New Approach — Banking of Industrial and Regional Benefit Transactions

Previous Approach

Banking of IRB transactions was not permitted (i.e. the accumulation of credits ahead of the IRB Achievement Period, or accumulation of credits in excess of the total obligation).

Why change?

Banking of IRB transactions (Banking) is being introduced to recognize that procurement cycles of the government procurement system can be out of phase with the business opportunities available to potential Contractors. The resulting increased flexibility from banking of IRB transactions will encourage potential and current Contractors to place work in Canada in the absence of a specific project. Banking of IRB transactions will also allow Canada to compete with other jurisdictions that allow banking when a Contractor is making decisions on where to allocate work.

New Approach

Industry Canada will permit a limited form of banking of IRB transactions in advance of an upcoming procurement, and in the event of overachievement of IRB transactions. For banking in advance of an upcoming procurement, potential Contractors would be able to apply banked IRB transactions to a successful contract award for up to 15 percent of total bid price (i.e., one half of minimum up front requirement). For overachievement transactions, the Contractor would be able to bank IRB transactions in excess of a completed IRB obligation for up to 10 percent of total obligation value of the current IRB project, up to a maximum of $100 million.

The value of banked activities will also be subject to depreciation on the following schedule:

• 100 percent of initial value for transactions banked less than 3 years;
• 75 percent of initial value for transactions banked between 3 and 4 years;
• 50 percent of initial value for transactions banked between 4 and 5 years;
• no value for transactions banked beyond 5 years.

At the time of submission to the IRB Authority for approval to bank an IRB transaction, companies would be required to identify a specific procurement project to which they wish the transaction to be applied. In addition, companies will be allowed a one-time transfer of the banked IRB transaction to either a current IRB project, or another potential procurement. In the event of transferred transactions, the depreciation schedule will continue to apply and will not be reset to the start of a new 5 year window.

On any IRB project, there is a limit of 50 percent of the total obligation that can be met using banked transactions.

All banked transactions must satisfy the IRB Eligibility criteria of Causality, Incrementality, Canadian Content Value and Eligible Party. Furthermore, all banked IRB transactions need to meet the terms and conditions outlined in the IRB Model Contract.