Canadian Value Proposition (CVP)

A Canadian Value Proposition (CVP) is an economic proposal that a contractor submits to the Government of Canada when bidding on an eligible major defence or Canadian Coast Guard procurement. It describes the investments and business activities the bidder commits to carrying out in Canada if it wins the contract. Government materials usually call it the Value Proposition. Innovation, Science and Economic Development Canada (ISED) describes it as part of the Industrial and Technological Benefits (ITB) Policy.

The Value Proposition is not a side document. It is a weighted and rated element of the bid, scored alongside the technical and cost requirements. A bidder with a strong technical offer and a competitive price can still lose ground if its economic commitments to Canada are weak.

The ITB Policy behind the Value Proposition

The Value Proposition comes from Canada's Industrial and Technological Benefits Policy, which was formerly associated with the Industrial and Regional Benefits framework. ISED administers the policy. Procurements are commonly led by Public Services and Procurement Canada (PSPC) together with the client department, such as the Department of National Defence or the Canadian Coast Guard. The ITB Policy page sets out how the framework applies.

Under the policy, a company awarded an eligible defence contract must undertake business activity in Canada equal to the value of the contract, as stated on the ISED ITB site. The Value Proposition is the part of that framework that is scored during bid evaluation.

How a Value Proposition is rated in a bid

A request for proposals may require bidders to submit a Value Proposition. It is then weighted and rated with the technical and price elements of the bid. The PSPC information session material identifies a default weighting of 10%, although the actual weighting is determined for each procurement.

ISED sets the economic-benefit requirements for each Value Proposition on a procurement-by-procurement basis, using industry engagement and market analysis, according to a PSPC briefing to the Standing Committee on National Defence. Two bids on different projects can therefore face different requirements.

Contract thresholds and examples

Canada's policy materials state that procurements valued at $20 million or more may be reviewed for application of a Value Proposition. Procurements valued at $100 million or more require a Value Proposition as part of a comprehensive ITB plan, as set out in the Government of Canada's 2014 announcement.

Recent procurements show the range of application:

• The fighter-jet replacement procurement applied the ITB Policy, including the Value Proposition, to generate jobs and economic growth for Canadian aerospace and defence businesses, as described in PSPC's 2020 news release.
• The Future Aircrew Training Program also fell under the policy, as noted in the 2023 preferred bidder announcement.
• The National Shipbuilding Strategy Value Proposition applies to the polar icebreaker project. It requires reinvestment equivalent to 0.5% of the relevant polar contracts in human-resources development, technology investment and industrial development, according to the Seaspans contract announcement.

What a bidder must commit to

A bidder must describe the investments and business activities it would undertake in Canada if awarded the contract. These can include Canadian supplier development, research and technology development, productivity improvements in Canadian firms, investments supporting Key Industrial Capabilities, and export opportunities.

The Value Proposition is distinct from Canadian Content Value (CCV). CCV is used to calculate the value of purchases from Canadian suppliers for ITB credit. The Value Proposition is the bidder's proposed economic plan for Canada, as explained in the ITB Policy. The ISED Value Proposition guide gives further detail for bidders.

What it means for a supplier

Canadian suppliers can benefit when a prime contractor commits to supplier development, research or export work in its Value Proposition. Suppliers bidding as primes on eligible defence or Coast Guard work need to treat the Value Proposition as a scored part of the bid. Check the solicitation for the weighting and the procurement-specific requirements that ISED has set.