Frequently Asked Questions — Improved Recognition of the value of Canadian Firms’ participation in Global Value Chains (GVC)

  1. Why are you introducing the Global Value Chains (GVC) approach?
  2. How will this approach help Canadian industry export its products and services?
  3. How will the level of Direct and Direct requirements for a specific procurement be established?
  4. Will this approach apply to both the acquisition and the In-Service Support (ISS) components of the contract?
  5. What will be an eligible Global Value Chains (GVC) platform?
  6. Will Global Value Chains (GVC) apply to all industry sectors (air, land, marine)?
  7. How will Global Value Chains (GVC) be applied in the context of single compliant bidder procurements?
  8. Why do you say this approach will lower the risk of cost, delivery time and reliability issues which may arise if the winning bidder is unable to meet the direct IRB requirement on the Canadian order exclusively?
  9. Will this policy change modify OEMs approach towards potential Canadians providers?

 

  1. Why are you introducing the Global Value Chains (GVC) approach?

    The heightened recognition of GVC work as an Industrial and Regional Benefits (IRB) activity is being implemented to better reflect current business models, whereby Contractors rely on a global network of value-added partners and suppliers in order to produce their goods and/or services. The GVC approach is intended to create greater access to the various value chains of Contractor, over and above the value chain of the platform or system being procured by Canada.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q1
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  2. How will this approach help Canadian industry export its products and services?

    The GVC approach will encourage access to greater potential business opportunities for Canadian industry, not only to supply goods and/or services for incorporation into the platform or system being procured by Canada, but also to have these same goods and/or services incorporated into the equivalent platform or system being exported by the Contractor to other markets. Often times, the export sales of the platform or system are greater in quantity and value than what has been purchased by Canada. As such, Canadian firms will be better positioned to establish long term, strategic business relationships with a Contractor and/or its major suppliers.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q2
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  3. How will the level of Direct and Direct requirements for a specific procurement be established?

    A minimum level of Direct IRB requirement for a specific procurement will be established by Industry Canada through an approach that includes: undertaking internal government consultations; seeking input from industry through mechanisms such as a Letter of Interest, Statement of Interest and Qualification or Request for Information; and conducting a due diligence assessment to validate the industry feedback and ensure its accuracy.

    Industry Canada will use the information collected through the above described approach and assess whether specifying a minimum Direct IRB requirement is appropriate and at what level. Our guiding principles will be that any minimum Direct IRB requirement must be fair to all bidders, achievable through both direct and GVC activities, and have a minimal impact on project costs and schedule.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q3
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  4. Will this approach apply to both the acquisition and the In-Service Support (ISS) components of the contract?

    Yes. The GVC approach may be applied to both the acquisition and the In-Service Support (ISS) components of the contract. Usually a higher percentage of direct work is applied on the ISS portion of the contract and GVC work could now be considered at least as equivalent in value as direct work. By applying a GVC model, this allows for more flexibility to Contractors when facing direct IRB requirements while increasing equivalent or higher valued work on strategic platforms.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q4
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  5. What will be an eligible Global Value Chains (GVC) platform?

    An eligible GVC platform must be one that has market potential equal to or greater than the market potential of the platform being purchased. This market potential shall be measured by market size (value) and longevity of the equivalent platform. Furthermore, the platform will have strategic value for Canadian companies-in other words, the platform will offer significant opportunities for technology advancement, growth in the level of system integration, small and medium-sized business (SMB) participation, and have large scale and sustainable acquisition and/or ISS opportunities. For example, the eligible GVC platform could offer equivalent, or better, opportunity for advancement of Canadian technologies to the platform being purchased.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q5
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  6. Will Global Value Chains (GVC) apply to all industry sectors (air, land, marine)?

    Yes. GVC requirements will apply to air, land and marine procurements. Each procurement will establish the required level of direct based on market analysis of different sectors. Again, the goal is to increase the flexibility of having Direct IRB requirements.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q6
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  7. How will Global Value Chains (GVC) be applied in the context of single compliant bidder procurements?

    Each procurement, including single compliant bidder procurements, will be assessed to determine the appropriate level of Direct IRB requirement. Our guiding principles will be that any minimum Direct IRB requirement must be fair to the bidder, achievable through either direct or GVC activities, and have a minimal impact on project costs and schedule.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q7
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  8. Why do you say this approach will lower the risk of cost, delivery time and reliability issues which may arise if the winning bidder is unable to meet the direct IRB requirement on the Canadian order exclusively?

    This policy change will allow the Contractor greater flexibility to meet their IRB requirements by allowing them to leverage their global network of value-added partners and suppliers in order to produce their goods and/or services. In most cases, the Contractor will determine the ratio of Direct/GVC IRB work that is appropriate for them and makes most business sense.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q8
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  9. Will this policy change modify OEMs approach towards potential Canadians providers?

    This policy change will broaden the scope of opportunity for Contractors to include Canadian industry participation on strategic platforms. By setting a specific Direct/GVC IRB requirement, Contractors will be required to seek opportunities for Canadian companies on such platforms, and within their global network of value-added partners and suppliers.

    http://www.ic.gc.ca/eic/site/042.nsf/eng/00032.html#q9
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