The crown jewel of a defence industrial strategy: An interview with former ADM(Mat) Troy Crosby

Troy Crosby, Assistant Deputy Minister for Materiel, retires after launching Canadian Surface Combatant and F-35 jet programs. Photo by Justin Tang/THE CANADIAN PRESS (available at: Procurement chief at National Defence to step down - Ottawa Citizen)

David Durand: It is my pleasure to introduce our readers to former ADM(Mat) Troy Crosby. Troy retired from the Public Service of Canada in October 2024 after 15 years as an executive, including 5 years as the Assistant Deputy Minister (Materiel) and Canada’s National Armaments Director (2019-2024). His other public service appointments included: Associate Assistant Deputy Minister (Materiel) (2018-2019); Director General, Defence Major Projects Sector at Public Services and Procurement Canada (2017-2018); Director General, Major Projects Delivery (Air & Land) (2013-2017); Project Manager of the Next Generation Fighter Capability Project (2011-2013); and, Director of Operational Services at the Transportation Safety Board of Canada (2009-2011).

Troy Crosby retired from the Royal Canadian Air Force as a Lieutenant-Colonel in 2008 after a 23-year military career. His postings included positions as Senior Maintenance Manager for the CF18 Hornet, Officer-in-Charge of Fixed Wing Flight Test at the Aerospace Engineering Test Establishment, and Weapon System Manager and Project Manager for Tactical and Medium Altitude Long Endurance Unmanned Aerial Vehicles.

Troy is a graduate of the Collège militaire royal de St-Jean (BSc), the University of Tennessee (MSc), the Empire Test Pilots’ School (Qualified Flight Test Engineer) and the Canadian Forces Command and Staff College.

Troy, thank you for joining us today. The landscape of defence procurement seems to be in a constant state of flux. One of the central pillars of our system, the principle of "fair, open, and transparent" competition, is being challenged. Can you speak to this and the notion that we need to evolve towards a model that is "strategic, fair, and transparent"?

Troy Crosby: David, it's a pleasure to be here. You've hit on a critical point. For years, the default has been that we must compete everything, and the Request for Proposal (RFP) is the primary vehicle. This is largely driven by trade agreements, both internal and external, which mandate this kind of open competition. However, this model isn't always the best fit for the unique requirements of defence.

The problem arises when we are acquiring highly sensitive or classified capabilities. Publishing detailed specifications in an open RFP could compromise national security. A recent amendment to the Government Contracts Regulations (GCR) (made on December 16, 2024, Canada Gazette, Part 2, Volume 159, Number 1) added subsections 3(1)(h) & (i) which except from the regulations:

(h) a contract entered into with a government entity; or

(i) a contract in respect of which a national security exception [NSE] is properly invoked in accordance with subsection 10(3) of the Canadian International Trade Tribunal Procurement Inquiry Regulations, or a contract indispensable to national security in respect of which no trade agreement referred to in subsection 10(2) of those Regulations applies, if the requirements set out in subsection 10(3) of those Regulations are met.

Though this mechanism may allow for a direct contract award to a specific supplier without a public bidding process, it is important to note that the NSE does not preclude competition per se. Instead of posting an open RFP, the contracting authority can choose which potential suppliers to share a RFP with, without necessarily having to disclose the rationale as part of an open Invitation to Qualify (ITQ).

This change is a direct challenge to the "default to open" mindset. The rationale for a national security exception is so compelling that it should lead us to a broader conclusion: not all procurement should be open. The focus needs to be on being strategic, fair, and transparent. This means we should start with a strategic assessment of the market in light of our national interests, such as the opportunity to leverage defence procurement to build partnerships with allies, and then apply a procurement process that is fair and transparent within that strategic context. Beyond that, we need to be transparent about what we are doing and fair in our dealings with participating suppliers. Even where NSEs do not apply, there are flexibilities within the existing set of regulations and policies, such as for the use of Negotiated RFPs and exclusions under GCR sections 6(c) and 6(d) to achieve Canada’s strategic objectives.

Navigating the ITAR Maze and IP Rights

David Durand: Let's pivot to the role of intellectual property (IP). It's often the elephant in the room. In the US, the International Traffic in Arms Regulations (ITAR) system is a significant factor. What are your thoughts on ITAR and its relationship to IP protection, and how does it influence our procurement decisions?

Troy Crosby: While ITAR is a set of US Department of State rules that control the export of certain defence and space-related items, it's deeply embedded in the global defence supply chain. The primary hypothesis is that a lot of ITAR regulation is driven by the US government's desire to protect its sensitive technology and the underlying IP. In Canada, National Defence operates under a policy framework called CTAT, which stands for Controlled Technology Access and Transfer (DAOD 3003-0). This policy requires, in part, that if the US labels something as ITAR-controlled, a Canadian armed forces member needs a secret security clearance to get access to a system's maintenance instructions or technical manuals. This creates a certain challenge to the Canadian Armed Forces (CAF) and Department of National Defence (DND), as well as to industry, particularly in light of recruiting and staff turnover.

David Durand. This brings us to the core issue of IP. Can you speak to how the acquisition of IP is viewed in defence procurement?

Troy Crosby: Canadian industry sometimes advocates for Canada to acquire IP when we buy a system. From my perspective, the need isn't necessarily to own the IP outright. The focus should be on licensing sufficient technical data packages (TDPs) to be able to operate, maintain, and upgrade the systems we buy. Think of the US government’s OMIT (Operations, Maintenance, Installations, and Training) concept; it's about having access, to the extent required for CAF/DND and Canadian industry to sustain a capability, throughout its life.

The difficulty of IP acquisition is that it's often seen as the seller's "crown jewel." When the conversation turns to ownership, it can shut down a deal or make it prohibitively costly. Also, IP isn't a static asset; it requires continuous maintenance to reflect the current configuration of the system. That said, current government policy - Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts - is for industry to retain foreground IP unless the Crown claims an exception, such as for national security reasons.

The Need for Continuous Sustainment and Open Architectures

David Durand: The traditional model of mid-life equipment upgrades every 20 years is no longer viable. Today, a system can be obsolete off the assembly line. How does this reality influence our approach to procurement?

Troy Crosby: It's a profound shift in mindset. The “Our North Strong and Free" defence policy recognizes the need for continuous capability sustainment. While a ship's hull or an airframe, might last 40 years with ongoing maintenance, its fighting capability is largely a function of its sensors, communications systems, and weapons. These elements need to be refreshed on an ongoing basis. We can't afford to wait 20 years, or even 5 years; we need to be constantly investing and reinvesting.

This necessitates a change in how we specify our requirements. Instead of simply focusing on raw performance metrics—how fast or how far a platform can go, or how sensitive a sensor is—we need to prioritize open architectures and system modularity. This is the only way to avoid vendor lock and enable the rapid integration of emerging and disruptive technologies. We need to buy systems along with the IP licenses, or sufficient technical data, to allow us to quickly and efficiently make upgrades over time.

For innovators, however, this creates a tension. They want to protect their own IP, especially from the acquisitive nature of the international market. The risk of IP flight is real; if we invest in R&D and the IP moves to larger markets, are we truly achieving economic sovereignty?

Fostering Domestic Innovation

David Durand: This leads to a final, crucial point: how does the government support and enable domestic innovation? You've listened to CBC Listen (from 11m10s to 24m20s) wherein Vice-Admiral (retired) Mark Norman and former NATO assistant secretary general for defence investment Ms. Wendy Gilmour were interviewed about acquiring defence capabilities and addressed some of the challenges in disentangling systems from those of our allies. Understanding that we would like to avoid taking actions that may undermine our ability to contribute to our allies – and share capabilities within the realm of the “defense of democracies” – our allies – Troy, what role can the government play in this ecosystem?

Troy Crosby:  The challenge is that the government is not yet set up to be a catalyst for the investments required for R&D and our procurement processes do not foster a vibrant domestic defence industrial base. If we can't build and innovate here, we risk remaining a nation that largely buys and operates other countries' systems.

We need a defence industrial strategy that supports entrepreneurs investing in, building and sustaining tomorrow’s operational capabilities. It's about moving from a transactional relationship to a strategic partnership with our domestic industry. This is the only way we can ensure that we’ll be able to acquire and sustain the capabilities we need from Canadian suppliers while also securing our economic future through export to our allies.

David Durand: Troy, thank you so very much for speaking with me, and educating us on the intricacies of defence procurement, especially in the IP space. Though I know that you will not be able to join us at FORPIQ2025 - Strengthening Canada’s competitive advantage in a global economy - we certainly look forward to speaking again in the near future.

For those that would like to join us, register here (online, subject approval) or here (in person).