DPSA, DFARS: Agreements for U.S. military to buy from Canada

As the world’s largest military spender, the U.S. Department of Defense (U.S. DoD) is on the radar of defence companies worldwide. Thanks to the Defence production Sharing Agreement (DPSA) and Defense Federal Acquisition Regulation Supplement (DFARS), Canadian firms enjoy a unique relationship with the U.S. DoD market that allows them to compete on equal footing with American firms.

The U.S. DoD relies on Canadian exports for a vast array of military goods and services — everything from technologies and transportation to manufacturing and R&D — to the tune of more than $2 billion a year. Some of the most sought-after solutions include search, detection, navigation and guidance technologies ($506 million), aircraft parts and auxiliary manufacturing ($263 million), aircraft manufacturing ($61 million) and small arms ammunition and manufacturing ($60 million).

The flow of goods for the defence sector are supported by a number of agreements including the Canada-U.S. Defence Production Sharing Agreement (DPSA). For every purchase, Canada and the U.S. Government enter into government to government (G2G) agreements similar to those in a foreign military sales program.

About DPSA

Signed in 1956, Canada has had special access to the U.S. DoD through the Canada-U.S. Defence Production Sharing Agreement (DPSA).

The DPSA views Canadian companies as vital to North America’s industrial base and puts their bids on equal footing with those of U.S. firms. While it opens the door for the U.S. DoD to buy from Canadian companies, the actual laws and regulations that govern purchases are detailed in a different document called the Defense Federal Acquisition Regulation Supplement (DFARS).

About DFARS

U.S. DoD procurement regulations also contribute to Canada’s advantage in accessing the largest defence market in the world. The Defense Federal Acquisition Regulation Supplement (DFARS) helps U.S. DoD procurement specialists understand how they should treat Canadian bids and how they should contract with Canadian suppliers.

DFAR 225.870 Contracting with Canadian contractors
DFARS 225.801-2 Establishing CCC as the prime contractor for U.S. DoD contracts over USD $250,000
DFARS 225.870-8 Recognizes Public Services and Procurement Canada site and employee security clearances as valid
DFARS 225.872-1 Waiving the Buy American Act for defence contracts
DFARS 252.225-7013 Ensuring Canadian goods can enter the U.S. duty-free

These clauses make it easier for Canadian defence companies to do business in the U.S. and provide some remedy against any U.S. protectionism.

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Other agreements

Signed in 1963, the Defense Development Sharing Agreement (DDSA) outlines a shared U.S. and Canada vision for the standardized defense equipment within North America, utilizing Canadian technology to meet U.S. requirements.

Following the success of the DPSA, the National Aeronautical and Space Administration (NASA) signed an agreement to institute a similar level of support to NASA for contracts awarded to Canadian firms through CCC. The agreement allows for discretionary use of CCC as prime contractor for NASA.

How Canadians sell to U.S. DoD

While defence procurement in the U.S. is managed by the U.S. DoD, each individual armed service has its own procurement office and executes its own procurements. In other words, there are offices for the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard and other agencies and organizations. Some of the key offices are:

Each of these offices in turn operates a range of sub-organizations that specialize in different fields of procurement such as research and development, infrastructure, commercial products, and support services. So it’s a good idea to investigate the needs of the various individual branches and see if there’s a sweet spot for what you have to offer.

One centralized agency to get familiar with is the Defense Logistics Agency, which is responsible for furnishing many non-military supplies and services including food, fuel, medical supplies, and spare parts.

The ins and outs of U.S. DoD procurement

How to find U.S. DoD opportunities

On top of all that, Canadian companies have full access to tradeshows and conferences that attract U.S. DoD buyers, U.S. DoD innovation acquisition programs, as well as Canada’s web application to help you find U.S. DoD tenders for you to bid on – the Global Bid Opportunity Finder — giving visibility into what the U.S. DoD is looking for today and indications of future purchasing intentions.

Through the Foreign Comparative Testing (FCT) program, Canadian firms can showcase new and emerging technologies to U.S. buyers.

U.S. DoD Prime Contractor service

U.S. DoD Prime Contractor is a free government service funded by the Government of Canada, supported by the U.S. Government, and that CCC administers to allow Canadians to sell their goods and services to the U.S. DoD and give the American military access to an expanded supply base of approved goods and services.

According to DFARS 225.870 states contracts over the simplified acquisition threshold of USD$250,000 with Canadian suppliers are to be awarded through CCC using the U.S. DoD Prime Contractor service.

Benefits of contracting with Canada

For U.S. military buying commands, the U.S. DoD Prime Contractor service provides the following benefits:

Guarantee of contract performance – When you buy from Canadian sources through CCC, the Government of Canada provides you with a guarantee of contract performance – so you can buy with confidence that we’ve got your back.
Contractual provisions give same data rights – Contractual provisions ensure that the U.S. DoD receives the same rights for data and information related to production that would be normally obtained.
Reduce contract administration effort – CCC fulfills some Defense Contract Management Agency (DCMA) roles by providing price verification and performing assist audits. We also serve as the point of contact for U.S. DoD contracting officials and DCMA North America.
Get assurance of value for money – CCC conducts a cost and price analysis to ensure the Canadian supplier’s price is fair and reasonable and in accordance with Government of Canada Cost and Profit Policy.
Broaden your supply base, reduce supply chain risk – By performing technical, managerial, and financial due diligence on your Canadian supplier, we broaden your supply base and reduce your supply chain risk.

Benefits of Canadians working with CCC

Canadian businesses also stand to benefit with working with the CCC for opportunities with the U.S. DoD including

Equal footing status – As a CCC-approved company, your proposal to the U.S. DoD carries the same weight as one submitted by a U.S. firm.
Government of Canada endorsement of proposal – We review your technical and financial proposal and perform a complete due diligence review to support your proposal.
Help navigating complex procurement process – Using our years of experience, we answer your questions about U.S DoD and their procurement process.
Price certification – We certify that your price is fair and reasonable which eliminates the need to present cost & pricing data that conforms with U.S. accounting standards.
Government of Canada advocacy – We help you find solutions to any disputes or export challenges at any stage of the contract.

Why work with CCC when pursuing deals with global governments

Connect with CCC

CCC has spent decades working closely with the U.S. DoD to connect American military needs with Canadian solutions. If you’re a Canadian defence company looking to sell to the U.S., you may want to check out our step-by-step Guide to U.S DoD Market Entry and take the first steps toward doing business with the U.S. DoD.

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This post was last updated on November 1, 2022.