Frequently Asked Questions (FAQ)
- What is the Industrial and Regional Benefits (IRB) Policy?
- What organization is responsible for the IRB Policy?
- How exactly does the IRB Policy work?
- When does the IRB Policy apply?
- How does Industry Canada determine if the IRB Policy applies to smaller procurements (under $100 million)?
- What mechanisms are in place to ensure that IRB contractors fulfill IRB commitments?
- What are the two types of eligible IRB transactions?
- How is Canadian Content Value (CCV) calculated?
- What role do the Regional Development Agencies play in IRB ?
- What were the recent changes made to the IRB Policy?
- What are Global Value Chains (GVC) with regards to the IRB Policy?
- What is the process for banking IRB Transactions?
- How can a Canadian company participate in the IRB Policy?
- Are Canadian companies that win government contracts subject to the IRB Policy?
- How can I find out what companies have IRB obligations to the Government of Canada?
- My company has been contacted by an Industry Canada IRB Manager to verify Canadian Content Value (CCV). Have I done something wrong in calculating it?
- How long does an IRB contractor have to fulfill an IRB obligation?
- Is there a required regional distribution of IRB work across Canada? Does the Policy force IRB contractor to work with specific companies?
- If my company is not involved with bidders before the Request for Proposals (RFP), have I missed the opportunity to be involved with IRB
- Companies must send Industry Canada corporate and business activity information which is commercially sensitive and confidential. What reassurances do they have that the information is being protected properly?
Q1. What is the Industrial and Regional Benefits (IRB) Policy?
The Industrial and Regional Benefits (IRB) Policy provides the framework for ensuring long-term industrial and regional development from Government of Canada defence and security purchases. The Policy ensures that business activity equal to the value of the contract is generated in Canada from companies who win these contracts.
top of pageQ2. What organization is responsible for the IRB Policy?
The IRB Directorate, housed within the Aerospace, Defence and Marine Branch of Industry Canada, is responsible for managing the IRB Policy on behalf of the Government of Canada.
top of pageQ3. How exactly does the IRB Policy work?
Please refer to How the IRB Policy Works for further information.
top of pageQ4. When does the IRB Policy apply?
The Policy applies to Government of Canada defence and security procurements that are exempt from international trade agreements to which Canada is a signatory, such as the World Trade Organization and the North American Free Trade Agreement (NAFTA). The Policy is mandatory for certain projects greater than $100 million and discretionary for projects between $2 and $100 million.
top of pageQ5. How does Industry Canada determine if the IRB Policy applies to smaller procurements (under $100 million)?
Industry Canada takes a number of factors into account when deciding whether or not to apply the Policy to government procurements under $100 million. Considerations include the following: 1) Is the procurement strategic to Canadian industry?; 2) Are the potential bidding companies of interest to Canadian industry and are they capable of fulfilling an IRB obligation?; 3) Is the project a smaller part of a larger one?
top of pageQ6. What mechanisms are in place to ensure that IRB contractors fulfill IRB commitments?
IRB contractors are required to submit annual IRB reports to Industry Canada. These reports detail the work that have been placed with Canadian industry; the contractors only get credit for work once it has been verified by Industry Canada officials. This annual report and subsequent granting of IRB credit allows officials to ensure IRB contractors are on the right track.
However, if the IRB contractor does not meet the IRB obligation by the end of the contract, performance guarantees and contractual penalties are imposed.
top of pageQ7. What are the two types of eligible IRB transactions?
There are two types of IRB transactions: direct and indirect. Each major procurement has its own mix of direct and indirect IRB requirements, according to the overall procurement strategy and depending on what makes business sense to the IRB contractor. An IRB transaction is the actual work package between the IRB contractor and the Canadian company.
Direct IRB transactions are IRB transactions containing work directly related to the product or service that the government is procuring. This could include production of parts or maintenance directly on the Canadian equipment purchase. Direct can also include work on Global Value Chain (GVC) platforms. Work on these approved platforms will be considered direct work as it offers significant technological opportunities on similar platforms that the IRB contractor is providing to Canada.
Indirect IRB transactions are transactions containing work or investments that are not related to the Canadian purchase. Work within the IRB contractor's other business lines which meet the IRB eligibility criteria, is considered indirect. Example: an IRB contractor that provides military helicopters to Canada places work in a Canadian company that produces aircraft parts for a commercial program. The IRB contractor is placing work from another business line to support their IRB obligation on the helicopter project
Examples of Indirect IRB transactions include:
- purchase of goods or services from Canadian high-technology companies;
- investments in post-secondary institutions and non-profit research and development institutions;
- investments made directly with a Canadian company;
- investments made to Venture Capital Funds (VCF); or
- investments to Consortia.
Q8. How is Canadian Content Value (CCV) calculated?
CCV is measured in Canadian dollars and is the portion of the selling price of a product or service associated with the work actually performed in Canada. The Canadian company calculates the CCV for the IRB contractor.
All proposed IRB transactions must be valued in terms of the CCV . Only the Canadian labour and materials of a particular work package is counted toward an IRB contractor's obligation. For example if an IRB contractor places a $1-million contract with a Canadian company and the CCV of the particular work package is 65 percent then the contractor would receive credit for $650 000.
A detailed explanation of how to calculate CCV is included in the IRB contractor's contract. It is also available on the IRB website in section 4 of the IRB Model Contract.
top of pageQ9. What role do the Regional Development Agencies play in IRB ?
The RDAs are the Atlantic Canada Opportunities Agency (ACOA), Canada Economic Development for the Quebec Region (CED-Q), and Western Economic Diversification (WD). The RDAs participate in the development of the IRB strategy and evaluation of IRB bids, as well as playing an important role in facilitating IRB -related outreach events for companies in their respective regions. The RDAs are also excellent contacts for IRB contractors and Canadian industry for IRB -related information in their region.
top of pageQ10. What were the recent changes made to the IRB Policy?
In September 2009, the Government of Canada announced that it would make seven enhancements to the IRB Policy to ensure that the Policy remains a viable, effective tool to leverage federal procurements for industrial and regional development. The seven enhancements are:
- Phase in of 60 percent upfront requirement;
- Incentive to create public-private consortia;
- Improved recognition of the value of Canadian firms' participation in GVC ;
- Strategic plans from prime contractors with major IRB Obligations;
- Banking of IRB transactions;
- Enhancing the Priority Technology List; and
- A framework for firm-level research, development, and commercialization.
For further information on the changes please go to the IRB Policy Improvements section of the website.
top of pageQ11. What are Global Value Chains (GVC) with regards to the IRB Policy?
In the IRB context, GVC represents work on a platform that is similar to the platform being proposed for a particular project; has a market potential (measured by market size and longevity) equal to or greater than the platform proposed for the particular project; and offers significant opportunities for technological advancement, growth in the level of system integration, small and medium-sized business participation. This work could also have potential large-scale and sustainable acquisition opportunities.
top of pageQ12. What is the process for banking IRB Transactions?
Companies who wish to bank IRB transactions must contact Industry Canada and request the opportunity to bank IRB transactions on a potential procurement. Please see Guidelines for Banking of Industrial and Regional Benefit Transactions for more information.
top of pageQ13. How can a Canadian company participate in the IRB Policy?
Canadian companies can optimize participation in IRB by following some key steps:
- Identify opportunities
- Research upcoming and current procurements and identify key contacts with the major prime contractors.
- Study the bidder's/IRB contractor's products and those of their suppliers.
- Contact an IRB manager and/or officials at the Regional Development Agencies for specific project information and advice.
- Prepare a marketing plan that demonstrates how your product or service is competitive and how it could fit with the bidder's/IRB contractor's business activities.
- Make sure your company has the appropriate accreditation (ISO, Controlled Goods, etc.).
- Keep your company website up to date.
- Register on the Canadian Company Capabilities List at www.ic.gc.ca/eic/site/ccc-rec.nsf/eng/home.
- Make contact with bidders or current IRB contractors
- Make direct contact with the primes and their major suppliers and present your marketing plan.
- While IRB officials can help point companies toward each other, it is up to you to make contact and sell your product or service.
- Network
- Gather additional intelligence and make contacts through trade associations, industry days, conferences and trade shows.
Q14. Are Canadian companies that win federal government contracts subject to the IRB Policy?
Yes, any company that wins a specific Government of Canada procurement that has an IRB requirement, must fulfill the IRB obligation.
top of pageQ15. How can I find out what companies have IRB obligations to the Government of Canada?
Please proceed to the section Procurement Projects on the website for further information.
top of pageQ16. My company has been contacted by an Industry Canada IRB Manager to verify Canadian Content Value (CCV). Have I done something wrong in calculating my CCV ?
Not necessarily. Companies with IRB obligations must report annually to Industry Canada on the activities they are undertaking to obtain IRB credits. Industry Canada officials then verify the content in these reports, including the CCV calculations. If your company is contacted, IRB Managers are simply checking that your company has an established process for calculating the CCV and has correctly calculated it based on the formula found in the contract.
top of pageQ17. How long does an IRB contractor have to fulfill an IRB obligation?
The amount of time that an IRB contractor has to complete an IRB obligation is dependent on the specific project. As the IRB obligation is part of the overall procurement contract and is completed at the end of the contract. However, in some cases because the duration of the contract is short, the IRB period goes beyond the end of the contract.
top of pageQ18. Is there a required regional distribution of IRB work across Canada? Does the Policy force IRB contractor to work with specific companies?
No, the IRB Policy is a market-driven policy, which means that IRB contractors place work with Canadian companies that make the best business sense to them. The Policy is set up this way so it will ensure that long-lasting business relationships are created and maintained between IRB contractors and Canadian companies. The Policy does not dictate where IRB work must be placed. However, we encourage bidders/IRB contractors to make efforts to have a balanced regional IRB plan.
top of pageQ19. If my company is not involved with bidders before the Request for Proposals (RFP) is released, have I missed the opportunity to be involved with IRB ?
No, bidders usually identify an initial portion of their IRB plan as part of their response to an RFP. Once a successful bidder is under contract there is a good probability they have not identified their full plan and thus there is still opportunity for Canadian companies to become involved.
top of pageQ20. Companies must send Industry Canada corporate and business activity information which is commercially sensitive and confidential. What reassurances do they have that the information is being protected properly?
Industry Canada has a responsibility to i) be open and transparent regarding IRB commitments, and ii) to protect companies' commercially confidential information. In the first case, an IRB Obligor's overall IRB commitments, claims and achievements is information available to Parliament and the public. In the latter case, any company's specific corporate and IRB transaction information is considered by Industry Canada as commercially confidential and its receipt, storage and protection is governed by federal laws and processes, including the Access to Information and Privacy Acts. Contractors are encouraged to clearly mark their documents, identifying each page as belonging to them and containing sensitive, commercially confidential information.
If you have a specific question on the IRB Policy, please contact the Industrial and Regional Benefits Directorate.
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