Industrial and Regional Benefits Policy and Industrial and Technological Benefits Policy
Backgrounder
The Industrial and Regional Benefits (IRB) Policy and the Industrial and Technological Benefits (ITB) Policy generally require prime contractors of defence procurements to undertake business activity in Canada equal to 100 percent of the value of the contracts that they are awarded by the Government of Canada.
As part of the Government's commitment to transparency, Innovation, Science and Economic Development Canada (ISED) has, for the first time, posted information on its website that shows the progress that prime contractors are making toward meeting their obligations under the IRB and ITB policies. This will help Canadian companies, especially small and medium-sized firms, position themselves for supply chain and partnership opportunities with contractors that have outstanding obligations to invest in Canada. The information reflects progress as of January 4, 2016 and will be updated each winter.
Since 1986, the IRB and ITB policies have been applied to 125 procurement contracts. To date, $24 billion has been invested, $9 billion is in progress and another $4.7 billion remains to be invested over the life of contracts in question. There is a lag between the time when companies make investments in Canada and when these are reported publicly, as companies are required to report annually. Taking this into account, progress in fulfilling obligations is generally on pace.
Generally, contracts with significant outstanding obligations are in-service support contracts that have an estimated ceiling price. At the end of the contract, ISED will reduce the obligation to match the actual project cost or extend the period of time that contractors have to fulfill their obligations to match the extended contract term should options be exercised.
In December 2014, the IRB Policy was transformed into the ITB Policy. Previously, procurements were awarded based on price and technical merit. Now the Government also takes into account the economic benefit to Canada associated with each bid when determining which companies will be awarded procurement contracts. This allows the Government to steer investments in Canada into priority areas like research and development to advance Canada's innovation agenda.
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Hon. Navdeep Singh Bains Innovation, Science and Economic Development Canada Economics and Industry