Harper Government Leveraging Investments for Innovative Canadian Small and Medium Sized Businesses

TORONTO, ONTARIO--(Marketwire - Feb. 20, 2013) - Today, the Honourable Christian Paradis, Minister of Industry, along with colleagues across the country, announced the final enhancement to the Industrial and Regional Benefits (IRB) Policy. This enhancement will encourage long-term private sector investments in innovative Canadian small and medium-sized enterprises (SME) in areas related to research, development and commercialization.

"Our government's top priorities are jobs, growth and long-term prosperity. Canada's small and medium-sized enterprises play a crucial role in our economy, punching well above their weight in terms of jobs, gross domestic product and exports," said Minister Paradis. "This enhancement will leverage hundreds of millions of dollars in new private sector investments in small and medium-sized companies to help them get their innovative ideas from the drawing board to the marketplace."

Through the Industrial and Regional Benefits Policy, firms that are awarded major defence and security contracts are required to reinvest 100 percent of the contract value back into the Canadian economy. The Investment Framework being launched today provides incentive for contractors to meet their Industrial and Regional Benefits Policy obligations by partnering with innovative Canadian SMEs. By providing more certainty and more credit at the front end of investments, the Investment Framework will foster more strategic, enduring business relationships and high-quality opportunities that will last years beyond the initial commitment.

"Our government will continue to work with Canadian industry to maximize military and defence procurements in support of Canadian jobs, economic growth and the competitiveness of Canadian industries," said Minister Paradis.

In 2009, the Harper Government announced seven enhancements to the Industrial and Regional Benefits Policy aimed at maximizing access to international business opportunities and improving the commercialization of innovative Canadian technology. The Investment Framework is the seventh and final enhancement. The government consulted widely with stakeholders at all stages of the enhancements' development, dating back to 2008. Industry Canada also sought independent third-party expertise to validate the Investment Framework model, engaging Ernst & Young in 2011 to give advice and to provide information on industry best practices.

For more information, visit the Industrial and Regional Benefits website (www.ic.gc.ca\irb).

Backgrounder

Industrial and Regional Benefits Policy

Investment Framework

The Industrial and Regional Benefits Policy

Created in 1986, the Industrial and Regional Benefits (IRB) Policy is the Government of Canada's primary tool for leveraging major federal defence and security procurements for the benefit of long-term industrial and regional development. The IRB Policy requires companies that win these contracts to undertake business activities in Canada at a value equal to that of the contract they have won.

The IRB Policy encourages high-quality and advanced technology business activities, exposes Canadian companies to global markets and assists in the development of long-term business relationships.

Enhancing the IRB Policy

In 2009, following broad consultations with industry, the Harper government announced seven key enhancements to the IRB Policy to encourage more strategic and even higher-quality business activities in Canada. Information on all seven of the enhancements to the IRB Policy is available on the Industrial and Regional Benefits website (www.ic.gc.ca/irb).

The seventh and final enhancement, the Investment Framework (IF), is an IRB crediting tool that directly benefits small and medium-sized enterprises (SME).

The Investment Framework

The IF encourages defence contractors to fulfill their IRB obligations by receiving credits for their long-term investments in Canadian SMEs, provided those investments are focused on R&D and commercialization activities. The objective is to increase the number and value of business expenditures in R&D at SMEs. An important feature of the IF involves IRB credits being awarded earlier and with more certainty during the procurement process.

Multipliers

Under the IF, IRB credits will be multiplied based on the nature of the investment the contractor makes. IF activities will have multipliers of four, seven or nine, depending on the type of investment. This means that for each dollar invested in an eligible IF activity, the contractor making the investment will receive multiplied IRB credits.

Eligible Investment Framework Investments

• must involve R&D and commercialization activities
• must be made directly in a Canadian SME
• may take the form of cash or in-kind contributions
• will receive those IRB credits earlier and with more certainty
• will receive multiplied IRB credits based on the value and type of the investment

Type of Investment	Multiplier
Cash for R&D activities or licence for intellectual property	9
Cash to purchase or in-kind transfer of equipment	7
In-kind transfer of knowledge and/or marketing/sales support	4

Independent Expertise and Validation

The IF was developed with the assistance of independent expertise and validation. Industry Canada consulted widely with stakeholders, both internal and external to government, to take advantage of recognized expertise and industry best practices.

Applicant Guide

A detailed Applicant Guide has been developed to explain the IF in more detail and to provide step-by-step guidance about the application process. The Guide is available on the Industrial and Regional Benefits website (www.ic.gc.ca/irb).