Federal government sales – Defence procurement

Things to know

The Defence Production Act provides the Government of Canada with far-reaching powers and rights in respect of a defence contract or subcontract, including:

• the right to shelter itself from claims in connection with the premature rescission, resolution or termination of a defence contract or subcontract
• the right to reset the amount paid or payable under a defence contract or subcontract to an amount that the Minister determines is the fair and reasonable cost of performing the contract together with a fair and reasonable profit
• the right to require a defence contractor or supplier to file requested information with respect to defence supplies, the sources of supplies, and facilities or accommodation, including related production or storage or the construction of defence projects

Also pursuant to the Defence Production Act, a contractor who has entered into a defence contract or subcontract must keep detailed accounts and records of the cost of carrying out the contract and retain those accounts and records until the expiration of six years after the end of the calendar year in which the contract is terminated or completed.

Things to do

• Where defence-related goods and services are being supplied, factor in the pricing risk that the Defence Production Act introduces to supply contracts.
• Ensure that record-keeping procedures and policies are in place to meet the requirements of the Defence Production Act.