The Department of National Defence has quietly cancelled a contract with a Canadian firm to refurbish armoured vehicles to be delivered to Ukraine — but the federal defence minister won’t say why.
Defence Minister David McGuinty was pressed about the contract at the House of Commons national defence committee on Tuesday as part of a general briefing on Canada’s defence spending and NATO commitments.
Conservative defence critic and committee vice-chair James Bezan said the contract with Armatec Survivability in Dorchester, Ont., near London, was for 25 light armoured vehicles to be refurbished by the company, but that none of those vehicles had been delivered to Ukraine and the contract had been “paused or cancelled.”
“A decision has been made to nullify the contract with that company presently, so obviously I can’t go any further in discussing the merits of it,” McGuinty responded. “We’ll see how that evolves in the relationship between the department and the contractor.”
Bezan cut off McGuinty as he tried to detail past armoured vehicle deliveries to Ukraine to note much of that equipment has been destroyed by Russian attacks, and asked why Ottawa would cancel a contract that would provide what the Ukrainians need while supporting Canadian jobs.
The minister responded that he wanted to “give you more insight into the reasoning behind the department’s decision to cancel the contract, but I’m not in a position to do so.”
Efforts to reach representatives for Armatec to comment on McGuinty’s testimony were unsuccessful Tuesday.
Bezan claimed the government had put a “gag order” on the company that prevented it from commenting on the contract.
Armatec is listed as having had 30 meetings with government officials and top Liberal staffers this year alone, according to federal records, most recently with McGuinty’s chief of staff in September. Industry Minister Melanie Joly also met with the company in June, the federal lobby registry shows.
The Ukraine contract with Armatec does not appear to have been publicly announced and it is not clear how much it was worth before it was cancelled, or when exactly it was awarded.
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Canada is in the process of delivering 50 armoured vehicles built by London, Ont.-based General Dynamics Land Systems-Canada under a separate $650 million contract signed in 2023.
The first vehicles were delivered to Europe last June, and McGuinty said Tuesday that the remaining vehicles are on track to be delivered by the end of this year.
Prime Minister Mark Carney has pledged an additional $2 billion in military aid to Ukraine this year, including $835 million for armoured vehicles and other critical equipment.
“There’s a very strong resolve by Canada and NATO as well as a whole to continue to support the brave women and men of Ukraine who are fighting a very difficult war,” McGuinty said.
Carney’s government has sought to boost the domestic defence industrial sector by prioritizing Canadian contracts and materials like steel, aluminum and lumber affected by U.S. President Donald Trump’s tariffs.
McGuinty said his department’s review of the F-35 fighter jet contract with the U.S. — which had been initially presented as an effort to deepen integration with the American military within NORAD — is “continuing,” despite earlier promising it would be completed by the end of summer.
“We will take the time we need,” he said.
He pushed back on suggestions by Conservative MP Cheryl Gallant that the review was being held up so the contract could be used as a “bargaining chip” in trade and security negotiations with the Trump administration, calling it a “mischaracterization.”
NATO targets will be met, minister says
McGuinty’s testimony came after he met with his German and Norwegian counterparts in Ottawa to discuss a potential contract for a new submarine fleet, which the government has said will help Canada meet its NATO spending targets.
The minister told the committee that Canada remains on track to boost military spending to meet its new NATO commitment of spending five per cent of GDP on defence, including 3.5 per cent on core military needs and the rest on related infrastructure.
Carney has promised Canada will meet the previous target of two per cent this fiscal year.
McGuinty said Canada’s commitment has had a “profound effect” on its credibility and standing with NATO allies, who have previously criticized Ottawa for not doing enough on defence. He said particular focus is being made on strengthening Arctic security, including NORAD modernization.
“I remind my NATO colleagues regularly that Canada has that special continental responsibility — many of them don’t,” he said.
“Nowhere is that more important that in the context of the Arctic, where Canada is being asked primarily by the United States and other NATO countries to take on a greater share of the responsibility when it comes to security and sovereignty in the Arctic. So a lot of the investments that are forthcoming will be addressing that question.”
Canada’s defence spending boost also includes raising wages and benefits for Canadian Armed Forces members, as well as building new military housing and improving existing units and bases.
The federal auditor general released two reports earlier Tuesday that found living spaces are at several bases are in “poor physical condition,” and that the military is not bringing in enough new people to meet its operational needs.
McGuinty defended his department’s recruitment process, saying National Defence has made strides in overhauling its recruitment system over the past year and that the military exceeded its recruitment goals last year.
He told the committee the incoming wage increase was identified as a necessary investment to attract recruits and that work was ongoing to improve recruiting and training capacity.
As for housing, McGuinty acknowledged his department is “working actively to improve all of that,” after a reporter asked him Tuesday if he would live in military base housing.
“I’ve walked through those residences, I’ve walked through the kitchens, I’ve walked through the walk-in freezers, I’ve spoken to the dishwashers,” he said.
“We have work to do.”
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