Industrial and Technological Benefits (ITB)

Industrial and Technological Benefits (ITB) is Canada's policy requiring companies that win eligible defence and Canadian Coast Guard contracts to undertake business or industrial activity in Canada generally equal to the value of the contracts they receive. The policy is administered by Innovation, Science and Economic Development Canada (ISED). ISED's ITB site sets out the policy and how it is applied.

Bidders propose their commitments through a Value Proposition, which can be evaluated as part of the contract award process. The policy replaced Canada's former Industrial and Regional Benefits (IRB) approach for major defence procurements. Its stated economic objectives include Canadian jobs, innovation, research and development, supply-chain participation and export potential, as described in the ITB Policy page.

What the ITB Policy requires of a contractor

The successful contractor must undertake eligible Canadian business activity and meet the commitments it made in its proposal. The activity falls into two broad types. Direct activities are connected to the equipment or service being procured. Indirect activities are other eligible Canadian business activity, such as work with Canadian suppliers, research and development, or facility expansion.

If the commitments in the original proposal do not add up to the full obligation, the contractor must identify additional Canadian investments after award. The ITB Policy page describes these duties.

Thresholds and procurement methods that trigger ITB

The policy applies to eligible Department of National Defence (DND) and Canadian Coast Guard procurements valued at more than $100 million, where the procurement is not subject to international trade agreements or where the national-security exception is invoked. Defence procurements between $25 million and $100 million are reviewed for possible application. Both thresholds are set out on the ISED defence and marine procurement ITB page.

The policy can apply regardless of procurement method. That includes competitive procurements, sole-source procurements, government-to-government arrangements and Foreign Military Sales.

The Value Proposition in bid evaluation

In major procurements, bidders may be required to submit a Value Proposition. It describes the Canadian investments and business activity the bidder intends to carry out if it wins. The Value Proposition is a weighted and rated element, assessed alongside technical and cost requirements, so industrial commitments can affect which bid wins. Public Services and Procurement Canada discusses this in its defence and marine procurement strategy.

ITB obligations, reporting and verification

ITB obligations are written into the contract through ITB terms and conditions. ISED publishes the current ITB Terms and Conditions, which require the contractor to meet its commitments and provide information for monitoring and verification.

ISED monitors projects through reporting and verification, including annual reporting. The projects and obligations page explains how this works.

What ITB means for a supplier bidding on Canadian public contracts

• If you are a prime bidder on a major defence or Coast Guard procurement, plan your Value Proposition early. It is rated with your technical and cost offer and can decide the award.
• If you are awarded the contract, your ITB commitments become contractual and must be reported on.
• If you are a Canadian firm with relevant technology or capacity, primes with ITB obligations must find eligible business activity in Canada. ISED's how to get involved page explains how to engage with them.