Frequently Asked Questions — Banking of Industrial and Regional Benefit Transactions
- Why is Canada introducing the Banking approach?
- How will the banking system work?
- What are the eligibility criteria that the transaction must meet?
- Will my company receive a bank statement?
- Will there be a Banker?
- What control will my company have over its banked IRB transactions?
- How will the depreciation of banked IRB transactions work? What will happen with the eliminated transactions? Why is there a sliding scale?
- Is there a single currency accepted by the bank?
- Are Tier 1 sub-contractors able to bank IRB transactions?
- What happens if I include a banked IRB transaction in my IRB Proposal at bid closing which is valued at more than 15 percent of the bid price?
Q1 Why is Canada introducing the Banking approach?
A1 Banking of IRB transactions (Banking) is being introduced to recognize that the procurement cycles of the government procurement system can be out of phase with the business opportunities available to potential Contractors. Banking will allow potential Contractors to place work in Canada in advance of a specific project, thus encouraging early placement of work in advance of an upcoming procurement. Banking will also allow for the recognition of high-value work in terms of overachievement of transactions resulting from early completion of an obligation ahead of a project's IRB Achievement Period. We believe that this increased flexibility will encourage companies to place work in Canada in the absence of a specific project. Banking will also allow Canada to compete with other jurisdictions that allow banking when a Contractor is making decisions on where to allocate work.
top of pageQ2 How will the banking system work?
A2 The IRB Bank will be similar to a regular bank. Each company that banks transactions will have an account with sub-accounts for specific potential procurements.
The potential Contractor, or the Tier 1 Sub-Contractor to the potential Contractor, will be required to submit IRB transactions to the Banker in the IRB Directorate. The Banker will subsequently conduct an assessment of the requested banking transaction based on the IRB Eligibility Criteria.
There are two types of banked IRB transactions that can be banked: transactions in advance of an upcoming procurement, and overachievement transactions. The process for banking is different depending on whether the transaction is in advance of an upcoming procurement or an overachievement on an existing obligation (Please see Guidelines For Banking IRB Transactions for further details.)
top of pageQ3 What are the eligibility criteria that the transaction must meet?
A3 Transactions must meet the IRB Eligibility Criteria: Causality (benefits must be brought about due to the IRB policy); Incrementality (must be new work to Canada); and transactions must be undertaken by an Eligible Party. In addition, transactions will also need to show the estimated Canadian Content Value (CCV) of the work. All transactions must involve technology equal to or greater than the level of technology involved in the contract.
top of pageQ4 Will my company receive a bank statement?
A4 Companies will receive annual bank statements that will show approved transactions that were deposited and withdrawn, as well as balances for in advance and overachieved transactions against specific projects. Additionally, companies must update the transactions that are in the IRB Bank on a bi-annual basis. (Please see Guidelines For Banking IRB Transactions for further details.)
top of pageQ5 Will there be a Banker?
A5 The IRB Directorate will dedicate one person with the responsibility to act as the IRB Banker. The Banker will have overall responsibility for managing banked transactions that are to be deposited or withdrawn from the IRB Bank, and ensuring that banking rules and processes, including the IRB Eligibility Criteria, are uniformly applied to all potential transactions.
top of pageQ6 What control will my company have over its banked IRB transactions?
A6 At the time of submission for approval of a banked transaction, companies must identify a specific Canadian procurement project to which they intend 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. Transactions cannot be broken up into separate pieces and must be applied as whole transactions.
top of pageQ7 How will the depreciation of banked IRB transactions work? What will happen with the eliminated transactions? Why is there depreciation?
A7 Industry Canada has adopted a depreciation schedule that operates in the following manner, for both in advance and overachieved transactions:
- 100 percent of value for transactions banked less than 3 years;
- 75 percent of value for transactions banked between 3 and 4 years;
- 50 percent of value for transactions banked between 4 and 5 years;
- no value for transactions banked beyond 5 years.
Eliminated transactions or transactions with no value beyond 5 years will be null and void.
The depreciation schedule is in place to ensure that banked IRB transactions are used within a limited timeframe. It also ensures that companies that want to bank are strategic in their decision making when banking IRB transactions.
top of pageQ8 Is there a single currency accepted by the bank?
A8 No, the currency of the transaction will determine the currency in the IRB Bank. However, it would be preferred to have the transactions in Canadian dollars. (Please see Guidelines For Banking IRB Transactions for further details.)
top of pageQ9 Are Tier 1 sub-contractors able to bank IRB transactions?
A9 Tier 1 sub-contractors are able to bank IRB transactions in advance of a procurement project. However, only Contractors with IRB obligations to the Government of Canada can bank overachievement.
top of pageQ10 What happens if I include a banked IRB transaction in my IRB Proposal at bid closing which is valued at more than 15 percent of the bid price?
A10 IRB Proposals may contain banked IRB Transactions of any value. However, for evaluation and scoring purposes only, any banked transactions in an IRB Proposal will be counted as if they total a maximum of 15 percent of the bid price. Any remaining values would be accounted for at contract award.
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