Foreign-owned buyers of two Canadian defence firms went through without national security review

Lockheed Martin bought Ultra Maritime, a Dartmouth, N.S. Company that builds sonar and undersea warfare systems, for more than $3.4 billion, and Elbit Systems, an Israeli firm, completed its purchase of International Submarine Engineering in Port Coquitlam, B.C. Neither deal has had a public national security review, even as Ottawa says it wants the defence industry kept domestically controlled. The Ultra Maritime company employs more than 1,000 people in Nova Scotia, and its equipment already sits aboard the Royal Canadian Navy's Halifax-class frigates.

Lockheed Martin's Canada VP Kristen Leroux said the combined business "will anchor a foundational position in Dartmouth and the province of Nova Scotia." Elbit said the ISE price "is not material to Elbit Systems" and provided no further comment. Public records show ISE had received federal money, including an IDEAS grant, and prior Department of National Defence contracts.

The federal Department of Innovation, Science and Economic Development said it was aware of both transactions but could not comment on them specifically, citing confidentiality. Under the Investment Canada Act's national security guidelines, updated March 5, 2025, the government says all foreign investments are screened for national security risk and that it "will take action where necessary." Neither deal was publicly reviewed under those rules.

Defence Minister David McGuinty commented on a separate investment in Saskatchewan-based Draganfly Inc., which received US$10 million from Unusual Machines, a company linked to Donald Trump Jr., along with an unnamed U.S. Fund. McGuinty said: "Look, they're investing. What can I say?" Draganfly said the money came with no board seats or "special rights" for Americans. Reports indicated that claim in September; it is the company's own and was not independently verified.

Carney announced a defence industrial strategy Feb. 17 promising billions for small and medium Canadian businesses and saying Canadian firms would get the lion's share of federal defence contracts. The Alliance of Canadian Defence Companies, which represents wholly Canadian-owned firms, says procurement should distinguish between companies operating in Canada and those that are Canadian-owned and controlled. The alliance brought that proposal to Parliament Hill on Nov. 3. Eliot Pence, founder and CEO of Ottawa's Dominion Dynamics, said federal defence spending "would be largely irrelevant" if it did not lead to Canadian-owned and -controlled capabilities.

A Pollara Strategic Insights poll for the alliance, released May 21, found Canadians strongly support investing in domestically owned defence firms and oppose relying on American companies to build military equipment.

The open question is whether Ottawa will take up either acquisition under those screening rules, and the draft offers no date for that decision.