject billions into Canada’s struggling automotive and heavy manufacturing sectors.

Together, Hanwha’s investment is projected to generate $94.1 billion in GDP and $16.8 billion in government revenue between 2026 and 2044.

TKMS, by contrast, has stated that it will not publicly release its ITB and strategic investment or partnership approach. Negotiating directly with government rather than appealing to the public appears to be the preferred German-Norwegian approach.

What is publicly known is that TKMS has emphasized, both on its website and through a public partnership agreement with EllisDon, that its proposal is likely to include elements of sovereign Canadian sustainment capability, long-term maintenance infrastructure and lifecycle support, domestic value creation, and skilled employment.

TKMS’s principal counterweight to Hanwha’s expansive and public economic pitch, however, lies less in direct job creation and more in industrial integration. This includes the transfer of advanced submarine design and engineering knowledge, deeper integration between Canadian and German/Norwegian naval ecosystems, and enhanced interoperability across logistics, training, and sustainment systems within TKMS’s broader NATO submarine fleet.

Based on this signalling, the German offer appears to trade broad-based domestic economic activity in Canada for deeper integration within TKMS’s established NATO submarine ecosystem.

The final factor Canada must consider is the strategic and geopolitical consequence of aligning more deeply with either Europe or Asia. Selecting TKMS would further consolidate Canada’s defence-industrial alignment with Europe, and particularly with Germany and Norway. Canada has made significant inroads in this regard in recent months, including winning the competition to host NATO’s Defence Security and Resilience Bank and becoming the first non-European member to join the Security Action for Europe program.

The deal would likely be read in European capitals as a reaffirmation of Canada’s commitment to the transatlantic alliance, and as a natural fit given that Canada and Norway are both Arctic states.

Choosing Hanwha, by contrast, would mark a more explicit shift toward the Indo-Pacific. It would signal Canada’s growing recognition of South Korea as a major defence-industrial power and an increasingly important partner within the broader Western security architecture.

Seoul has already emerged as a key supplier of conventional arms to NATO members, including artillery systems, ammunition, and naval platforms, and a submarine deal would further deepen its integration into allied defence supply chains.

More broadly, it would represent the start of a much longer and potentially much larger strategic partnership between the two countries, one that would reduce Canada’s reliance on its traditional industrial partners. It could also open new avenues for investment and collaboration in the Indo-Pacific, a region that remains relatively untapped in Canada’s defence-industrial footprint.

As Canada motors toward a CPSP decision, it will need to weigh carefully the delivery timelines, industrial benefits, and geopolitical signalling. Decision-makers will also need to consider that choosing one partner may come at the expense of deeper ties and integration with the other.

But amid all of this, procurement officials cannot lose sight of the fundamental purpose of the exercise: selecting the submarine best suited to the RCN’s operational needs and Canada’s interests at sea.

Canadians deserve nothing less.

Kevin Budning PhD is the Director of Scientific Research at the Conference of Defence Associations Institute.