Innovation, Science and Economic Development Canada

Innovation, Science and Economic Development Canada

May 24, 2016 14:42 ET

Government of Canada Delivers Greater Transparency in Defence Contract Obligations

Canadian defence firms will be able to better take advantage of supply chain opportunities

OTTAWA, ONTARIO--(Marketwired - May 24, 2016) - Innovation, Science and Economic Development Canada

In keeping with the Government's commitment to openness and transparency, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development (ISED), today announced that the progress defence contractors are making in fulfilling their obligations under the Industrial and Regional Benefits (IRB) Policy and the Industrial and Technological Benefits (ITB) Policy will be published for the first time.

This information will help Canadian companies and research institutions promote their business and develop partnerships with defence contractors while keeping Canadians informed about contractors' progress in fulfilling their obligations.

Under the IRB and ITB policies, defence contractors are required to undertake business activity in Canada equal to 100 percent of the value of their contracts. These policies are helping to build regional strengths across Canada in the defence and other sectors of the economy. Defence contractors and their major suppliers have created significant new opportunities for small and medium-sized firms in Canada, notably in the manufacturing sector. These investments are also fostering research, development and innovation and positioning Canada for export success and future growth.

Quotes

"These government policies create opportunities for Canadian firms across all sectors. Releasing this information will help Canadian businesses gain a foothold in important and lucrative defence supply chains, growing both their business and our economy. Sharing this information with Canadians is also an important part of the Government being open, transparent and accountable."

- The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development

"CADSI welcomes the opportunity to communicate the progress defence contractors have achieved in fulfilling their Industrial and Regional Benefits and Industrial and Technological Benefits obligations to Canada. This will also help Canadian small and medium-sized enterprises access global supply chains. CADSI worked in close partnership with the Government to support enhanced transparency around policies that are enabling the Government to leverage economic benefit for Canada from defence procurements."

- Christyn Cianfarani, President, Canadian Association of Defence and Security Industries

Quick facts

  • The IRB and ITB policies have been applied to 125 contracts since 1986, resulting in obligations to invest $37.7 billion in Canada.
  • Of those obligations, $24 billion has been invested, $9 billion is in progress and $4.7 billion has yet to be invested in Canada over the life of the contracts.
  • Presently, 30 defence contractors have outstanding obligations and report annually to ISED on their progress toward fulfilling their commitments. The status of these obligations will be reported on an annual basis.

Related products

  • Backgrounder: Industrial and Regional Benefits Policy and Industrial and Technological Benefits Policy

Associated links

- IRB obligations

- ITB obligations

- IRB and ITB policies

Follow Minister Bains on social media.

Twitter: @MinisterISED

May 24, 2016

Backgrounder

Industrial and Regional Benefits Policy and Industrial and Technological Benefits Policy

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.

Contact Information

  • Philip Proulx
    Press Secretary
    Office of the Minister of Innovation,
    Science and Economic Development
    343-291-2500

    Media Relations
    Innovation, Science and
    Economic Development Canada
    343-291-1777
    ic.mediarelations-mediasrelations.ic@canada.ca