IBS (industrial benefits sharing)

Industrial benefits sharing (IBS) describes the requirement that a company awarded a defence or security contract by the Government of Canada carry out business or industrial activity in Canada, generally equal in value to the contract it was awarded. The goal is to use large public purchases to create Canadian jobs, innovation and economic growth.

The Government of Canada now calls this mechanism the Industrial and Technological Benefits (ITB) Policy. Innovation, Science and Economic Development Canada (ISED) administers it for eligible defence and Canadian Coast Guard procurements. Suppliers will see ITB and its predecessor, Industrial and Regional Benefits (IRB), in solicitation documents and contract terms.

From Industrial and Regional Benefits to the ITB Policy

Canada established the ITB Policy in 2014, and it replaced the earlier IRB Policy. The change in name reflects a stronger emphasis on technology and innovation alongside regional economic development. Federal publications, including this 2016 departmental publication, record the replacement of IRB by ITB.

The policy is led by ISED and applies to procurements for the Canadian Armed Forces and, where relevant, the Canadian Coast Guard. The ITB Policy page sets out its scope and application.

Which procurements trigger benefit obligations

The policy applies to eligible procurements valued at over $100 million. Procurements between $25 million and $100 million are reviewed to decide whether the policy should apply, according to ISED's ITB site.

The policy applies to procurements that are not subject to trade agreements, or where the National Security Exception is invoked. It can apply whatever the procurement method: competitive solicitations, sole-source contracts, government-to-government purchases and Foreign Military Sales all fall within its reach.

Value Proposition and sole-source negotiation

In a competitive procurement, bidders may be required to submit a Value Proposition that describes the economic benefits they will deliver to Canada. As the Atlantic Canada Opportunities Agency explains, the Value Proposition is evaluated together with the technical and price elements of the bid. The Office of the Auditor General also describes industrial and technological benefits as part of the bidding process for major defence contracts, in its 2024 audit report.

In a sole-source procurement there is no competition to evaluate. Canada instead negotiates the economic benefits directly with the supplier.

Contract terms and reporting

The obligations are written into the contract through ITB model terms and conditions, available in the ITB toolkit. The successful contractor must undertake Canadian business or industrial activity generally equal to the value of the awarded contract over the life of the contract. Contractors must fulfil their commitments and report on them to ISED.

What it means for a supplier bidding on Canadian public contracts

• Check each defence, security or Coast Guard solicitation for ITB requirements and a Value Proposition evaluation.
• Treat the Value Proposition as a scored part of the bid, not an attachment.
• Prime contractors carry the obligation to Canada, so smaller Canadian suppliers can position themselves as partners who help primes meet it.
• Plan for reporting to ISED throughout the contract, using the model terms and conditions as the guide.