Peter Graham has been fielding more and more calls from Canadian companies closely watching the race to replace the navy’s aging fleet of submarines, looking for a slice of the billions of dollars about to be put in play.

The head of KPMG Management Consulting’s aerospace and defence team in Canada said the submarine contract is down to two offshore bidders — Germany’s ThyssenKrupp Marine Systems GmbH (TKMS) and South Korea’s Hanwha Ocean Ltd. — but Canada’s defence suppliers will also be in for a big boost.

Canada is looking for an economic return for homegrown companies no matter which company it chooses to build a dozen subs over the next decade.

Hanwha Ocean is reportedly offering a range of collaborations, from Canadian lithium-ion battery production and 

liquefied natural gas

(LNG) to

critical mineral mining

and sustainable energy. The company is also proposing to build submarine sustainment facilities on the east and west coasts as well as a manufacturing facility in Canada to build tanks and military weapons.

Graham said the list of Canadian suppliers that could contribute ranges widely, from systems developers and aluminum and steel producers to

artificial intelligence

and encrypted technology suppliers. That doesn’t include maintenance contracts once the submarines themselves are built and plying Canadian waters.

“I’m comfortable saying tens of billions of dollars,” Graham said about the money that’s up for grabs. “This is a submarine program. Submarines can be operated safely for upwards of 50 years. This is not only the delivery, but the maintenance of it going forward. They’re going to need everything.”

And Canadian firms can fill the need, he said.

“We have a great ecosystem in Canada of companies that serve various militaries. Our clients are excited about all these extra opportunities and promises of spending,” he said.

Graham said the key to delivering on those promises is the federal Industrial and Technological Benefits program. The policy says companies awarded defence and security procurement contracts are contractually obligated to undertake business activities in Canada equal to 100 per cent of the contract’s value, creating jobs, fuelling innovation and economic growth.

“Are we going to get our fair share? Yes, we will,” he said. “It depends on how the contracts are negotiated. But from my experience, I know that there are requirements for economic contributions to Canada.”

In the case of South Korea, that could mean agreements to purchase LNG from Canada.

“We know that Carney has said that he wants to diversify our customer base for LNG,” Graham said.

As for Germany, Prime Minister

Mark Carney

is looking for new economic partnerships with the European Union.

“Whatever partnerships are forged, it’s important that research and development in Canada is protected,” Graham said. “That means intellectual property remains the property of companies in Canada. Whether it’s foreign-owned, the point is that it is in Canada, earning money in Canada, contributing tax dollars in Canada and providing Canadians with jobs.”

The government is moving fast on the sub file. Ottawa announced the procurement process a year ago under the Justin Trudeau Liberal government and has already ruled out most of the competition. Procurement projects this massive tend to move very slowly through the bureaucracy. As the bidding race tightens, both companies appear eager to sign on Canadian suppliers to their bids.

Representatives of TKMS and Hanwha will be attending a defence industry networking event, DEFSEC Atlantic, in Halifax at the end of the month. Potential subcontractors like the Irving and Davie shipyards and a host of smaller outfits will be there.

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“They’ll be in Halifax trying to find Atlantic Canadian customers to partner in that supply chain,” DEFSEC executive director Colin Stephenson said. “It could be a 20-person operation in Burnside (Nova Scotia), or it might be a big contingent from a multinational that’s based in Ottawa. There’s going to be a lot of excitement and energy about the submarine procurement as well as other projects that are going on.”

It’s been three months since Carney announced $9.3 billion in additional defence spending for submarines, aircraft, ships, armoured vehicles, artillery, radar and drones, as well as artificial intelligence and quantum computing. The focus, Stephenson said, would be on greater procurement from domestic companies and sales to allies.

“We’re going through the biggest regeneration of the air force and simultaneously the biggest regeneration of the navy since the end of World War 2,” he said. “The opportunities are huge.”

• Email: arankin@postmedia.com