By Melanie Nadeau

February 26, 2026

Canada’s newly released Defence Industrial Strategy (DIS) sets out to develop and maintain a domestic defence industrial base built around a set of defined sovereign capabilities. The government appears willing to take a role in directing a sector of the economy and using its tremendous spending power to do so.

This carries significant risk, especially considering Canada’s fraught history with defence procurement, which has been notoriously plagued by bureaucratic failures, cost increases, and delivery delays that some have referred to as the worst in the Western world.

The DIS appears to be attempting to hit the reset button by introducing something akin to a non-market variable into the mix: the very human factor of trust. Trust, in this context, is not a sentiment. It is a bet. The government is asking Canadians to accept fewer suppliers, longer timelines, and higher upfront costs in exchange for sovereign capability. That trade-off only works if trusted partners deliver.

The authors of the strategy recognize that to lead in the development of a defence industrial base for Canada, the government will need to have trusted strategic industry partners who deliver results.

That trust will not be equally deserved. Some firms will welcome the promise of long-term contracts without fully accepting the scrutiny and accountability that must come with them. A trust-based industrial model will expose underperformance faster, not conceal it.

Clearly, if all of the sovereign capabilities that the strategy proposes to build cost significantly more than what their initial contracts budget for, and take far longer to deliver than originally estimated, the strategy will collapse under its own weight.

In which case, Canada will not be able to defend its sovereignty in a more dangerous geopolitical environment, nor will it be able to fulfill its obligations as a NATO ally, let alone deliver on the promise of economic growth and industrial and technological development that all the new defence spending and bureaucratic infrastructure hold.

Indeed, the strategy cannot succeed without trust between industry and government holding fast, or Canadians will rightfully sour towards the initiative and demand that the government invest more in their beloved butter than in newfangled guns.

Canadians will tolerate a great deal in the name of sovereignty, but they will not tolerate failure that looks protected or unaccountable. If trust erodes, political patience will erode with it.

To build trusted partnerships across the public and private sectors requires time, space, and commitment. This is where strategy must also draw on lived experience.

Here, we see the contours of what might be described as the grand bargain at the core of the Defence Industrial Strategy: in exchange for “a clear, long-term demand signal” industry must provide supply both on time and on budget.

If either side of this bargain breaks down, trust will be broken, and we will be back to where we started.

The government is even proposing to go so far as to pick winners in this space, and name national champions in likely all the sovereign-capability sub-sectors of the strategy.  This will involve designating champions across the vast spectrum of defence capabilities required to defend Canadian sovereignty — land, maritime, aerospace, space, sensors, digital systems, ammunition, simulation technologies.

Importantly, details have yet to be published on how these strategic partnerships will be established and national champions identified. In the meantime, it is crucial to remember that trust is something that is earned. It cannot be asserted or reset with the push of a button.

To build trusted partnerships across the public and private sectors requires time, space, and commitment. This is where strategy must also draw on lived experience.

At COVE, a not-for-profit founded as part of the National Shipbuilding Strategy, we have been central to building trust between industry and government in the defence and marine tech sector.

The firms we work with incubate and accelerate their development within our infrastructure and through our programming. They test their innovations and explore the dual-use dimensions of their products. They leverage our facility and our status as NATO DIANA North American HQ to seek out domestic and foreign customers.

They do this at the front end of their development, where a culture of trust and accountability can be rooted in the DNA of Canada’s future national champions in the defence industry.

The release of the Defence Industrial Strategy is a major milestone in Canada’s political economic history. The fact that its success or failure depend on whether industry and government can come together in a relationship defined by trust in the service of Canadian sovereignty should cause all industry, government and CAF leaders to pause and reflect on what has been and what could be.

We must go forward with a renewed sense of collective purpose. We are no longer operating in a purely market driven economy — if we ever truly were. Rather, the Defence Industrial Strategy marks a moment where economic nationalism begins to manifest in macroeconomic policy.

The DIS is asking industry to mix profit motive with patriotism, and to trust that if it does, the government will continue to fill out the demand side of the equation.

Melanie Nadeau is CEO of COVE, a global innovation hub, official accelerator with NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA) and leader of Canada’s first Defence Innovation Secure Hub.