Industrial and Technological Benefits (ITB)

When you're bidding on major defence contracts with the Canadian government, you're not just promising to deliver equipment or services—you're committing to invest back into the Canadian economy. Industrial and Technological Benefits (ITB) requires winning contractors to undertake business activities in Canada equal to 100 percent of the contract value. This isn't fine print. It's a weighted evaluation criterion that can make or break your bid.

How It Works

The ITB Policy, administered by Innovation, Science and Economic Development Canada (ISED), applies mandatory to all defence and Canadian Coast Guard procurements over $100 million that aren't subject to trade agreements or where the national security exception has been invoked. Defence procurements valued between $20 million and $100 million? Those get reviewed case-by-case for possible application.

Here's how it works in practice. Your company wins a $150 million contract to supply equipment to the Department of National Defence. You're now obligated to undertake $150 million worth of qualifying business activities in Canada—things like research and development, production, purchasing from Canadian suppliers, or technology transfer. These activities don't have to happen immediately, and you typically have flexibility in timing, but they must be completed and verified.

The policy launched in 2014 as an update to the old Industrial and Regional Benefits framework. It uses something called a Value Proposition as part of bid evaluation—you submit your proposed ITB plan as part of your bid, and it gets weighted and rated against other criteria. Your Value Proposition needs to align with Canada's Key Industrial Capabilities, which are priority areas where the government wants to build domestic capacity. ISED released an updated list of these capabilities in April 2018, and they guide what kinds of investments score better.

Key Considerations

• The threshold isn't always clear-cut: While procurements over $100 million trigger mandatory application, the $20-100 million range requires review. You might not know until well into the procurement process whether ITB will apply to your specific opportunity.

• Your obligations follow the contract value, not your profit: If you're bidding $100 million with slim margins, you still owe $100 million in Canadian business activities. Subcontracting to Canadian companies counts, but you need to structure these relationships early.

• Trade agreement exemptions matter: Not all defence contracts trigger ITB. If the procurement is subject to trade agreements without an invoked exception, the policy may not apply. Understanding which procurements qualify requires close attention to the solicitation documents.

• Compliance is monitored and enforced: According to a December 2024 Auditor General report, ISED tracks whether companies fulfill their commitments. Failure to comply can affect your eligibility for future contracts.

Related Terms

Value Proposition, Key Industrial Capabilities (KIC), Defence Procurement Strategy, National Security Exception, Trade Agreement Exemptions

Sources

• Industrial and Technological Benefits (ITB) Policy - ISED

• Industrial and Technological Benefits Policy: Value Proposition Guide - ISED

• Report 10—Industrial and Technological Benefits - Office of the Auditor General

If you're pursuing major defence work, factor ITB planning into your bid development from day one. The commitments you make in your Value Proposition will follow you for years after contract award.