On February 5, 2014, the Government of Canada announced the Defence Procurement Strategy (DPS) to deliver the right equipment to the Canadian Armed Forces and the Canadian Coast Guard in a timely manner, leverage purchases of defence equipment and services to create jobs and growth in Canada, and streamline the defence procurement process.
A key deliverable under the DPS is the new Industrial and Technological Benefits (ITB) Policy, which requires bidders to compete on the basis of the economic benefits to Canada associated with each bid and undertake business activity in Canada equal to the value of the contracts awarded. Previously, winning bidders were selected on the basis of price and technical merit. Now, however, the Government will also assess the bidder's proposed economic Value Proposition to Canada.
On December 19, 2014, the Government released the Industrial and Technological Benefits Policy: Value Proposition Guide, which will serve as a starting point for discussions with industry on a procurement-by-procurement basis. The guide will be reviewed and will evolve over time through engagement with industry and as the Government gains experience with an approach that provides flexibility and discretion in its application.
Submitted at bid time, the Value Proposition will outline the bidder's commitment to support Canadian economic development. The Value Proposition will be rated as part of the overall bid evaluation, a departure from past practice when bidders were scored solely on the basis of price and technical merit. This new approach gives the Government a more powerful tool to leverage high-impact economic outcomes from defence procurements.
The ITB Policy, including the Value Proposition, will apply to all eligible defence procurements over $100 million and all eligible Canadian Coast Guard procurements over $100 million and for which the National Security Exception applies. All eligible defence procurements with contract values between $20 million and $100 million will be reviewed for the use of Value Propositions. The review will determine whether the application of a Value Proposition is consistent with achieving the appropriate balance between capability, cost and benefit to Canada.
The ITB Policy will support the long-term growth of Canada's defence sector; promote the growth of prime contractors and suppliers in Canada, including small and medium-sized enterprises across the country; enhance innovation in Canada through research and technology development; and increase the export potential of Canadian-based firms.
To emphasize the importance of supporting strong growth in the defence sector, the Government has established an aggressive target to increase defence revenues by 40 percent over the next 10 years.