New Approach — Phase in 60 percent up-front requirement
Previous Practice
Bidders are required to identify eligible IRB activities valued at 60 percent of bid price at bid closing. The winning contractor identifies the remaining 40 percent over the remainder of IRB Achievement Period (in some cases, a specific time limit to identify the remaining 40 percent existed).
A bidder's proposed IRB business activities form the basis of its IRB proposal to Canada. The purpose of this 60 percent up-front requirement is to provide the IRB Authority with enough detailed information on the bidder's proposed IRB activities such that their individual quality and risk, as well as the bidder's overall engagement with IRB principles and objectives can be evaluated. The 60 percent identification requirement also represents a strong incentive for bidders to engage in a meaningful way with Canadian industry early on in a procurement.
Why Change?
Stakeholders have indicated that identifying that level of detailed information at such an early stage prevents some bidders from committing to more strategic, high quality business activities, or to those involving regions and SMBs. Bidders that do commit early may increase their costs to reflect the associated risk.
New Practice
The requirement to identify IRB activities will be phased in using three tranches:
| Tranche 1 | At bid closing, bidders will be required to submit an IRB Proposal specifically identifying at least 30 percent of their proposed IRB activities. They will also be invited to provide, on an optional basis, a forecast plan for their second tranche of IRB activities. |
| Tranche 2 | Within one year of contract award, the winning bidder will be required to specifically identify and submit a further 30 percent (or whatever percentage will bring them to a cumulative total of 60 percent) of their proposed IRB activities. |
| Tranche 3 | Within three years of contract award, the winning bidder will be required to specifically identify and submit the remaining 40 percent (or whatever percentage will bring them to a cumulative total of 100 percent) of their proposed IRB activities. |
The first 60 percent of IRBs, which are submitted in tranches 1 and 2, will be subject to the same formal assessment processes as currently take place. Failure to submit the first 30 percent will result in the IRB Proposal being declared non-compliant. Failure to submit the second and third tranches at the required times will result in the holdback of a milestone payment within the contract.
| Tranche | Time Period | Requirement | Optional | Evaluation | Consequence | Notes |
|---|---|---|---|---|---|---|
| * or whatever percentage will bring cumulative total to at least 60% ** time period for this requirement may vary *** or whatever percentage will bring cumulative total to 100% |
||||||
| 1 | Bid Closing | Submit IRB Proposal, including identification of at least 30% of proposed IRB | Include a "Forecast Plan" for Tranche 2 IRB activities | Formal evaluation of IRB Proposal by Industry Canada (IC) and Regional Development Agencies (RDAs) | IRB Proposal declared non-compliant | |
| 2 | One year after Contract Award | Submit further 30%* of proposed IRB | Formal assessment of IRB Transactions by IC & RDAs | Milestone payment withheld | 30 day grace period before penalty | |
| 3 | Three** years after Contract award | Submit further 40%*** of proposed IRB | Review by IC, in consultation with RDAs | Milestone payment withheld | 30 day grace period before penalty | |
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