Submarines, Fighters, and Attitude in Defence Procurement

Military acquisitions come down to capability, cost, and economic benefits, but tone can matter, too.

Two major Canadian defence procurements have been in the news recently: the Canadian Patrol Submarine Project (CPSP) and the F-35 acquisition. The government narrowed down CPSP to two potential suppliers, Hanwha from South Korea and Germany’s Thyssen Krupp Marine (TKMS). Stephen Fuhr, the Secretary of State for defence procurement, has further indicated that CPSP will come down to economic benefits for Canada, since Hanwha and TKMS both have boats that meet the baseline technical requirements. The United States, meanwhile, has reportedly warned Canada not to pursue a mixed fleet as part of the government’s review of the F-35 acquisition. This reflects the Americans’ far more aggressive approach to Canada-United States relations since President Trump returned to office.

Here are a few thoughts about both developments.

Let’s start with CPSP. The government’s decision to downselect to two firms is welcome. It shows that Canada is serious about moving ahead at an accelerated pace on CPSP. Indeed, the Commander of the Royal Canadian Navy, Vice Admiral Angus Topshee, has suggested that CPSP could be decided by the end of 2025. That seems ambitious, but CPSP has been meeting a series of ambitious targets thus far. In fact, it goes to show that defence procurement can go much faster if the Prime Minister and Cabinet are willing. When CPSP was first launched, I assumed that it would languish for years while the government hummed and hawed about the cost and requirements, yet I was cautiously optimistic that the project could be sped up. Well, it looks like Topshee and his team made a convincing case, particularly in light of Canada’s pledge to rapidly reach and maintain NATO’s 2% of GDP defence spending target.

Hanwha and TKMS each have things going for and against them. If we awarded prizes for enthusiasm in Canadian defence procurement, Hanwha would win with gusto. The South Koreans have been signing partnerships, giving out swag, and generally showing themselves to be really pumped about CPSP. Their public relations campaign has been so strong that they’ve left the impression that CPSP is theirs to lose. Defence procurements aren’t decided on vibes alone, but man, Hanwha knows how to exude confidence.

The problem, however, is that Canada and Hanwha don’t have a long history, and that relationship will go through a lot of growing pains if the South Koreans win the contract. Canada simply isn’t used to doing business with Hanwha and vice versa. That’ll probably lead to misunderstandings, clashes, and unanticipated problems on both sides. Government officials and military leaders are aware of this reality, which could lead to hesitation and heightened risk aversion during a potential contract negotiation. Above all, ministers and officials might ask if it’s wise to undertake such a large, costly, and complex contract with a firm that’s a relatively new player in the Canadian defence market.

In sharp contrast with Hanwha, TKMS has been dour and hesitant. You get the sense that TKMS is competing for CPSP because they have to, not because they want to. TKMS has been burned by Canada before and you get the sense that they’re just waiting for it to happen again. They come across as, well, grumpy. TKMS isn’t interested in a popularity contest and it shows.

What the Germans have going for them is familiarity, their standing as a good ally, and the fact that they’re a known quantity. Dealing with them would come with challenges, of course, but you know you’ll ultimately get a dependable capability, and one that would be operated by two other NATO navies, the Germans and Norwegians. This may explain TKMS’s attitude: their approach is boring reliability. That can’t be underestimated in defence procurement.

CPSP won’t be decided on tone and attitude, of course. In the end, it’ll largely come down to price, economic opportunities, and technical requirements. Topshee has also mentioned that Canada might pursue a strategic partnership with either Germany or South Korea, as opposed to contracting with Hanwha or TKMS. That would see CPSP serving as the foundation of a broader deal and perhaps ensure that Canada could get its first boat delivered more quickly. Still, we can’t discount how Hanwha and TKMS are positioning themselves and what messages they’re sending. Their strengths are each other’s vulnerability, making this an interesting study in contrasts.

Speaking of attitude, the American response to Canada’s F-35 review highlights a hardening one. There’s a widely held view out there that the United States pressures Canada to buy military equipment. I don’t think that’s been exactly right in the past. Canadian defence policy has effectively directed the defence department and armed forces to acquire American capabilities. The Department of National Defence and Canadian Armed Forces have been more than happy to do so, since the military wants the best capability and to interoperate with their American counterparts. The United States, then, hasn’t had to push very hard for Canada to favour American equipment; our own defence and military preferences were turned in that direction anyway. There were exceptions, of course. American diplomats may have urged Canada to buy the P-8A maritime patrol aircraft, for example. But here, too, it didn’t take a lot of arm twisting. The Royal Canadian Air Force (RCAF) was keen on the P-8A and marshalled a variety of arguments in favour of the Boeing plane.

When the Carney government announced that it was reviewing Canada’s F-35 purchase, the Lockheed skeptics rejoiced. It looked like the plane that the Canadian defence commentariat loves to hate might not be bought after all. That was always a fantasy, one fuelled by President Trump’s 51^st state talk and Carney’s now infamous elbows. Fact is, there was no time left to rethink the CF-18 replacement, and the F-35 remains the most capable aircraft available. The real question was never whether Canada would cancel the F-35, but whether the government would acquire a mixed fleet of F-35s and a European fighter. The chances of that outcome are low. A mixed fleet is inefficient and expensive. You need two sets of pilots, infrastructure, and technicians. The allure of building and maintaining a separate fighter in Canada might get us there, yet all of DND/CAF’s analysis will weigh strongly against the idea. The Carney government will need to really, really want to invest in Canadian industry and sovereignty for a mixed fleet to happen.

With this in mind, the United States could have played it cool. Since the Canadian defence establishment was going to do everything it could to steer the government off the mixed fleet option, the United States might have let us sort it out ourselves. The Carney government would probably have quietly stuck with the original F-35 plan without drawing much attention to the file. Canadians, in turn, would have accepted the decision without much fuss, as our collective shrug toward Canada joining the Golden Dome suggests.

In keeping with its harder approach toward Canada under President Trump, the United States has apparently been more direct about its opposition to the mixed fleet option. It probably won’t change the outcome, since the mixed fleet was always a long shot, though it’ll contribute to the feeling that our ability to make sovereign decisions is slipping away fast. The Carney government may come away thinking it has to make good on its promise to stop spending 75 cents of every defence procurement dollar on American kit. If that happens, Canadian defence policy won’t necessarily favour American capability anymore; it could be biased against it. In response, the United States might do what critics have long assumed it has been doing: pressure Canada to buy American or else. We may already be there, frankly.

I’ve always been a firm believer that Canadian defence procurement decisions come down to things like process, money, and capability. I still think that’s what ultimately matters, but we shouldn’t discount the influence of tone and attitude.