Backgrounder — Canada's Industrial and Regional Benefits Policy

The Industrial and Regional Benefits (IRB) Policy has been providing opportunities to Canadian industry since 1986. Canada currently has over 60 major procurements subject to the policy, with more than $20 billion in contracted, high-quality business activities with Canadian industry. Estimates indicate this could increase by over $30 billion over the next decade.

Canada's IRB Policy requires prime contractors to undertake business activities in Canada that total 100 percent of the value of the defence or security contract they have just won with the Government of Canada.

The long-term focus of the IRB Policy provides Canadian companies with an opportunity to develop and apply their own strengths and competitive solutions and to take advantage of real business opportunities that will last years beyond the initial IRB commitment.

Through the IRB Policy, the Government of Canada supports research and helps bring new technologies to market by increasing access to international business opportunities and improving the commercialization of innovative Canadian technology.

The updates to the IRB Policy announced in September 2009 maximize benefits for Canada's defence procurements and provide Canadian firms with better access to work on global value chains, technology investments and other high-quality, strategic business activities.

Background

Industrial and Regional Benefits Policy Objectives

A key objective of Government of Canada procurement is to ensure that the right goods and services are purchased at the best possible price to the taxpayer. Canadian firms can meet the government's procurement requirements and provide significant Canadian content in their goods or services. Global firms can provide goods and services that combine high-value Canadian content with world-class items sourced outside of Canada.

The IRB Policy works within this procurement framework and ensures that economic benefits flow to Canada as a result of defence procurement by requiring prime contractors to place work in Canada over the life of the contract.

The IRB Policy strongly encourages prime contractors to use their best business sense to select their Canadian partners and suppliers, with the goal of generating long-term, sustainable business relationships in Canada. These strategic relationships stimulate the Canadian economy while helping to ensure a more competitive Canadian industry.

Improvements to the Industrial and Regional Benefits Policy

Several improvements to the IRB Policy were announced by the Minister of Industry on September 24, 2009.

These changes to the IRB Policy

encourage major defence contractors to integrate Canadian suppliers into their global supply chains;
provide added flexibility to generate IRB activity before government contracts are awarded;
enable direct investment into Canadian small and medium-sized enterprises with world-leading technologies and services;
promote the creation of consortia between major defence contractors, Canadian industry and publicly funded research institutions; and
attract additional research and development investment to Canada.

These changes are encouraging more strategic relationships, strategic investments and subcontracting opportunities between major prime contractors — many of which are world-leading technology companies — and Canadian companies both large and small.

These improvements are also better aligning the IRB Policy with the respective goals of client departments and support the development of Canada's industrial capability to meet future procurement needs in Canada and abroad.

As well, these changes are significantly strengthening the role the IRB Policy can play in enabling research, development and commercialization and in bringing new technologies to market.

They are also creating a more prosperous environment for the development of more valuable, enduring business relationships between global prime contractors and Canadian industry.

Five of the seven IRB Policy changes have been fully implemented, and the remaining two are in advanced stages of development.