The final bids for submarines — likely the largest military procurement deal in Canada's history — are now in the hands of military and procurement officials in Ottawa as well as senior lawmakers.
The purchase of 12 new diesel-powered submarines would replace Canada’s aging fleet of four Victoria-class subs bought, used, from Great Britain in 1998. Over the past quarter-century the old vessels have faced chronic maintenance issues and costly repairs. It’s become so acute that one vice admiral said last year the Royal Canadian Navy is down to one operational submarine.
The plan to buy new subs worth more than $100 billion was launched in 2024. It falls under the new defense strategy for Canada, announced by Prime Minister Mark Carney last year. Carney wants to beef up the numbers of Canadian military personnel, encourage Canadian industry to build and export military hardware and transition away, as much as possible, from Canada’s reliance on the U.S. for military equipment and defense.
"This strategic autonomy doesn’t mean isolation," Carney said. "It means being strong enough to be a partner of choice rather than a dependent. It means building a domestic defense industrial base so we are never hostage to the decisions of others when it comes to our security. It means diversifying our partnerships so that we’re resilient against any single point of failure."
The new submarines would be used to patrol the east and west coasts as well as the Arctic, defend Canadian sovereignty and improve underwater surveillance and defense capabilities.
Canadian military analysts narrowed the list of contenders for the subs to two companies: Thyssen Krupp Marine Systems (TKMS) of Germany and Hanwha of South Korea. They had until the end of April to tweak their final bids, which, Ottawa insisted, must also contain economic benefits to Canada.
Hanwha has been very public vocal its bid, openly courting the Canadian public with advertising and promotional material such as paying for a huge billboard in Ottawa. The managing director and CEO of Hanwha Ocean Canada, Glenn Copeland, said going with his company will mean the creation of 200,000 Canadian jobs by 2040, as well as partnerships with Canadian firms.
"We’ve had a look at a number of companies and a number of strategic partners for investment," Copeland said. "Inside that window you're also looking at a massive amounts of investment in trade between the two countries."
A couple of weeks ago, Hanwha sweetened its bid, committing to building armored fighting vehicles in Canada if it gets the submarine contract. And it’s signed a partnership agreement with members of the Automotive Parts Manufacturers Association to build the K-9 Howitzer vehicles and weapons systems in Canada, which Canada could also export to help meet international demand. The head of the Automotive Parts Manufactures Association, Flavio Volpe, said his organization fully supports the Hanwha bid.
"They agreed to do something," he said. "If they win the submarine bid, we are going to set up a joint venture that is majority Canadian-owned. The board will be majority Canadian-represented. We will build those ground systems together for the Canadian armed forces purchases but also establish where we might actually use Canada as a base for export."
Volpe said Canada’s auto sector has suffered job losses from U.S. tariffs over the past year.
For its part, TKMS has also been talking with companies across Canada in an effort to strengthen its bid. CEO Oliver Burkhardt said the German pitch also offers many economic benefits, albeit in a different approach.
"The recipient of the bid will be the authorities," he said. "It’s not the public. The public will be the next step. And, of course, we do have industrial cooperation and we have economic value. Of course we have all that in. But for my point of view, it’s too early to call out figures and throw it into the public and just raise expectations. We go it a different way."
The Germans have also sweetened their bid, announcing they’ve reached a memorandum of agreement with General Dynamics Mission Systems-Canada to set up an undersea research station in Canada. It would be called Arctic Sentinel and would focus on underwater surveillance technology for the Arctic, offering military and civilian uses.
The winner of the submarine contract will be announced by the end of June.
