Model Contract

Contents

1. Definitions
2. Statement of Work: IRB Commitments and Responsibilities
3. IRB Reporting
4. Canadian Content Value
5. Eligibility Criteria for IRB Transactions
6. Technology and Skills Cooperation
7. Investment in Canada
8. Third Party Investments/Venture Capital Funds for Small Business
9. Investments made to Consortium
10. Indirect Transactions
11. Direct IRB Transactions
12. Strategic Plans
13. Valid Orders
14. Trading and Mutual Abatement
15. Banking
16. Import Replacement
17. Multipliers
18. World Product Mandate
19. Small and Medium Business
20. Announcements
21. IRB Transaction Alterations
22. Contract Price Changes
23. Verification and Access to Records
24. Over-Achievement of IRB Commitments
25. Failure to Achieve IRB Commitments
26. Responsibilities of the Parties
27. Dispute Settlement — Resolution of Discrepancies
28. Government Organizations
29. Compliance with the Lobbying Act
30. List of Eligible Parties
31. List of Approved Global Value Chain Platforms

• Version Control
• Annex A — Plans, Transactions and Tables
• Annex B — Certificate of Compliance
• Annex C — IRB Transaction Sheet

• 1.1.  For the purpose of this Part, unless the context otherwise requires, the following definitions apply:
• 1.1.1.  "Achieve", "Achieved", or "Achievement" in relation to any Commitment for Industrial and Regional Benefits (IRB), means the accomplishment of all or any part of an IRB Commitment;
• 1.1.2.  "Achievement Period" or "IRB Achievement Period" means the period commencing on XXXX and ending X years following the Effective Date of this Contract;
• 1.1.3.  "Banked IRB Transaction" means an IRB Transaction that resides in the IRB Bank that has been approved in writing by the IRB Authority and has met the IRB Eligibility Criteria of Causality, Incrementality, Canadian Content Value and Eligible Party;
• 1.1.4.  "Canadian Company" or "Canadian Corporation" means a commercial enterprise that is resident and operating in Canada and incorporated, registered or recognized as such, under federal or provincial legislation and which has ongoing business activities in Canada;
• 1.1.5.  "Canadian Content Value" or "CCV" is as described in Article 4, Canadian Content Value;
• 1.1.6.  "Capitalization" means the total value of a company's issued shares plus the value associated with instruments which can be converted into shares. For publicly traded companies, this is equal to the total number of issued shares multiplied by the market price plus the equity portion of any derivative instrument according to Canadian Generally Accepted Accounting Principles. For privately held companies, this is equal to the total number of issued shares multiplied by the most recent price at which they were sold plus the equity portion of any derivative instrument according to Canadian Generally Accepted Accounting Principles;
• 1.1.7.  "Causality" means the criteria of the IRB Policy which stipulates that a proposed work package or "IRB Transaction" was brought about by an IRB Obligation to Canada as set forth in Article 5, Eligibility Criteria for IRB Transactions;
• 1.1.8.  "Commitment" or "IRB Commitment" means the Contractor's contractual obligation to achieve the CCV for IRB Transactions as set forth in Article 2, Statement of Work: IRB Commitments and Responsibilities;
• 1.1.9.  "Consortium of Consortia" means a public-private partnership established with the intent of undertaking activities related to research and development, and which shall meet the criteria set out in Article 9, Investments made to Consortium;
• 1.1.10.  "Designated Regions of Canada" means the following regions: the "Atlantic Region", consisting of the Provinces of Newfoundland and Labrador, Prince Edward Island, New Brunswick and Nova Scotia; the "Quebec Region", consisting of the Province of Quebec; the "Northern Ontario Region", consisting of that part of the Province of Ontario northward from the southern limits of Nipissing and Parry Sound Districts and west of the Ottawa River; and the "Western Region", consisting of the Provinces of Manitoba, Alberta, Saskatchewan, and British Colombia;
• 1.1.11.  "Direct IRB Transaction", "Direct" or "Direct IRB" means an IRB Transaction that is entered into for the performance of any part of the Work under this Contract, and includes work on approved Global Value Chain (GVC) platforms as defined in Article 1.1.14;
• 1.1.12.  "Eligibility Criteria" means those criteria, as defined in Article 5, Eligibility Criteria for IRB Transactions, which an IRB Transaction must meet in order to be accepted by the IRB Authority;
• 1.1.13.  "Eligible Party" means the provider of the IRB, and consists of: the Contractor, its parent corporation, and all its subsidiaries, divisions and subdivisions; and first tier suppliers related to the performance of any part of the Work under this Contract. Canadian-owned companies with less than 500 employees (including first-tier suppliers) will not be considered as Eligible Parties without written approval of the IRB Authority;
• 1.1.14.  "Global Value Chain" means a platform which is similar to the platform being proposed for (Insert Project Name), have a market potential (measured by market size and longevity) equal to or greater than the platform proposed for (insert Project Name), and offers significant opportunities for technological advancement, growth in the level of system integration, small and medium-sized business (SMB) participation, and have large-scale and sustainable acquisition and/or sustainment opportunities;
• 1.1.15.  "Import Replacement" refers to the production/manufacture of a good or the provision of a service in Canada that was formerly manufactured or provided from off-shore sources of supply;
• 1.1.16.  "Incrementality" refers to the Eligibility Criteria outlined in Article 5.3, Eligibility Criteria for IRB Transactions which stipulates that an indirect IRB activity must include new work, over and above a baseline of similar previous business activity undertaken by the Contractor with the recipient;
• 1.1.17.  "Indirect IRB Transaction", "Indirect", or "Indirect IRB" means an IRB Transaction that is entered into for a business activity unrelated to the performance of any part of the Work under this Contract;
• 1.1.18.  "Industrial and Regional Benefit" or "IRB" or "IRB Transaction" means a commercial or business activity that is carried out by means of a contract, including any purchase order, sales agreement, license agreement, letter of agreement or other similar instrument in writing, that has an identified dollar value, meets the Eligibility Criteria set forth in this Contract and has been approved by the IRB Authority;
• 1.1.19.  "IRB Authority" means the Minister of Industry or any other person designated by the Minister of Industry to act on the Minister's behalf. The IRB Authority is responsible for evaluating, monitoring, verifying and accepting IRB, and for assessing the Contractor's IRB performance under this Contract;
• 1.1.20.  "IRB Credit" or "Credit" in relation to any IRB Commitment, means the Written Notice by the IRB Authority that an IRB has been achieved in whole or in part and that the Contractor's obligation has to that extent been fulfilled;
• 1.1.21.  "IRB Investment" means an IRB Transaction which consists of an investment within Canada of a verifiable amount of money which fosters the production of goods or the performance of services by Canadian citizens or permanent residents as defined in the Immigration and Refugee Protection Act 2001, c.27, and which shall meet the criteria set forth in Article 7, Investment in Canada;
• 1.1.22.  "IRB Plans" means the Contractor prepared IRB Plans which form part of this Contract: IRB Management Plan, dated XXX, bearing reference number XXX; IRB Regional Development Plan, dated XXX, bearing reference number XXX; and Small and Medium Business Development Plan, dated XXX, bearing reference number XXX;
• 1.1.23.  "IRB Reporting Period" or "Reporting Period" means: Period 1, commencing on the first day of the IRB Achievement Period and ending on the last day of the twelfth month after the Effective Date and a consecutive twelve month increment following Period 1 (Periods 2, 3, etc.) until the end of the IRB Achievement Period;
• 1.1.24.  "Major Obligor" means a company which holds contractual commitments for IRB Obligations in Canada in excess of $1 billion;
• 1.1.25.  "Mutual Abatement" or "IRB swap" means a reduction of the Contractor's IRB Obligation in exchange for the reduction of a Canadian company's obligations to a foreign offset authority;
• 1.1.26.  "Over-achievement" in relation to any IRB Commitment, means the degree or amount by which the Contractor's IRB Credit measured in terms of CCV, granted during the IRB Achievement Period for an IRB Transaction is greater than the IRB Commitment for that IRB Transaction;
• 1.1.27.  "Pooling" refers to the act of applying IRB credit achieved on a single IRB Transaction may be applied over two or more discrete IRB Obligations;
• 1.1.28.  "Shortfall" in relation to any IRB Commitment, means the CCV amount by which the Contractor fails to achieve its Commitment in the IRB Reporting Periods;
• 1.1.29.  "Small and Medium Business" or "SMB" means a Canadian-based, independently-owned and operated manufacturer or service company with fewer than 250 full-time personnel as of the date of entering into an eligible IRB Transaction. Agents and distributors of foreign goods and services as well as subsidiaries of large firms do not qualify as Small and Medium Business;
• 1.1.30.  "Semi-processed Goods" means goods converted from their natural state of a raw material through the use of a specialized process into a state of readiness for use or assembly into a final product;
• 1.1.31.  "Strategic Plan" means a document which describes the Contractor's broad corporate business development plans for Canada and how these plans may translate into strategic IRB activities, as set forth in Article 12, Strategic Plans;
• 1.1.32.  "Technology Cooperation," "Technology and Skills Cooperation", "IRB Technology Cooperation" and "Technology Transfer" consists of the granting of a license, and the transmission of a usable body of knowledge to a Canadian company. Technology Cooperation has no imputed value based on development, but is measured in CCV of future sales resulting from the cooperation output by the IRB Recipient and shall meet the criteria set forth in Article 6, Technology and Skills Cooperation;
• 1.1.33.  "Venture Capital Fund" or "VCF" means a pooled group of investments directed at assisting the growth of Canadian Small Businesses and which is managed by a third party and which shall meet the criteria set forth in Article 8, Third Party Investments/Venture Capital Funds for Small Business; and
• 1.1.34.  "World Product Mandate" means a long-term supplier relationship between the Contractor or an Eligible Party and a Canadian company whereby the Canadian company has been legally authorized to carry out and has sole responsibility for specific activities including the design, development, intellectual property, manufacture and marketing related to the supply of products, components, modules or services destined for the domestic and world markets. The CCV of the product is calculated as described in Article 18, World Product Mandate.

• 2.1.  Through the implementation of the IRB Management Plan, the Regional Development Plan and the Small and Medium Business Development Plan detailed in Annex A, the Contractor shall by the end of the Achievement Period:
• 2.1.1.  achieve $ (to be inserted from Contractor's proposal — at least 100% of contract value) in CCV as Direct and Indirect IRB Transactions as specified in Annex A;
• 2.1.2.  achieve $ (to be inserted from Contractor's proposal) in CCV as Direct IRB Transactions related to the INSERT PROJECT NAME as specified in Annex A;
• 2.1.3.  achieve $ (to be inserted from Contractor's proposal) in CCV as Indirect IRB Transactions related to the INSERT PROJECT NAME as specified in Annex A;
• 2.1.4.  achieve $ (to be inserted from Contractor's proposal) in CCV, as Direct and Indirect IRB Transactions in the regions of Canada, as specified in Annex A, as follows:
• 2.1.4.1.  Atlantic $ (to be inserted from Contractor's proposal)
• 2.1.4.2.  Quebec $ (to be inserted from Contractor's proposal)
• 2.1.4.3.  Northern Ontario $ (to be inserted from Contractor's proposal)
• 2.1.4.4.  Ontario (excluding Northern Ontario) $ (to be inserted from Contractor's proposal)
• 2.1.4.5.  West $ (to be inserted from Contractor's proposal)
• 2.1.4.6.  Unallocated $ (to be inserted from Contractor's proposal);
• 2.1.5.  achieve $ (to be inserted from Contractor's proposal) in CCV for Direct and Indirect Small and Medium Business Development IRB Transactions as specified in Annex A;
• 2.1.6.  carry out each and every IRB Transaction as per the IRB Transaction Sheets attached at Annex A;
• 2.1.7.  commit to Unallocated IRB valued at $ (to be inserted from the Contractor's proposal) and to achieving these within the IRB Achievement Period. As new and/or unallocated IRB Transactions are identified by the Contractor and approved by the IRB Authority, the Direct, Indirect, Regional and Small and Medium Business IRB Commitments in Clauses 2.1.2, 2.1.3, 2.1.4 and 2.1.5 will be adjusted as applicable;
• 2.1.8.  submit to the IRB Authority, one (1) year following the Effective Date of Contract, acceptable IRB Transactions which are detailed, fully described and which bring the cumulative total of identified acceptable IRB Transactions to a minimum of 60% of the contract value, measured in CCV; and
• 2.1.9.  submit to the IRB Authority, X years after Contract Award, acceptable IRB Transactions which are detailed, fully described and which bring the cumulative total of identified acceptable IRB Transactions to 100% of the contract value, measured in CCV;
• 2.2.  The Contractor shall submit to the IRB Authority, through the PWGSC Contracting Authority, annual IRB Reports based on the performance achieved during the IRB Reporting Periods defined in this Contract. These reports shall be submitted sixty (60) calendar days after the end of the annual IRB Reporting Period.
• 2.2.1.  As evidence of the Contractor's achievement of IRB Commitments, the Contractor shall provide, appended to the Annual IRB Reports, a Certificate of Compliance, as set forth in Annex B to this Contract, signed by the senior company Comptroller in respect of each IRB Transaction for which there was activity in that IRB Reporting Period. This Certificate of Compliance also covers those IRB achievements of the Contractor's sub-Contractors and/or its Eligible Parties.

• 3.1.  Each annual IRB Report shall consist of four parts, as outlined in the following sub-paragraphs:
• 3.1.1.  Part A: The CCV achieved in total since the beginning of the IRB Achievement Period for each of the Tables found at Annex A;
• 3.1.2.  Part B: The CCV achieved since the last Annual IRB Report for each of the Tables found at Annex A;
• 3.1.3.  Part C: For each IRB transaction being reported, describe any significant achievements, activities, delays or problems which could impact on the implementation of the IRB portion of the Contract and provide a plan of action to resolve any difficulties; and
• 3.1.4.  Part D: A summary that includes:
• 3.1.4.1.  the total amount of progress payment requests or invoices submitted by the Contractor for Work completed since the Effective Date;
• 3.1.4.2.  a forecast of IRB achievements;
• 3.1.4.3.  a description of Small and Medium Business development activities undertaken during the reporting period;
• 3.1.4.4.  an explanation of any IRB Shortfall in achievement evident from the data in Part A, and a plan of action to resolve the problem;
• 3.1.4.5.  a list of IRB Authority approved IRB Transactions which have been cancelled, terminated, added or substantially altered during the reporting period, the details of any requested changes, their status vis-à-vis contract amendment, and the reasons thereof;
• 3.1.4.6.  a brief narrative describing, on an exception basis, any noteworthy developments with respect to Small and Medium Business; and
• 3.1.4.7.  a description and explanation of any changes to the IRB Management Plan.

• 4.1.  The CCV of any Direct and Indirect Transaction shall be determined by the Net Selling Price Method or the Cost Aggregate Method.
• 4.1.1.  Net Selling Price Method: A product which bears a substantiated selling price may have its CCV determined as follows:
• 4.1.1.1.  the Net Selling Price is that total selling price of the product, less the applicable customs duties, excise taxes and applicable GST, HST and all provincial sales taxes; and
• 4.1.1.2.  the CCV is the Net Selling Price less any costs incurred as set out in Clause 4.2.
• 4.1.2.  Cost Aggregate Method: for any product, service or activity which cannot be assigned a substantiated selling price, the CCV shall be the aggregate of the following:
• 4.1.2.1.  the cost of parts produced in Canada, and the cost of materials to the extent that they are of Canadian origin, that are incorporated in the equipment in the factory of the manufacturer in Canada, including parts or materials to the extent that the IRB Authority can verify that they are of Canadian origin and have been exported from Canada and subsequently imported into Canada as parts or finished goods;
• 4.1.2.2.  transportation costs, including insurance charges incurred in transporting parts and materials from a Canadian supplier or frontier port of entry to the factory of the manufacturer in Canada for incorporation in the equipment, to the extent that such costs are not included in the foregoing paragraph; and
• 4.1.2.3.  such part of the following costs, exclusive of GST, HST, all provincial sales taxes, excise taxes, royalties and license fees paid outside of Canada, as are reasonably attributable to the production or implementation of the equipment, service or activity:
• 4.1.2.3.1.  wages and salaries paid for direct and indirect production and non-production labour in Canada paid to Canadians or to permanent residents as defined in the Immigration and Refugee Protection Act 2001, c.27;
• 4.1.2.3.2.  materials used in the Work but not incorporated in the final products;
• 4.1.2.3.3.  light, heat, power and water;
• 4.1.2.3.4.  workers compensation, employment insurance and group insurance premiums, pension contributions and similar expenses incurred with respect to labour referred to above in sub-paragraph 4.1.2.3.1;
• 4.1.2.3.5.  taxes on land and buildings in Canada;
• 4.1.2.3.6.  fire and other insurance premiums relative to production inventories and the production plant and its equipment, paid to a company authorized by the laws of Canada or any province to carry on business in Canada or such province;
• 4.1.2.3.7.  insurance purchased specifically from a company authorized by the laws of Canada or any province to carry on business in Canada or such province;
• 4.1.2.3.8.  rent of factory or office premises paid to a registered owner in Canada;
• 4.1.2.3.9.  maintenance and repairs to buildings, machinery and equipment used for production purposes that is executed in Canada;
• 4.1.2.3.10.  tools, dies, jigs, fixtures and other similar plant equipment items of a non-permanent nature that have been designed, developed or manufactured in Canada;
• 4.1.2.3.11.  engineering and professional services, experimental work and product or process development work executed and completed in Canada;
• 4.1.2.3.12.  pertinent miscellaneous factory and office expenses, such as administrative and general expenses, including profits earned in Canada, depreciation with respect to production machinery and permanent plant equipment and the installation costs of such machinery and equipment; and a capital allowance not exceeding five per cent of the total capital outlay incurred for buildings in Canada owned by the producer of the work;
• 4.1.2.3.13.  fees paid for services not elsewhere specified; and,
• 4.1.2.3.14.  pre-tax net profit upon which Canadian taxes are paid or are payable.
• 4.2.  Costs or Business Activities that are ineligible for IRB Credit:
• 4.2.1.  the value of materials, labour and services imported into Canada;
• 4.2.2.  in the case of Indirect IRB, the value of raw materials and semi-processed goods exported from Canada;
• 4.2.3.  the value of any living, relocation costs and remuneration paid to non-Canadians for work on the Project;
• 4.2.4.  the amount of all Canadian Excise Taxes, Import Duties, Federal and Provincial Sales Taxes, Goods and Services Taxes, Harmonized Sales Taxes and other Canadian duties;
• 4.2.5.  the value of goods and services with respect to which credit has been received or is being claimed by the Contractor or its Eligible Parties as an IRB to Canada under any other IRB agreement;
• 4.2.6.  any proposal or bid preparations costs;
• 4.2.7.  all transportation costs not covered under Clause 4.1.2.2;
• 4.2.8.  obligations of the Federal Government e.g. government furnished equipment;
• 4.2.9.  license fees paid by the Canadian IRB recipient and any on-going royalty payments;
• 4.2.10.  IRB Transactions claimed by a Contractor that pertain to its influence or that of one of its Eligible Parties over their own country's Purchasing Agent/Department or the Purchasing Agent/Department of another country;
• 4.2.11.  interest costs associated with Letters of Credit or other financial instruments to support IRB Investments;
• 4.2.12.  fees paid to Lobbyists (as defined by the Lobbying Act); and
• 4.2.13.  fees paid to third-party consultants or agents for work related to gaining IRB Credit against this Contract. This includes, but is not limited to, providing advice on the IRB Policy, preparation of IRB transactions and/or reports, representing the interests of the Contractor to the IRB Authority, and/or searching for potential recipient firms.

• 5.1  Causality — each IRB Transaction shall be one which was clearly and demonstrably brought about by either the Contractor or one of the Contractor's Eligible Parties as a result of a current or anticipated IRB Obligation to Canada. It shall not be one which probably would have been entered into if an IRB obligation had not existed. Causality may be demonstrated to a specific project or more broadly to a company's IRB obligation in general.
• 5.1.1  The responsibility for demonstrating Causality lies with the Contractor or its Eligible Party, not the IRB recipient.
• 5.1.2  Given the large volume of defence procurements, Contractors and their Eligible Parties are often engaged in IRB planning and execution on several projects with IRB obligations. Therefore, causality may be demonstrated to a specific project or more broadly to a company's IRB obligations in general.
• 5.1.2.1  The Contractor or its Eligible Party must demonstrate causality beyond generic statements on the transaction sheet. They should provide a clear statement on Causality, which outlines the details involved in their decision about a procurement or investment activity.
• 5.1.2.2  As IRB activities should make good business sense to the Contractor or Eligible Party, the causality provision does not require that the IRB obligation be a company's only decision-making factor. However, the Contractor or its Eligible Party must show the link between Canada's IRB Policy and their decisions related to the IRB activity.
• 5.1.2.3  As further demonstration of Causality to this Contract, the IRB Authority's written approval for a proposed IRB Transaction shall be obtained prior to the Contractor, on behalf of itself, its Eligible Parties and Canadian recipients, making public announcement, media or press releases related to the proposed business activities. Failure to do so may result in the rejection of the business activity as an IRB under the Contract.
• 5.1.3  The Contractor or its Eligible Parties must provide clear evidence of causality. Failure to provide sufficient evidence of causality will result in the ineligibility of the IRB Transaction.
• 5.1.3.1  Evidence of Causality includes a history of events in the development of an IRB Transaction and any supporting written documentation. Contractors or its Eligible Party should provide as much detailed supporting documentation as possible at the time of the IRB Transaction submission that supports the statement on Causality. This documentation may include but not be limited to: internal emails, official correspondence, meeting notes, corporate presentations, etc. The IRB Authority seeks documentary evidence that links decisions regarding the IRB transaction to the donor's IRB obligation.
• 5.1.4  Wherever possible, the IRB Authority will confirm causality prior to a proposed IRB Transaction being accepted into the contract.
• 5.1.4.1  The IRB Authority reserves the right to validate Causality for any or all IRB Transactions identified in Annex A within one year of Contract Award. The IRB Authority shall submit to the Contractor within one year of Contract Award a written notice, through the Contracting Authority, of the IRB Transactions that the IRB Authority wishes to validate. Once the request is made, the Contractor shall have 60 calendar days to submit a package in support of their Causality claims.
• 5.1.4.2  Should the Contractor be unable to satisfy the IRB Authority that the IRB Transaction has met the Eligibility Criteria, future IRB Credits will not be granted and a substitute IRB Transaction will be sought from the Contractor.
• 5.1.5  Contractors should note that all IRB transactions are subject to annual reporting and verification before IRB credits are confirmed. Should new information arise during verification that seriously calls in to question the Causality of an IRB Transaction, the IRB Authority will review and investigate as soon as possible.
• 5.2  Timing — IRB Transactions shall be implemented within the Achievement Period. IRB Transactions or substitute IRB Transactions identified after the Effective Date will only be accepted provided the activity meets the IRB Eligibility Criteria and does not occur prior to the date of identification of the IRB Transaction.
• 5.3  Incrementality — where an Indirect IRB Transaction is for the purchase of goods or services from a Canadian source, and such goods and services are similar to those that the purchaser had acquired in Canada prior to the date of identification of the IRB Transaction:
• 5.3.1  The CCV of the IRB Transaction shall be determined only with respect to the increase that the IRB Transaction will provide over the average amount of orders placed by that purchaser for those goods or services from the Canadian source during the three years preceding the date of identification of the IRB Transaction.
• 5.4  Eligible Party — IRB Transactions shall be undertaken by an Eligible Party as defined in this Contract. In any case, the Contractor shall be 100% responsible for IRB Commitments, regardless of flow down to Eligible Parties. A list of approved Eligible Parties for the (Insert Project Name) Contract is found in Article 30.

• 6.1.  In order to qualify as a technology and skills cooperation IRB Transaction, the activity shall meet the following criteria:
• 6.1.1.  technology shall be in a form that is sufficiently complete to allow the Canadian recipient to apply the knowledge to existing or new products or processes;
• 6.1.2.  technology shall be proprietary, current and equivalent to or better than that used on the Project;
• 6.1.3.  all required licenses or permits to facilitate the sale of products/services domestically or for export shall be included;
• 6.1.4.  the transferor shall make available all engineering and technical advice and assistance required to exploit and keep current the transferred technology and all related information (drawings, methods of application, etc.);
• 6.1.5.  the Canadian company shall have access to domestic and foreign markets and have the resources to exploit the technology in these markets;
• 6.1.6.  the technology shall be exploitable in terms of the capability (financial and technical) of the Canadian company to use and keep it current; and
• 6.1.7.  the Contractor shall make available, upon request by the IRB Authority, the licensing agreement with the Canadian recipient. Failure to do so will result in the technology and skills cooperation IRB Transaction being rejected.
• 6.2.  The technology and skills cooperation shall be measured in Canadian Content Value of the future sales, export sales or import replacement, of goods or services by the Canadian company as a result of the technology and skills cooperation. In addition, the Contractor may be credited for reasonable costs incurred as a result of the technology and skills cooperation once the achievement in future sales surpasses the cost of the technology and skills cooperation. Reasonable costs incurred include:
• 6.2.1.  training costs;
• 6.2.2.  set-up of infrastructure needed to exploit the technology; and
• 6.2.3.  any others as deemed reasonable by the IRB Authority.
• 6.3.  IRB in the form of technology and skills cooperation with Canadian companies may include activities such as:
• 6.3.1.  participation in the design, development and manufacture of new or improved systems;
• 6.3.2.  the provision of new process technologies that will enhance Canadian industry by improving their capabilities in present product lines and enhance their export potential; and
• 6.3.3.  the provision of licenses which will allow Canadian companies to manufacture new or existing components of major systems for export sale and import replacement.
• 6.4.  All costs to develop the technology shall be ineligible for IRB credit.

• 7.1.  IRB can be derived from activities such as investment in Canada. These investments shall meet the IRB Eligibility Criteria and shall be made directly by the Contractor or its Eligible Party and placed directly with a Canadian recipient.
• 7.1.1.  The Contractor will be credited the CCV of future sales resulting from the specific investment, and the amount of the investment, once the Achievement surpasses the amount of the initial investment. The credited future sales will be prorated by multiplying the applicable sales to the ratio of the Contractor's own direct investment in the company relative to that company's Capitalization at the time the investment was made once the accepted IRB credits surpasses the amount of the total investment.
  
  Credited Future Sales =
  
  
  Applicable Sales X

  Contractor's own direct investment in Canadian Recipient
  

  ---

  Canadian Recipient's Capitalization at the time the investment was made
• 7.2.  The investment shall be for the purchase of equity such as common shares or preferred shares. Use of the investment to purchase debentures is not permitted.
• 7.3.  The investment made by the Contractor or its Eligible Parties shall remain placed with the Canadian recipient for a minimum of three (3) years, starting from the date the investment is placed with the recipient. Failure to do so will result in the immediate clawback of all IRB approved credits for the IRB Transaction by the IRB Authority. No further IRB credits will be approved for that particular transaction.
• 7.4.  In the event the Contractor or an Eligible Party invests in its own Canadian facilities, the investment and the incremental sales resulting from that investment are eligible for IRB credit, assuming the investment itself is causal to the IRB obligations of the Contractor or Eligible Party. This is also provided that the investment results in a net benefit to Canada and that the transaction does not result in overcapacity, shutdowns of existing companies or losses of prospective sales by existing companies in Canada.
• 7.5.  The capital associated with the purchase of a Canadian company that is considered a "going concern" is not an eligible investment for IRB purposes. If the investment is for a Canadian company that has declared bankruptcy, then the investment can be counted for IRB purposes.
• 7.6.  Investment transactions may include:
• 7.6.1.  the establishment or enhancement of a Canadian facility or project which will develop Canada's advanced technology industries, and provide a capability that does not already exist in Canada. Consideration on the eligibility of the proposed IRB transaction will also be based on whether the transaction results in overcapacity, shutdowns of existing companies or losses of prospective sales by existing companies in Canada; or
• 7.6.2.  the development of joint ventures with Canadian firms, which will contribute to their long-term viability and increase sales in both domestic and international markets.

• 8.1.  In any instance where the Contractor or its Eligible Party is not placing an investment directly with a Canadian recipient, and is utilizing a third party to manage such investments, the method of crediting such investments will be as detailed in this Clause. Any organization which manages investments such as, but not limited to Banks, Trust Companies, Venture Capital Funds, and Investment Companies, will not be an Eligible Party to the Contract, but will be deemed a third party. A portion of a Contractor's investment may come from the placement of funds into a Venture Capital Fund (VCF) directed at assisting the growth of Canadian small businesses through their development and exploitation of new technologies. The multiplied IRB credit related to these investments shall not exceed 5 percent of the IRB Commitment Value. Contributions in support of Canadian small business are permitted within the following parameters:
• 8.1.1.  Timing:
• 8.1.1.1.  IRB credit can be claimed when:
• 8.1.1.1.1.  the Contractor makes a financial contribution to a qualifying VCF. Only the face value of the contribution, measured in Canadian dollars, can be sought as an IRB at this time; and,
• 8.1.1.1.2.  the VCF Manager invests funds with a Canadian small business and the funds remain placed with the Canadian recipient for a minimum of three (3) years, starting from the date the funds are placed. Failure to do so will result in the immediate clawback of all IRB credits claimed or approved for the IRB Transaction by the IRB Authority.
• 8.1.1.2.  All VCF related IRB credits claimed by the Contractor are subject to verification and approval by the IRB Authority before IRB credits are accepted.
• 8.1.2.  Scope:
• 8.1.2.1.  (Privately held) small business recipients of the VCF investment shall have 50 employees or less (service based industries) or 100 employees or less (manufacturing based industries) at the commencement of the investment.
• 8.1.2.2.  Initial investments by the VCF Manager, including co-investments, in eligible small businesses cannot exceed $1M.
• 8.1.2.3.  Small business recipients will generally be involved in the development, manufacture or commercialization of a technologically advanced product or service in one of the following sectors:
• 8.1.2.3.1.  Life sciences (biotechnology, medical devices and pharmaceuticals)
• 8.1.2.3.2.  Health
• 8.1.2.3.3.  Advanced materials
• 8.1.2.3.4.  Advanced manufacturing
• 8.1.2.3.5.  Environment
• 8.1.2.3.6.  Information and communications technologies, and
• 8.1.2.3.7.  Aerospace and defence
• 8.1.2.4.  Only Canadian registered and managed VCFs (or Third Parties) which support the above industrial sectors will be acceptable. The Contractor will have to provide evidence that a high percentage of a chosen fund's investment activity is with companies that are in the above sectors.
• 8.1.3.  Multiplier for IRB Credit purposes:
• 8.1.3.1.  The multiplier for IRB credit purposes is 5:1. The IRB credit will be given for the initial contribution at the time of the deposit to the VCF by the Contractor. The IRB credit that makes up the remaining multiples will be offered when the VCF Manager or Third Party Investment Manager assigns the funds to a Canadian small business and the funds remain placed with the Canadian recipient for a minimum of three (3) years, starting from the date the funds are placed. The maximum multiplied IRB credit for the Project is 5 percent of the IRB Commitment Value.
• 8.1.4.  Limitation to Third Party Investments/Venture Capital Funds for Small Business
• 8.1.4.1.  Once a small business reaches the Initial Public Offering stage, no further IRB credit will be granted by the IRB Authority for further VCF investment to the Canadian small business.
• 8.1.5.  Performance Guarantees
• 8.1.5.1.  IRB Transaction sheets related to qualifying VCF transactions are stated in the multiplied value of the proposed contributions to the VCF. This multiplied value is part of the Contractor's total IRB commitment, and as such is subject to the performance guarantees stipulated in this Contract.
• 8.1.5.2.  If the Contractor fails to achieve an approved IRB Transaction involving a VCF, the full "multiplied" value of its IRB Commitment shall be made up with other IRB activities that meet the IRB Eligibility Criteria. Substitute transactions will not be subject to the multiplier.

• 9.1.  In any instance where the Contractor or its Eligible Party invests in research and development through a consortium, the method of crediting such investments will be as detailed in this Clause. A consortium shall consist of an association of the following: the Contractor or its Eligible Party, a minimum of one (1) Canadian company and a minimum of one (1) Canadian post-secondary institution or public sector research institution. Investments shall be permitted in the form of cash donations as well as in-kind contributions.
• 9.1.1.  Timing:
• 9.1.1.1.  IRB credit can be claimed when:
• 9.1.1.1.1.  the Contractor makes a financial contribution to a qualifying consortium; and,
• 9.1.1.1.2.  the Consortium partner(s) make their contribution to the consortium.
• 9.1.1.2.  All Consortia related IRB credits claimed by the Contractor are subject to annual reporting and verification and approval by the IRB Authority before IRB credits are approved.
• 9.1.2.  Scope:
• 9.1.2.1.  A Consortium shall be considered as an association between the Contractor(s), Canadian company(s) and Canadian research institute(s). The association shall consist of a minimum of:
• 9.1.2.1.1.  the Contractor or its Eligible Party; and,
• 9.1.2.1.2.  a minimum of one (1) publicly or privately owned Canadian company; and,
• 9.1.2.1.3.  a minimum of one (1) post-secondary or public research institution.
• 9.1.2.2.  Involvement of non-Canadian company(s) in the consortia shall be permitted. The combined total investment from foreign sources shall not exceed fifty (50) percent of the Consortium value.
• 9.1.2.3.  The Contractor shall not be able to claim its Consortium partner(s) as Eligible Parties to this Contract. In cases where an existing Eligible Party to the Contract participates in a Consortium, a separate IRB Transaction Sheet shall be submitted that describes the Eligible Parties' involvement in the Consortium to claim credits for contributions leveraged by the Eligible Party. At no time shall the Contractor and Eligible Party be able to claim for the same contributions.
• 9.1.2.4.  In addition to demonstrating Causality, the Contractor shall be responsible for demonstrating how its involvement in the Consortium leveraged the investments from the other parties involved.
• 9.1.2.5.  The Contractor may choose to invest in an existing Consortium and will be credited for its investment into the Consortium. In order to receive credit for funds invested by other companies, the Contractor must demonstrate that the additional funds invested into the Consortium were the result of the Contractor's participation. The Contractor will not receive credit for funds already existing in the Consortium prior to their participation.
• 9.1.2.6.  The Contractor will not be eligible to claim IRB on any funds leveraged by other parties and applied to other IRB obligations. In cases where multiple Contractors with IRB obligations are involved in a Consortium, each of these Contractors may be eligible to receive IRB credit for their own contribution and that of the partners they attract to the Consortium.
• 9.1.2.7.  Contributions to the Consortium may take the form of in-kind donations. These donations will not be eligible for a multiplier. In the case of equipment, tools and other final goods, credit for these shall be given based on an assessment to be undertaken by a Third Party to this Contract solely at the cost of the Contractor. Donations that cannot be assessed by a Third Party may be credited for reasonable costs incurred. The costs of these assessments will not be eligible for IRB Credit.
• 9.1.2.8.  The future sales that may arise from the Consortium will not be considered for IRB Credit. Should the Contractor procure goods and services from the Consortium, the purchase will be considered as a separate IRB Transaction. No multiplier will be applied to these future sales.
• 9.1.3.  Multiplier for IRB Credit purposes:
• 9.1.3.1.  The multiplier for IRB credit purposes shall be credited as follows. An initial value shall be the sum of the following:
• 9.1.3.1.1.  the value of cash contributions from the Contractor to the Consortium; and,
• 9.1.3.1.2.  the value of cash contributions from other eligible participants, leveraged by the Contractor's participation in the Consortium, up to a maximum value equal to that of the Contractor's contribution.
• 9.1.3.2.  However, the following will not be eligible for IRB Credit:
• 9.1.3.2.1.  contributions from post-secondary institutions and public research institutions shall not be counted towards the Contractor's obligations; and,
• 9.1.3.2.2.  direct contributions from all levels of government into the Consortium.
• 9.1.3.3.  Once an initial value is established, the Contractor shall receive a five (5x) times multiplier on the initial value.
• 9.1.3.4.  When a Consortium IRB Transaction is submitted, the Contractor must identify the manner that it proposes to calculate the regional distribution. The Contractor may opt to make regional commitments based on where funding for the Consortia originates as a proportion of the total Canadian funding. Alternatively, the Contractor may opt to make regional commitments based on where the work associated with the Consortium is taking place. In either situation, once a Contractor selects a regional calculation, the Contractor will be held to this selection.
• 9.1.4.  Performance Guarantees
• 9.1.4.1.  IRB Transaction sheets related to qualifying Consortium transactions are stated in the multiplied value of the proposed contributions to the Consortium. This multiplied value is part of the Contractor's total IRB commitment, and as such is subject to the performance guarantees stipulated in this Contract.
• 9.1.4.2.  If the Contractor fails to achieve an approved IRB Transaction involving a Consortium, the full "multiplied" value of its IRB Commitment shall be made up with other IRB activities that meet the IRB Eligibility Criteria. Substitute transactions will not automatically be subject to a multiplier.

• 10.1.  An Indirect IRB in the form of a purchase of goods or services, not specifically for use in the Work, shall be equivalent level of technology to the Project with applications in Canadian advanced technology industries. A credit for these purchases will be given equal to their CCV under the following conditions:
• 10.1.1.  if the CCV is less than 30 percent of the total content for a given activity, then this activity will not qualify as a IRB Transaction; and,
• 10.1.2.  if the CCV is equal or greater than 30  percent, then the CCV will qualify as an IRB.

• 11.1.  Direct IRB Transactions are those achieved through the provision of the goods and services required to deliver the (Insert Project Name) or achieved through the provision of goods and/or services on approved Global Value Chain (GVC) platforms.
• 11.2.  Canadian resources should be utilized to the maximum extent possible to develop, produce, integrate and deliver the (Insert Project Name). Eligible areas of involvement include hardware and software, project management, systems design, engineering and integration, programming and independent validation and verification, installation engineering and site installation, and transportation.
• 11.3.  An eligible Global Value Chain (GVC) platform must be similar to the platform being proposed for (Insert Project Name), have a market potential (measured by market size and longevity) equal to or greater than the platform proposed for (insert Project Name), and one that offers significant opportunities for technological advancement, growth in the level of system integration, small and medium-sized business (SMB) participation, and have large-scale and sustainable acquisition and/or sustainment opportunities.
• 11.4.  Activities associated with GVC platforms include, but are not limited to, pre-commercialization activities (e.g. collaborative technology development and demonstration projects), production activities (e.g. definition, design, and manufacturing) and In Service Support activities.
• 11.5.  A list of approved GVC platforms is found in Article 31.1.

• 12.1.  Major Obligors to Canada are required to submit a Strategic Plan to the IRB Authority annually. If the Contractor is a Major Obligor, as defined in Article 1.1.24 then;
• 12.1.1.  The Contractor and the IRB Authority will meet annually to update, review and discuss the Contractor's Strategic Plan.
• 12.1.2.  Representatives at senior levels of the corporation and senior levels of Industry Canada will be available for annual meetings.
• 12.2.  The Contractor's Strategic Plan should include:
• 12.2.1.  a description of the Contractor's broad corporate plans for Canada over the medium-term (3-5 years) and long-term (5+ years);
• 12.2.2.  how these corporate plans may translate into IRB activities;
• 12.2.3.  an overview of the Contractor's current and anticipated IRB Obligations to Canada;
• 12.2.4.  IRB Partnerships with tier-one suppliers or other Eligible Parties.
• 12.3.  Contractors with multiple IRB Obligations totaling less than $1 billion may also submit a Strategic Plan to the IRB Authority; however, neither the IRB Authority, nor the Contractor will be required to meet annually to discuss the Strategic Plan.
• 12.4.  Contractors with a Strategic Plan may be permitted to "pool" high value, strategic IRB business activities.
• 12.5.  Pooled IRB Transactions must meet the following criteria:
• 12.5.1.  meet the IRB Eligibility Criteria as described in Article 5, Eligibility Criteria for IRB Transactions;
• 12.5.2.  have a value of over $100 million measured in CCV; and
• 12.5.3.  provide long term impact to the Canadian recipient including R&D support, first purchase of innovative Canadian technologies, market leadership, world product mandate, global value chain activities, or technology advancement.

• 13.1.  The extent to which each IRB Transaction will qualify will be based on and limited to valid orders and/or contracts delivered by the end of the IRB Achievement Period.

• 14.1.  Trading of IRB credits is not permitted.
• 14.2.  Mutual Abatement is not permitted.

• 15.1.  A total of 50 percent of the IRB Commitment value can be utilized with Banked IRB Transactions from the IRB Bank. The entire CCV of a Banked IRB Transaction, not a portion thereof, must be applied to a single IRB Transaction under the Contract. Each transaction must clearly state that it is a Banked IRB Transaction. The Banked IRB Transaction must contain the exact information as submitted to the IRB Bank.

• 16.1.  Import replacements due to the transference of work into Canada will be counted for IRB purposes.

• 17.1.  Multipliers are only permitted on IRB Transactions involving: cash contribution input to Canadian universities for university research or the establishment of university Chairs; investments in advanced technology skill development through publicly operated post secondary institutions; collaborative research undertaken with publicly accessible research institutions (e.g. the National Research Council or other federal or provincial research institutions); contributions to Venture Capital Funds specializing in small business development; and cash contributions to research and development through a Consortium (see consortium article 9.1.3). Multipliers will not exceed five (5:1).

• 18.1.  If a product designed, developed and manufactured by a Canadian company is the subject of a world product mandate, where it is a long term relationship between the Contractor or an Eligible Party and a Canadian company, whereby the Canadian company has been legally authorized to carry out the aforementioned specific activities, and is identified as such in an Indirect IRB Transaction, and where the CCV of the product is verified to be seventy (70) percent or greater, the full contract value of the transaction will be deemed to be CCV.

• 19.1.  For the benefit of Small and Medium Business and to lessen their administrative burden, if at least seventy (70) percent of the value of an IRB Transaction below $100,000.00 is CCV, that contract will be deemed to have 100 percent CCV for reporting and verification purposes only.

• 20.1.  Industry Canada reserves the right to make general announcements on contracted or signed Memorandum of Understanding IRB Transactions. Announcements would include company names, general descriptions of the work being proposed and approximations of CCV.

• 21.1.  The Contractor shall not alter the IRB Commitments listed in Annex A unless:
• 21.1.1.  the Contractor has submitted a proposal to the IRB Authority through the Contracting Authority, with respect to the alteration; and,
• 21.1.2.  the IRB Authority through the Contracting Authority has given written approval to the Contractor and requested the Contracting Authority to amend the Contract accordingly.
• 21.2.  The Contractor may propose alterations to or substitutions for any of the IRB Transaction(s) listed in Annex A, and the IRB Authority may accept these requests provided that in the judgment of the IRB Authority:
• 21.2.1.  the circumstances requiring the change are exceptional and likely to result in undue hardship upon the Contractor if a change is not made;
• 21.2.2.  the obligations of this Contract under the Statement of Work are maintained i.e. the overall Regional and Small and Medium Business Commitments are maintained;
• 21.2.3.  the proposed alterations or substitutions meet the IRB Eligibility Criteria stated in this Contract;
• 21.2.4.  the proposed substitute IRB Transaction is not less than the IRB Transaction to be replaced both as to the level of technological sophistication of the work to be performed and the CCV;
• 21.2.5.  Canadian industry will receive the maximum high-quality, low risk, Direct Benefits associated with the delivery of the work; and
• 21.2.6.  Canadian industry will receive high-quality, low risk, Indirect Benefits of the same level of technology as the Direct Benefits.

• 22.1.  In the event that the Contract value is increased or decreased, the Contractor's IRB Commitment shall be correspondingly either increased or decreased to reflect this change.

• 23.1.  The Contractor shall implement the IRB procedures and practices as described in the IRB Management Plan. Any changes to the IRB Management Plan are subject to approval by the IRB Authority.
• 23.2.  The Contractor shall keep proper records and all documentation relating to the determination of the CCV of the work provided under this Contract, including invoices and proof of payments. The Contractor shall not, without the prior written consent of the IRB Authority, dispose of any such records or documentation until the expiration of two (2) years after final payment of this Contract, or until settlement of all outstanding claims and disputes, whichever is later. All such records and documentation shall at all times during the aforementioned retention period be open to verification, inspection and examination by the IRB Authority or his/her delegate, who may make copies thereof and take extracts therefrom.
• 23.3.  In addition, the IRB Authority may request the Contractor provide copies of all such information be sent to him/her via mail or courier for a random sample of IRB Transactions as he/she may from time to time request.
• 23.4.  If the IRB Authority determines that the information contained in the annual report and certified by the Certificate of Compliance shall be verified, the Contractor shall undertake to provide the IRB Authority with access, at all reasonable times, and within sixty (60) calendar days of being notified, to its accounts and records relating thereto and shall, by obtaining similar undertakings in the subcontracts of all Eligible Parties, arrange for the same in respect of any subcontracts and suppliers carrying out the work.
• 23.5.  Where, subsequent to the verification action taken pursuant to this Clause, the IRB Authority determines that the records are insufficient to verify the Contractor's achievements in respect of any IRB Commitment, the Contractor shall provide such additional information as may be required by the IRB Authority.
• 23.6.  Where it cannot be verified that an IRB Transaction has provided the IRB claimed, that portion of the IRB which cannot be verified will be considered as not having been achieved and the IRB Authority will give Notice to the Contractor of the shortfall through the Contracting Authority.
• 23.7.  Should the Contractor disagree with a decision delivered pursuant to the above paragraph, the Contractor, within twenty (20) Business Days from the notification of the said decision, may appeal, by Notice to the Contracting Authority, the above decision by describing fully the issue, all relevant factors and the reasons for its disagreement with the said decision. The IRB Authority, on subsequent review of the factors surrounding the disagreement, will issue a final determination, identifying the amount of any such IRB achieved.
• 23.8.  If the IRB Authority determines that a significant Shortfall in the Contractor's total IRB Commitment exists and if the IRB Authority believes that the Contractor will not meet its total IRB Commitment, the IRB Authority may give, through the Contracting Authority, notice to the Contractor and request the Contractor to submit a proposal showing how the Contractor plans to correct such deficiencies. The Contractor will submit its proposal within sixty (60) calendar days of receipt of such notice. If the proposal is not acceptable to the IRB Authority, the IRB Authority may request the Contracting Authority to terminate the Contract.
• 23.9.  The Contractor's overall IRB Commitments, claims and achievements, is information available to Parliament and is considered by the Canadian Government as information that can be released to the public. However, in situations where transactional information is formally requested through the Access to Information and Privacy Act of the Government, the IRB Authority will identify this information as "company confidential" when submitting it to the ATIP office for final release determination.

• 24.1.  The Contractor may achieve a CCV for any Commitment in excess of the value stated in the IRB Transactions without prior approval. When an over-achievement occurs in an IRB Transaction Commitment, subject to the prior written approval of the IRB Authority, the over-achievement may be applied against the shortfall or unallocated portion of the IRB Transactions, as long as the Regional and Small and Medium Business Commitments are achieved. An over-achievement in one Region will not be applied to reduce a shortfall in another Region.

• 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.

• 26.1.  The Parties to this Contract acknowledge and agree that:
• 26.1.1.  Canada has responsibility for the economy of Canada and, in order to develop its economy, has set in place policies and programs to promote and enhance the development of the Canadian industrial base, including regional industry and small business;
• 26.1.2.  the award of this Contract to the Contractor resulted from a procurement process in which the Contractor committed to fulfill the CCV Commitments set out in Article 2, Statement of Work: IRB Commitments and Responsibilities;
• 26.1.3.  it is the responsibility of the Contractor to ensure that it can complete the IRB Transactions and that these are not limited by applicable laws, regulations, policies or standards; and
• 26.1.4.  actual damages which would be sustained by Canada in the event of a breach by the Contractor of the CCV Commitment provisions of this Contract would be commercially impracticable or extremely difficult to compute or ascertain and, therefore, the provisions for Liquidated Damages are agreed to be a fair and reasonable best estimate of such actual damages, and the manner provided herein for the enforcement and collection of Liquidated Damages is agreed to be fair and reasonable.

• 27.1.  In matters pertaining to proposed and/or approved IRB Transactions, in circumstances where the IRB Authority and the Contractor fail to agree after negotiating in good faith, then the decision of the IRB Authority will prevail.
• 27.2.  In the event that the Contractor fails to agree to the decision rendered by the IRB Authority, then the Contractor may, within twenty-eight (28) calendar days of receipt of Canada's decision, submit a request to the Contracting Authority, for reconsideration of the matter by the IRB Authority. Such a request shall fully describe the issue, all relevant factors and the reasons for the Contractor's disagreement. Industry Canada will, within twenty-eight (28) calendar days of receipt of the request, issue the final determination detailing the reasons for the decision.

• 28.1.  It is the responsibility of the Contractor to be familiar with Government departments and agencies including the following which are responsible for regional and industrial development: Industry Canada; Department of Western Economic Diversification (WD); Atlantic Canada Opportunities Agency (ACOA); and Canada Economic Development for Quebec (CED'Q).

• 29.1.  The Contractor and its Eligible Parties each represents and warrants:
• 29.1.1.  that it has filed all Lobbying Act returns to be filed in respect of persons employed by it who communicate and/or arrange meetings with public office holders as part of their employment duties, and that it will continue to do so;
• 29.1.2.  that it has not contracted with any person to communicate and/or arrange meetings with public office holders for remuneration that is or would be contingent in any way upon success of such person arranging meetings with public office holders, or upon the approval and granting of IRB Credit under this Contract;
• 29.1.3.  that it will not contract with any person to communicate and/or arrange meetings with public office holders for remuneration that is or would be contingent upon the success of such person arranging meetings with public office holders, or upon the approval and granting of IRB Credit under this Contract;
• 29.1.4.  all persons who are or have been contracted by it to communicate and/or arrange meetings with public office holders in respect to this Contract are in full compliance with the registration and other requirements of the Lobbying Act;
• 29.1.5.  it shall at all times ensure that any persons contracted to communicate and/or arrange meetings with public office holders in respect of this Contract are in full compliance with the requirements of the Lobbying Act.
• 29.2.  When submitting each IRB Annual Report, the Contractor and its Eligible Parties must provide the IRB Authority with an update, in a form satisfactory to the IRB Authority, on all representations, warranties and undertakings made herein.

• 30.1.  The Eligible Parties to this contract include the companies and coordinates listed below:

• (List to be included at contract award)

• 31.1.  The Platforms approved for GVC work are listed below:

• (List to be included at contract award)

Clauses that have changed from Version 1.0 to Version 2.0

• 1.1.31 (minor numbering correction)
• 2.1 (and all sub clauses) (minor corrections regarding numbering and consistency)
• 2.2.1 (minor numbering corrections)
• 3.1.1 (minor numbering corrections)
• 3.1.2 (minor numbering corrections)
• 3.1.4.5 (minor wording correction)
• 4.2.3 (clarification regarding non-Canadian expenses)
• 5.1 (and all sub clauses) (new sections regarding causality)
• 6.1.6 (minor word correction)
• 8.1.2.4 (clarification regarding Third Parties)
• 8.1.3.1 (clarification regarding Third Parties)
• 9.1.1.1.2 (minor word correction)
• 11.5 (minor numbering correction)
• 12.1 (minor clarification regarding strategic plans)
• 12.4 (minor clarification regarding pooling)
• 12.5.2 (minor word correction)
• 13 (deleted in V.2)(deletion of discretionary authority clause)
• 15 (new section regarding banking)
• 17.1 (minor grammatical correction)
• 21.1 (minor numbering correction)
• 21.2 (minor numbering correction)
• 22.1 (clarification regarding contract price changes)
• 25.2 (updated title)
• 25.2.2 (minor numbering correction)
• 25.2.3 (new section regarding tranche 3 holdbacks)
• 25.2.4 (new section regarding tranche 3 holdbacks)
• 25.3 (minor numbering corrections)
• 25.6.6 (updated date)
• 30.1 (minor wording correction)
• 31.1 (minor wording correction)
• Annex A (new clarification regarding contents of annex)
• Annex C (transaction sheet changes in boxes 3 and 9)
• Annex D (deleted)

Plans, Transactions and Tables

IRB Plans — to be attached from Contractor's IRB Proposal

IRB Transactions — to be attached from Contractor's IRB Proposal

IRB Tables — templates below, for IRB reporting purposes

Table I — Total of IRB Transactions by Period and Region

Region	Period 1	Period 2	Period 3	Period 4	Period 5	Totals by Region
Atlantic
Quebec
West
Northern Ontario
Ontario
Unallocated
Totals by Period

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Table II — Total Direct IRB Transactions by Period and Region

Region	Period 1	Period 2	Period 3	Period 4	Period 5	Totals by Region
Atlantic
Quebec
West
Northern Ontario
Ontario
Unallocated
Totals by Period

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Table III — Total Indirect IRB Transactions by Period and Region

Region	Period 1	Period 2	Period 3	Period 4	Period 5	Totals by Region
Atlantic
Quebec
West
Northern Ontario
Ontario
Unallocated
Totals by Period

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Table IV — IRB Transaction Listing and Summary — by Period

Transaction Description	Period 1	Period 2	Period 3	Period 4	Period 5	Totals
Direct IRBs:
#001
#002
#003
Sub-total — Direct IRBs:
Indirect IRBs:
#001
#002
#003
Sub-total — Indirect IRBs
Totals

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Table V — IRB Transaction Listing and Summary — by Region

Transaction Description	Atlantic	Quebec	Northern Ontario	West	Totals
Direct IRBs:
#001
#002
#003
Sub-total — Direct IRBs
Indirect IRBs:
#001
#002
#003
Sub-total — Indirect IRBs
Totals

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Table VI — IRB Transactions Listing and Summary for Small and Medium Business — by Period

Transaction Description	Period 1	Period 2	Period 3	Period 4	Period 5	Totals
Direct IRBs:
#001
#002
#003
Sub-total — Direct IRBs
Indirect IRBs:
#001
#002
#003
Sub-total — Indirect IRBs
Totals

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Table VII — IRB Transactions Listing and Summary for Small and Medium Business — by Region

Transaction Description	Atlantic	Quebec	Northern Ontario	West	Totals
Direct IRBs:
#001
#002
#003
Sub-total — Direct IRBs
Indirect IRBs:
#001
#002
#003
Sub-total — Indirect IRBs
Totals

Certificate of Compliance
For Industrial and Regional Benefits (IRB) Reporting Purposes

WHEREAS Her Majesty the Queen, in right of Canada as represented by the Minister of Public Works and Government Services Canada (referred to herein as the Minister) on the ____ day of _____ has entered into contract with _________________________ for the Contract.

AND WHEREAS Such Contract requires that, as evidence of the achievement of Canadian Content Value of Industrial and Regional Benefits Transactions and Commitments, the Contractor shall submit a Certificate of Compliance to that effect to the IRB Authority;

NOW THEREFORE, The Contractor declares and certifies as follows:

1. The information contained in the documents appended herewith, which applies to the reporting of the IRB Transaction periods is to the best of our knowledge and ability complete, true and correct;
2. The information contained in the documents appended herewith is compliant with information contained in Certificates of Compliance submitted to the Contractor by other Eligible Parties;
3. The Canadian Content Values shown in documents appended herewith have been determined in accordance with Article 4 (Canadian Content Value) of the Contract;

IN WITNESS THEREOF THIS CERTIFICATE OF COMPLIANCE HAS BEEN SIGNED THIS ______________ DAY OF _______________ BY THE SENIOR COMPTROLLER WHO IS DULY AUTHORIZED IN THAT BEHALF.

_______________________________
SIGNATURE

__________________________________________________________
NAME AND TITLE OF SENIOR COMPTROLLER

AT:________________________________

Detailed IRB Transaction Sheet