Government of Canada Unveils Value Proposition Guide

OTTAWA, ONTARIO--(Marketwired - Dec. 19, 2014) - Industry Canada

Industry Canada today released the Government of Canada's Value Proposition Guide, which outlines the Government's approach to assessing defence and Coast Guard procurements. The guide will serve as a reference for companies that want to successfully bid on future defence procurement contracts.

The Value Proposition Guide is a new tool for fostering investment in the Canadian defence industry. The guide will ensure that the Government of Canada's Defence Procurement Strategy will result in the creation of high-skilled jobs and economic growth across the Canadian economy.

The guide was developed after months of extensive consultations with industry leaders. The Value Proposition Guide is supported by large contractors, small and medium-sized businesses, and industry associations, including the Canadian Association of Defence and Security Industries (CADSI) and the Aerospace Industries Association of Canada (AIAC).

Industry Canada will host a series of technical briefings starting in January 2015 to ensure that companies understand the purpose of the Value Proposition Guide as it relates to new military procurement opportunities.

Quick facts

• On February 5, 2014, the Government of Canada announced the Defence Procurement Strategy, which has three key objectives: to deliver the right equipment and services 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 economic growth in Canada, and streamline defence procurement processes.
• The Value Proposition Guide will leverage military spending to create high-skilled jobs and drive economic growth across the Canadian economy.
• Canada's defence sector includes more than 650 companies located in all regions of Canada. The industry generates more than $9.4 billion in revenues, accounting for almost $6 billion of Canada's gross domestic product, and employs more than 65,000 full-time workers.

Quotes

"The Value Proposition Guide will ensure that the Defence Procurement Strategy attracts investment, resulting in high-skilled job creation and economic growth across Canada."

- James Moore, Minister of Industry

"The release of the Value Proposition Guide marks a significant milestone in the implementation of the Defence Procurement Strategy. The Value Proposition instrument is potentially a game changer for our industry. We should see this translate into higher-quality Canadian content and investment in key industrial capabilities. The defence industry looks forward to continuing to work in partnership with the Government on the successful implementation of the guide to specific procurements."

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

"In advance of the Value Proposition Guide, the Canadian defence industry has seen increased activity from foreign-based defence companies in discussing and delivering better and higher-value Canadian participation than in the past. Many Canadian firms are getting calls from international companies for potential partnerships that weren't open for discussion before. We expect that with the release of the initial version of the guide, conversations with Canadian companies about technology transfer, teaming arrangements and partnerships will increase in intensity to ensure that future proposals for Canadian defence contracts are highly competitive from a Canadian participation perspective. This will have a medium- to long-term positive impact on jobs in the defence sector in Canada."

- Mike Greenley, Chair, Canadian Association of Defence and Security Industries

"Today's announcement is a very important milestone in strengthening Canada's procurement process. The Value Proposition Guide incorporates themes that our members have been requesting for a long time, and it encourages companies to formulate innovative, competitive bids that provide real benefit to Canadian industrial capabilities and priorities. This is excellent news for Canadian industry and taxpayers, and we applaud the government for its leadership on this important initiative."

- Jim Quick, President and CEO, Aerospace Industries Association of Canada

"The Value Proposition Guide represents another significant step in the reformation and advancement of our defence procurement system. It contains important features that will enable forward-thinking small and medium-sized enterprises to play their proper roles in the defence industrial base. Considering the important role that SMEs play in nurturing innovation and building our economic strength, this is significant. As a prior chief executive of three such SMEs, and Chair of CADSI's SME Committee, I compliment Industry Canada's bold and timely action that will help SMEs more readily gain access to global value chains."

- John Wright, Director, JPOM Inc.

Associated links

Industrial and Technological Benefits Policy: Value Proposition Guide

Industrial and Technological Benefits website

Canada's Defence Procurement Strategy

Defence Acquisition Guide 2014

Backgrounder

Industrial and Technological Benefits Policy: Value Proposition Guide

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.

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