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Military growing more reliant on contractors — a boon for CAE, chief executive says

CAE Inc. chief executive Marc Parent says a growing reliance on private contractors by Western armed forces — including Canada’s — bodes well for his company and global security, even as questions linger around spending and accountability.

Escalating strife and international conflict have sparked a military build-up that means governments contending with personnel shortfalls are increasingly depending on private sector firms for everything from catering and construction to hired guns, Parent said in an interview.

“Nobody’s happy about the rise of geopolitical tensions around the world. But what is happening for sure is that defence budgets are on the rise,” he said.

“Militaries literally don’t have enough uniformed personnel to be able to conduct their operations themselves … In Canada, they’re turning to private industry to be able to do more and more contracted services in support of the military,” he said, adding that the trend is global.

Last month, a joint venture between Montreal-based CAE and B.C.-based KF Aerospace secured an $11.2-billion contract from the federal government to train aircrews and provide simulators for the Royal Canadian Air Force.

The 25-year deal represents a vast expansion of the flight simulator maker’s previous role in RCAF training, as the partnership aims to take responsibility for more areas, such as training support crews and procuring trainer aircraft.

“We’ll essentially be running the bases here,” Parent said, referring to those in Moose Jaw, Sask., Winnipeg and Portage la Prairie, Man.

“This is the Canadian government essentially transforming the way they do pilot crew training,” he stated, adding that “pretty much everything” in that realm will be outsourced.

In a world of technologically complex combat, companies can fill critical niches for armed forces already short of recruits.

Defence Minister Bill Blair has said the Canadian Armed Forces faces a shortfall of 16,500 members that could take years to resolve.

David Perry, president of the Canadian Global Affairs Institute, said tapping large corporations and niche outfits makes sense to draw on “specialized skill sets related to digital technology,” among other areas.

“The private sector unquestionably can be more efficient, more nimble, faster decision making,” Perry said.

However, Brown University’s Costs of War project argues that militaries are spending more and more of their budgets on contractors with little accountability for how the funds are doled out.

The Public Service Alliance of Canada has said there is scant evidence that the billions of public dollars spent each year on defence contracts with private firms amounts to an efficient use of funds.

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This report by The Canadian Press was first published June 11, 2024.

News from © Canadian Press Enterprises Inc., 2023