Frequently Asked Questions — Phase in 60 percent up-front requirement

Why Change?

  1. Why are you changing the 60 percent up-front requirement?
  2. Did you consult the defence and security industry about this change? What did they say?
  3. Why did you choose a 30/30 split? Will Canadian industry not lose too much leverage in allowing a contractor to win the contract while identifying so few of their IRB activities?
  4. Why are you inviting bidders to submit at bid closing a "forecast plan" of their second tranche of IRB activities? Doesn't this defeat the purpose of phasing in the 60 percent requirement? Is it a mandatory requirement? Will it be scored? What should it look like?
  5. Why are you asking contractors to identify all of their IRB activities within three years of contract award? Won't this requirement be unreasonable for longer contracts?
  6. Given that the 60 percent of IRB activities will be at different stages of review and approval during the first year after contract award, what will be the communication protocol between IRB officials and Contractors?
  7. Given that the 60 percent of IRB activities will be at different stages of review and approval during the first year after contract award, what will be the communication protocol between IRB officials and Contractors?
  8. Are the new safeguards appropriate? Why are you withholding milestone payments?
  9. Are bidders required to follow the 30/30 split exactly? What happens if a bidder submits 45 percent of their IRB activities at bid closing? What happens if a bidder submits 25 percent at bid closing?

 

  1. Why are you changing the 60 percent up-front requirement?

    Stakeholders have indicated that identifying 60 percent of their proposed IRB activities at bid closing prevents some bidders from committing to more strategic, high-quality business activities that take longer to establish, or to those involving regions and Small and Medium Business(SMBs). In addition, bidders that do commit early sometimes increase their costs to reflect the associated risk.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q1
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  2. Did you consult the defence and security industry about this change? What did they say?

    Yes, we consulted widely with industry stakeholders. Phasing-in the 60 percent up-front requirement was one of the changes discussed with industry during consultations which took place over the past year.

    Some bidders stated that the requirement to identify a high level of detailed information at bid closing prevents them from committing to more strategic, high-quality business activities, or to those involving regions and SMBs. Bidders that do commit early sometimes increase their costs to reflect the associated risk.

    Some stakeholders expressed concern that any change to the 60 percent requirement would weaken the incentive for primes to engage early and in a meaningful way with Canadian industry.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q2
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    30/30 Split?

  3. Why did you choose a 30/30 split? Will Canadian industry not lose too much leverage in allowing a contractor to win the contract while identifying so few of their IRB activities?

    The 30/30 split was selected for its ease and simplicity.

    Industry Canada recognizes that the 60 percent requirement is viewed as a strong incentive to bidders to engage early and in a meaningful way with Canadian industry.

    Some bidders are able to easily and firmly identify these activities early on. Some others, due to the nature of their businesses or of the specific procurement, can only provide their best guess at bid closing of their business activities in Canada. In these cases, sub-contracts are finalized some months after contract award.

    We believe that a more gradual phased-in approach, coupled with firm time lines, will better mirror normal business cycles while maintaining a strong incentive to engage effectively with Canadian industry.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q3
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    Forecast Plan?

  4. Why are you inviting bidders to submit at bid closing a "forecast plan" of their second tranche of IRB activities? Doesn't this defeat the purpose of phasing in the 60 percent requirement? Is it a mandatory requirement? Will it be scored? What should it look like?

    The invitation to submit a "forecast plan" at bid closing for the second tranche is just that — an invitation. Unlike the mandatory identification of the first 30 percent IRB activities, the "forecast plan" for the second tranche is optional. It is not a mandatory requirement and will not be scored.

    The reason we are including this invitation is to encourage bidders to maintain a high level of IRB planning, engage early with Canadian industry and reduce their IRB program risk.

    There is no prescribed format for a "forecast plan". It should contain information regarding the bidder's state of planning for the second tranche of IRB activities. This may involve describing planned supplier development activities. It could also involve listing specific Canadian companies with which the bidder is considering doing business. Alternately, it could involve listing specific capabilities for which the bidder is seeking Canadian participation. There may be other information the bidder wishes to provide.

    Ultimately, it is the bidder's decision about whether to include a "forecast plan" and if so, its format and contents.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q4
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    Identifying 100 percent Within 3 Years?

  5. Why are you asking contractors to identify all of their IRB activities within three years of contract award? Won't this requirement be unreasonable for longer contracts?

    This requirement is not new. It reflects our current practice on many contracts with IRB requirements. The purpose of the requirement is to encourage contractors to continue their IRB planning and identify all of their IRB program as early as possible.

    While three years will be the standard time frame, IRB Managers will have the discretion to recommend adjusting the time period if required, to suit the circumstances of a particular project (unusual contract timeframe, changing or emerging technical requirements, etc).

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q5
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    Evaluation Process

  6. What is the evaluation process for the new phased-in approach?

    Previously, the 60 percent IRB activities weree evaluated according to the Evaluation Plan laid out in the Request for Proposal. Industry Canada and the Regional Development Agencies (RDAs) meet to review and assess whether the IRB proposal from each bidder meets the mandatory IRB requirements and criteria. Within this review, IRB transactions are assessed and scored for their quality and risk.

    Under the new phased in approach, Industry Canada and the RDAs will meet twice — the first time at bid closing to formally evaluate the IRB Proposal and the first tranche of IRB transactions, and the second one year after contract award to assess the second tranche of IRB transactions.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q6
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    Communications Protocol

  7. Given that the 60 percent of IRB activities will be at different stages of review and approval during the first year after contract award, what will be the communication protocol between IRB officials and Contractors?

    Following contract award, IRB officials and the Contractor will be free to engage in all the regular open discussions regarding the overall IRB program, contract administration and the first tranche of specific IRB activities which have been submitted, evaluated and accepted in principle.

    Discussions regarding the second tranche of specific IRB activities under development will be more limited. In this way, that second tranche of activities can be properly and fairly assessed by IRB officials and the RDAs.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q7
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    Failure to Identify

  8. Are the new safeguards appropriate? Why are you withholding milestone payments?

    In order to phase in the 60 percent requirement, we needed to create adequate safeguards to ensure that Contractors comply with the revised requirement schedule and that Canadian industry does not lose out.

    We consulted widely regarding the appropriate safeguards. Withholding milestone payments was selected as a strong yet reasonable safeguard to ensure compliance.

    The 30-day grace period is a limited and reasonable time period within which a Contractor, whose submissions at tranche 2 or 3 are insufficient, may correct things. The 30 days are calendar days and they begin upon the date of notification by the IRB Manager that the submission is insufficient.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q8
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  9. Are bidders required to follow the 30/30 split exactly? What happens if a bidder submits 45 percent of their IRB activities at bid closing? What happens if a bidder submits 25 percent at bid closing?

    The 30/30 split is based on the requirement for bidders to identify at least 30 percent of their proposed IRB activities at bid closing (tranche 1) and a cumulative total of at least 60 percent within one year of contract award (tranche 2). Bidders/Contractors are free to exceed these minimums.

    See examples below:

    Submission Scenarios
    Tranche 1
    (Bid Closing)    		 Tranche 2
    (1 year from Contract Award)    		 Tranche 3
    (3 years from Contract Award)    		 Consequence?
    submits 30% submits 30% submits 40% None
    submits 35% submits 25% submits 40% None
    submits 30% submits 50% submits 20% None
    submits 25%     IRB proposal declared non-compliant
    submits 40% Submits 10% submits 50% Milestone payment withheld
    submits 40% submits 30% submits 10% Milestone payment withheld
    submits 30% submits 20% submits 30% Milestone payment withheld
    http://www.ic.gc.ca/eic/site/042.nsf/eng/00028.html#q9
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