25. Model Contract — Failure to Achieve IRB Commitments

• 25.1.  Liquidated Damages:
• 25.1.1.  In respect of the failure to achieve any of the Commitments in clauses 2.1.1 to 2.1.9 (Statement of Work: IRB Commitments and Responsibilities) by the end of the IRB Achievement Period, the Contractor shall immediately pay to Canada as liquidated damages 10 percent of the Shortfall.
• 25.1.2.  In the event that liquidated damages arise under more than one of the IRB Commitments, the Contractor will be liable only under the IRB Commitment which results in the highest liquidated damages.
• 25.1.3.  Included in the total IRB Commitments are the unallocated IRB Commitments.
• 25.2.  Holdback/Stop Payment:
• 25.2.1.  If at the end of IRB Reporting Period 2, it is confirmed through the submission and evaluation of transactions that the Contractor failed to identify 60 percent of the IRB Commitment Value in eligible IRB Transactions by the end of Reporting Period 1, as stated in Article 2.1.8, milestone payment X will be withheld by the Crown.
• 25.2.2.  With respect to the Holdback outlined in sub-section 25.2.1, a grace period of thirty (30) calendar days, beginning on the date of failure notification by the IRB Authority, shall pass before the Holdback takes effect. Within this period, the Contractor may take corrective action.
• 25.2.3.  If at the end of the IRB Reporting Period X, it is confirmed through the submission and evaluation of transactions that the Contractor has failed to identify 100 percent of the IRB Commitment Value in eligible IRB transactions by the end of Reporting Period X-1, Canada will suspend contract payment until the situation is remedied.
• 25.2.4.  With respect to the Holdback outlined in sub-section 25.2.3, a grace period of thirty (30) calendar days, beginning on the date of failure notification by the IRB Authority, shall pass before the Holdback takes effect. Within this period, the Contractor may take corrective action.
• 25.3.  In the event that the Contract is terminated for default pursuant to Clause X (Default by the Contractor), the Contractor will immediately pay to Canada an amount equal to the Liquidated Damages that would be payable under clause 25.1 based on the shortfall in regard to those Commitments that, according to Annex A (Plans, Transactions and Tables), were to be achieved by the date of termination. In the event of such payment, the Contractor will have no further liabilities in regard to the IRB requirements of the Contract.
• 25.4.  In the event that this Contract is terminated for convenience pursuant to Clause X (Termination for Convenience), the Contractor will have no further liabilities. In the event of partial termination of the Contract under Clause A, the Contractor will be released from the terminated portions of its Commitments and from the provisions of Article 2 (Statement of Work: IRB Commitments and Responsibilities) as it relates to such terminated portions.
• 25.5.  If, during the progress of the Contract, a change in the Work is initiated by the Crown which results in the Contractor no longer being able to source from a Canadian Company and, as a consequence, Commitments in the Statement of IRB Work may not be met, the Contractor shall immediately notify the IRB Authority through the Contracting Authority. The Contractor shall fully describe the issue, provide all supporting data, including a complete record of attempts to purchase from Canadian sources and Canadian suppliers' responses, together with an analysis of specific technical, commercial or other factors which result in the inability to source from Canada.
• 25.6.  The Contractor shall, prior to being entitled to receipt of the final Milestone Payment from Canada following the completion of the Work, provide Canada a guarantee in the form of a letter of credit, covering the amount of monies that would be owing by way of liquidated damages pursuant to the Liquidated Damages clause should the Contractor not achieve any further IRB Credits after the date of the final Milestone Payment. The letter of credit shall be:
• 25.6.1.  issued by a financial institution which is a member of the Canadian Payment Association;
• 25.6.2.  in form and substance satisfactory to the Minister;
• 25.6.3.  solely at the cost of the Contractor;
• 25.6.4.  abated as set forth below;
• 25.6.5.  unconditional and irrevocable; and
• 25.6.6.  subject to the Uniform Customs and Practice for Documentary Credits, as set out in Publication No. 600, July 2007.
• 25.7.  The letter of credit shall remain in force until the earliest of:
• 25.7.1.  the achievement of the Commitments; and
• 25.7.2.  six months following the submission of the final IRB Report at which time the letter of credit will be abated in full and will be returned by Canada to the Contractor.
• 25.8.  The obligation of the Financial Institution to pay under the letter of credit will be triggered by notice executed by either the Minister or the Deputy Minister of Public Works and Government Services Canada to the Issuing Bank stating that the Contractor is in default under the Contract for failure to achieve the Commitments within the Achievement Period, that Canada has made a demand by Notice for payment of Liquidated Damages in accordance with the Liquidated Damages Clause and that the Contractor has failed to pay Canada Liquidated Damages in accordance with the Liquidated Damages Clause. No other event will trigger payment under the letter of credit.
• 25.9.  The Contracting Authority in accordance with this Article, will have the right to holdback, drawback, deduct and set off from and against the monies owing at any time by the Crown to the Contractor, any damages owing under this Contract equal to ten percent (10 percent) of the shortfall amount.
• 25.10.  Nothing in this Article will be interpreted as limiting the rights and remedies which the Contracting Authority may otherwise have in relation to any breach of this Article by the Contractor, including the right to terminate the Contract for default.