Guidelines for Banking of Industrial and Regional Benefit Transactions

1)  Banking In Advance of an Upcoming Procurement

The intent of IRB banking for activities in advance of an upcoming procurement is to recognize that the Government of Canada procurement cycles and the business cycles of potential Contractors do not always align. This will encourage early placement of economic activity in Canada in advance of procurements.

a. Approval Criteria

For any banked IRB transaction to be considered, the company must first sign a Declaration of Acceptance, which sets out all of the conditions that the company entering into a banked IRB transaction with Industry Canada must accept.

When applying to bank a transaction, companies must identify a specific Canadian government procurement project to which it wishes the banked transaction to be applied.

Potential Contractors to upcoming procurements and Tier 1 Sub-Contractors to the potential Contractors can bank IRB transactions.

All IRB banked transactions need to account for the terms and conditions outlined in the IRB Model Contract. Specifically, companies will need to prove and show documentation that the IRB transactions to be banked meet the IRB Eligibility criteria of Causality, Incrementality, Canadian Content Value, and Eligible Party.  The IRB Authority will make the final ruling whether the transaction meets the IRB Eligibility Criteria.  See Article 5 in the IRB Model contract.

b. Limits to Application of Banked IRB Transactions

Potential Contractors can bank IRB transactions in advance of a potential procurement. However, companies can apply banked transactions to only 15 percent of their bid price, as part of their IRB response to a Request for Proposal.  (Note that IRB Proposals may contain banked IRB Transactions of any value.  However, for evaluation and scoring purposes, any banked transactions in an IRB Proposal will be counted as if they total a maximum of 15% of the bid price. )

Over the life of the contract a Contractor can utilize up to 50 percent of the IRB obligation in banked IRB transactions on any IRB project.

c. Depreciation Schedule

The value of transactions in the IRB Bank will be subject to the following schedule:

• 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.

d. Award of IRB Credits

Upon having been approved by the IRB Authority and accepted into the IRB Bank, banked IRB transactions have been deemed as having met the IRB Eligibility Criteria.  However, there is no advance credit for transactions that are accepted into the IRB Bank.

Actual IRB credit for banked IRB transactions will only be granted when the transactions go through the IRB reporting and verification process.  During the verification process, transactions will be verified based on financial documentation requested by the IRB Authority for determining the IRB credit that is claimed. The Canadian Content Value (CCV) will also be verified for accuracy.

e. Timing

The time period for calculating depreciation for a banked IRB transaction will begin on the date that the transaction is accepted into the IRB Bank by the IRB Authority. The time period will end on the date of bid closing of the Request for Proposal of the procurement which the IRB transaction is to be applied, or when the company advises the IRB Authority in writing that the IRB transaction is to be transferred to another IRB obligation.

f. Transfer of IRB Banked Transactions

Companies will have the flexibility to transfer a banked transaction to another potential procurement or to a current IRB obligation. However, companies can transfer a banked transaction only once in the life of the transaction. In the event of transferred transactions, the depreciation schedule will continue to apply to all banked transactions; the schedule will not be reset to the start of a new 5 year window.

If a company loses a bid, they can put their banked transaction(s) back into IRB Bank. However, the time limit of a banked transaction does not reset if a banked transaction re-enters the bank. The company can also apply to put the other, non-banked transactions  from their losing bid into the IRB Bank.

g. Process

The IRB Bank will be managed by the IRB Directorate of Industry Canada.

Contractors who wish to bank IRB transactions will need to contact the IRB Authority in writing requesting the opportunity to bank IRB transactions.

The company will then need to sign the Banking Declaration of Acceptance with Industry Canada. A company will only have to sign a single Banking Declaration of Acceptance to open accounts within the IRB Bank.

To bank a transaction, the IRB Banking transaction sheet will need to be completed and all the required information will need to be included for assessment by Industry Canada. The transaction sheet is found in the Banking Declaration of Acceptance.

The IRB Authority will decide on potential banked IRB transactions in an expeditious manner. However, the timeline that will determine official acceptance of a transaction to the IRB Bank will be determined by the quality of information that the company provides .

The IRB Authority will respond in writing to the Contractor on the matter of a transaction's acceptance. If the transaction is accepted it will immediately enter the IRB Bank.

The IRB Bank will be set up with separate accounts. Each company will have an account with sub-accounts for individual procurements.

Banked transactions that are submitted as part of an IRB Proposal must be an exact copy of the latest version of the Banked Transaction sheet which was approved by the IRB Bank and be accompanied by the signed Letter of Acceptance from the IRB Banker.

Transactions cannot be broken up into separate pieces and must be applied as whole into only one account.

The IRB Bank will accept the currency that the company proposes in the transaction sheet.  However, it would be preferred to have the transactions in Canadian dollars.

2)  Banking of Overachievements from a completed IRB obligation

The intent of the banking of overachievement from a completed IRB obligation is to give flexibility to Contractors to make strategic decisions towards the end of a current IRB obligation.

Contractors can bank the overachievement that occurs between the early completion of its IRB obligation and the end of its IRB Achievement Period. The maximum that can be banked from overachievements on a current project is 10 percent of the value of that current IRB obligation, up to a maximum of $100 million.

Only Contractors will be able to bank overachievements.  

The value of overachievement transactions in the IRB Bank will be subject to the  same schedule:

• 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.

a. Process

Contractors who wish to bank overachievement IRB transactions will need to contact the IRB Authority in writing requesting the opportunity to bank IRB transactions.

The company would then need to sign the Banking Declaration of Acceptance with Industry Canada. A company would only have to sign a single Banking Declaration of Acceptance to open accounts with the IRB Bank.

Contractors need to notify the relevant IRB Manager and the IRB Bank of its intention to use specific transactions to overachieve on its current IRB obligation, and that it seeks to bank this overachievement.

The IRB Banking transaction sheet will need to be completed and all the proper information will need to be included for a proper assessment by Industry Canada. The transaction sheet is found in the Annexes to the Banking Declaration of Acceptance. The company will need to fill out the IRB Bank transaction sheet with the overachievement transaction and identify from which completed IRB obligation that the transaction originated and identify to which project it will be applied.

Industry Canada will decide on potential banked IRB transactions in an expeditious manner. However, the timeline that will determine official acceptance of a transaction to the IRB Bank will be determined by the quality of information that the company provides.

The IRB Authority will respond in writing to the Contractor on the matter of a transaction's acceptance in the IRB Bank. If the transaction is accepted, it will immediately enter the IRB Bank.

Overachievement can be submitted to the IRB Bank only once the IRB Achievement period on a project is complete and within one year following that date.

3) Banked Transactions Management

Companies that bank IRB transactions need to update all banked IRB transactions on an annual basis in the form of an update report. The timing of these due dates will be agreed upon by the IRB Authority and the company. The format for the update report will be provided by the IRB Authority before the first update.

The update should include but not be limited to: change in value of the transaction; change in description of the work; in case of current transaction how much work has occurred; status of transaction; and any other relevant information regarding the transaction.

Any updated values will be subject to the original acceptance date for the purposes of the  depreciation schedule.

4) Example of IRB Bank

Company “X” has an IRB Bank account. Within this account, it has two sub-accounts for banked IRB transactions for two potential procurements.

Checklist for how a company would actually receive IRB credit on a Banked IRB transaction:

•   Step #1 — Request, review and sign the Banking Declaration of Acceptance with Industry Canada.
•   Step #2 — Propose, and have accepted by Industry Canada, an IRB transaction into the IRB Bank.
•   Step #3 — Either move the banked IRB transaction into an IRB proposal, or onto a current IRB obligation.
•   Step #4 — In the IRB proposal example — contract is won by the Contractor.
•   Step #5 —The Contractor goes through the IRB reporting and verification process on an active IRB project and granted IRB credit.