Series Glossary

Introduction

Canada’s Defence Industrial Strategy’s most significant operational shift is its adoption of a formal Build-Partner-Buy (“B-P-B”) procurement posture. While presented at a policy level, B-P-B has concrete legal consequences for how bids are framed, how deals are structured, and how intellectual property is negotiated.

For both counsel and industry, this new framework operates as a sorting mechanism.

Build-Partner-Buy as a Legal Framework

Under the DIS, pathway selection is not passive or downstream. Whether a project is positioned as Build, Partner, or Buy affects:

• Evaluation criteria
• The role of Canadian content and capability
• Sustainment and lifecycle expectations
• IP ownership, access, and licensing terms

As a result, procurement strategy and legal strategy have become increasingly intertwined.

Deal Structure is Decisive

As B-P-B emphasizes domestic capability and long-term sustainment, contractual design becomes a key focal point. Partnership agreements, joint ventures, and subcontracting arrangements are no longer accessory documents – they are materially affecting proponents’ bid potential.

Key legal considerations include:

• Governance and decision-making authority
• Allocation of liability and risk
• Export controls and data handling
• Dispute resolution mechanisms

Poorly aligned deal structures can undercut otherwise technically or commercially strong bids.

Practical IP Structuring by Pathway

The DIS places a clear priority on Canadian ownership, protection, and access to intellectual property. At the same time, many defence suppliers (particularly tech companies and SMEs) depend on retaining their own scalable IP models and export commercialization to remain commercially viable.

This tension drives negotiation risk around:

• Broad government licenses
• Step-in and access rights
• Assignment and transfer restrictions
• “Use beyond scope” provisions

Effective contractual drafting should separate ownership, field-of-use, sustainment access, and export commercialization rights instead of collapsing them into a single license grant.

While no single IP model fits all procurements, common patterns are emerging:

• Build/Partner scenarios often involve background IP retained by the contractor where the government receives defined licenses for use and sustainment or field-of-use splits.
• Buy scenarios typically involve more off-the-shelf style purchasing with maintenance rights, update access, and onward disclosure controls.

The DIS pushes towards sovereign control, but commercially sustainable structures remain possible where addressed early and deliberately.

The Evolving Role of ITBs

The DIS signals a shift in how Industrial and Technological Benefits (“ITBs”) function. Rather than a compliance checkbox, ITBs are positioned as a strategic narrative tied to measurable Canadian value, long-term capability, and industrial presence.

Counsel should expect ITB commitments to influence both bid evaluation and contractual performance obligations, even as operational details continue to evolve through policy updates.

What Should be Flagged Early

Under the B-P-B framework, early legal guidance should focus on:

• Procurement pathway selection
• Alignment between deal structure and pathway positioning
• IP posture consistency across bids and contracts
• Sustainment, flow-down, and continuity obligations

Treating these issues as downstream risks rather than early positioning opportunities increasingly carries potential bid-losing consequences.

Learn more in Part 3 where we look beyond bids and contracts to readiness, supply chains, and domestic partnerships where DIS risks materialize after DIA awards.  

Read Part 3

This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances. Counsel should be consulted concerning your own situation and any specific legal questions you may have. Please contact a lawyer to discuss your specific circumstances.

About the Author(s)

Jordyn M. Nachtegaele is an associate lawyer in the McKercher LLP Saskatoon office with experience in entrepreneurship who maintains a general corporate commercial practice. 

Joseph A. Gill is a partner in the McKercher LLP Saskatoon office. He is the Prairie's go-to technology and startup lawyer, having assisted hundreds of Prairie startups from formation and beyond. He works with founders throughout the startup life cycle through growth, scale, and exit. Joe was named a 2025 Lexpert Rising Star - Leading Lawyer Under 40 in Canada. This prestigious national award recognizes exceptional young lawyers who demonstrate leadership, innovation, and community impact.

About McKercher LLP

For 100 years, McKercher LLP has grown deep roots across Saskatchewan, serving the community from offices in Saskatoon and Regina. As one of the province’s largest and most established full-service law firms, we proudly follow a client-first philosophy as we provide legal services and real solutions for the people who rely on us.

Related Articles

Canada’s Defence Industrial Strategy (2026): Practical Legal Considerations for Counsel and Industry Series

Part 1: Canada’s Defence Industrial Strategy: What Changes for Lawyers and Industry

Part 3: Readiness, Supply Chains, and Domestic Partnerships: Managing Beyond the Bid