How does the Industrial and Regional Benefits (IRB) policy work?

Step 1: Procurement strategy

For each major defence procurement which has IRB requirements, a procurement strategy is developed jointly, by the Department of National Defence (DND), Public Works and Government Services Canada (PWGSC) and Industry Canada (with input from the Regional Agencies). IRBs are almost always applied on defence procurements over $100M (Major Crown Projects) and are discretionary below that threshold.

Step 2: Search for Canadian capabilities

Early in the process (before the Request for Proposal is released), bidders will search out Canadian capabilities and possible business partnership opportunities, as they prepare their IRB plans. Informal discussions often take place between government, bidders and Canadian companies. Bidder tours can be set up in the regions, in addition to one-on-one site visits.

Step 3: Release of Request for Proposal (RFP)

The RFP outlines for bidders what is expected regarding IRBs. As part of their bid, each bidder is required to submit IRB plans, outlining the proposed activities involving Canadian companies. In particular, bidders must outline how they will involve Canada's regions, SMEs and, where it has been identified in the procurement strategy, aboriginal businesses.

In competitive situations, the IRB policy does not set pre-specified regional distributions, and the government never forces bidders to work with specific Canadian companies. IRB activities can either be directly or indirectly related to the item being procured.

Once the RFP is released, all informal discussions between bidders and government stop and communications are strictly controlled to ensure transparency and fairness.

Step 4: Bid evaluation

Once bids for a major defence procurement are received, there are three parts to the government's evaluation:

• the technical evaluation, which is the responsibility of the DND team.
• the financial evaluation, which is the responsibility of the PWGSC team.
• the IRB evaluation, which is the responsibility of the Industry Canada team, which includes the Regional Development Agencies.

During the IRB evaluation, proposals are assessed on a pass/fail system. IRB officials evaluate individual IRB transactions, assessing their quality, quantity and the likelihood that they will be carried out. In addition, the plans for regional, SME and aboriginal business development are evaluated.

Step 5: Contract award

Once the government selects a winning bid, the corresponding IRB plans and their specific commitments become part of the contract signed between the government and the prime contractor.

The inclusion of IRBs in the contract ensures that the proposed IRB transactions will be carried out as planned.

Performance guarantees, including liquidated damages, are also included in the contract, to ensure that contractors honour their commitments.