Canada's missing AI guardrails

The message was blunt at the inaugural Tech for Defence Summit in Ottawa: Canada lacks a plan for how artificial intelligence will shape national security, and that gap leaves the country leaning heavily on multinational giants.

Christine Hanson from Global Affairs Canada laid out the scale of the problem when she described NATO’s Defence Innovation Accelerator for the North Atlantic, better known as DIANA. Founded in 2021, DIANA already runs accelerators in London and Halifax that give selected startups €100,000 and a six-month crash program with access to more than 580 experts from industry, government, and academia. The mission is simple but ambitious. NATO wants to maintain its technological edge in a security environment defined by AI, autonomy, cyber operations, and quantum.

Canadian startups have shown they can step up. Out of 600 companies that entered, 72 from Canada made it into the final round. Firms such as Reaction Dynamics, which is developing rockets, and Ottawa’s own TACTIQL, which makes Fulcrum software for tactical operations, are attracting international attention. Canada already has innovators capable of competing with anyone in the alliance. The problem is not talent. The problem is the environment they must operate in.

Right now, Canada has no guardrails for how AI will be used in defence. There are no clear sandboxes where companies can access secure data to build and test new systems. There is no transparent certification process that allows small and medium-sized firms to scale into defence contracts. Instead, companies face certification regimes that run more than a thousand pages. That level of bureaucracy locks out Canadian startups and forces the government to fall back on hyperscalers such as Microsoft, Amazon, and Google. The effect is dependency. Canada’s most sensitive systems risk being built on foreign platforms that the government cannot fully control.

The summit also made it clear that AI is far more than chatbots. AI already drives logistics, predictive maintenance, surveillance, search and rescue, and energy optimization. These systems may not capture headlines, but they represent the backbone of modern security and the future of allied operations. Without a framework for deploying AI responsibly, Canada cannot move fast enough. Procurement cycles drag on for years when militaries need solutions in weeks. Startups that can solve those problems today remain stuck on the outside.

The comparison with DIANA’s accelerator could not be starker. NATO offers companies a clear runway, dedicated mentorship, and rapid paths to adoption. Canada’s domestic system smothers them in paperwork. Every month lost to process weakens the country’s ability to retain sovereign capability.

The risks extend beyond procurement. Countries that spread new technologies into their societies early are the ones that prosper in the long run. By failing to adopt and diffuse AI across sectors such as defence, transportation, and health, Canada risks falling behind more aggressive peers. This gap is not technical. It is political.

One of the most surprising notes at the summit came when speakers linked national security to housing and transit. They argued that affordable housing and efficient transit are not simply social policy issues. They have become national security issues because Canada cannot attract or retain top AI talent without them. The experts did not mince words. No talent means no innovation, and no innovation means no sovereignty.

This argument cuts against the way Ottawa usually talks about security. Instead of abstract slogans about sovereignty, the summit forced a practical conversation. If Canada cannot house its talent pool, and if it cannot provide the transit systems needed to sustain innovation clusters, then the policy choices made on urban planning and infrastructure will directly shape the country’s ability to field AI systems in defence.

The summit also highlighted the emotional edge of the sovereignty debate. For many, sovereignty in AI means making sure data stays protected and secure. It means building a regulatory framework that allows confidence in how data is stored and used. Without that trust, industry cannot deploy AI at scale. Canada has no such framework in place today. That lack of clarity leaves both government and industry cautious, and in the meantime, multinational corporations race ahead with their own solutions.

The industry leaders on stage pointed out that procurement still measures value by price rather than by quality or security. That approach guarantees more contracts go to large multinationals that can underbid smaller Canadian firms. The outcome is predictable. Canada loses sovereign capability while relying more heavily on international providers. Policymakers left the summit with a clear warning. If the federal government continues to let cost dictate procurement, then Canada’s domestic innovators will wither while foreign giants consolidate their hold.

This story is not new. Successive governments have promised to reform procurement and accelerate timelines. What feels new is the urgency. With NATO allies already rolling out accelerators and sandboxes, and with global rivals pressing their own AI systems into service, Canada looks stuck. The timeline for innovation has compressed.

The path forward requires more than tinkering. It requires a mindset shift inside government. Canada must create pathways where small and mid-sized firms can access data securely, test AI applications in defence contexts, and scale without drowning in certification paperwork. The government must also recognize that the ability to house and train AI talent has become a matter of sovereignty, not just social policy. Without a strong talent pipeline, all the accelerator programs in the world will not matter.

The summit closed on a mix of optimism and urgency. Canada has innovators capable of competing with anyone. NATO has given them a platform through DIANA. The missing piece is a domestic policy environment that matches their ambition. Until Ottawa builds clear guardrails for AI, the country will remain dependent on multinationals for the very systems that define modern sovereignty.

Sovereignty in the age of AI is not about waving the flag. It is about setting the rules, building the infrastructure, and trusting Canadian innovators with the tools to lead. Right now, Canada is not doing that. Until it does, slogans about sovereignty will remain hollow.

If you found this briefing valuable, forward it to one person who needs to stay sharp on Canadian tech.