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The Industrial and Technological Benefits Policy: An Analysis of Contractor Obligations and Fulfillment

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Published on May 12, 2022 PDF

This report analyses transactions and investments made from 2015-2019 under the Industrial and Technological Benefits Policy for Canadian defence and security procurement, as administered by Innovation, Science and Economic Development Canada.

Highlights

  • ITB transactions over the 2015 to 2019 period total $18.3 billion in Canadian dollars.

  • Credit multipliers do not play a significant role in obligation fulfillment, accounting for only 0.8% of total transactions.

  • “Indirect” transactions, which concern work unrelated to the procurement, account for nearly half (47.1%) of the total dollar value of transactions.

  • While Small and Medium Enterprises are engaged in over 50 percent of ITB transactions, they account for only 12.2% of total transaction amounts.

  • Of the total dollar value in ITB transactions with large partner firms, Canadian-owned firms account for 30.8%.


Communications

Quotes

  • The Industrial and Technological Benefits (ITB) Policy aims to leverage defense and security procurement for job creation and growth. We find that transactions under this policy for the period 2015 to 2019 total C$18.3 billion.

  • Of the $18.3 billion, we find that 47% of this total pertains to transactions that are indirect in nature, meaning that the activities performed by the contractor and its suppliers are not directly related to the production of the military equipment purchased by Canada.

  • In terms of the number of companies benefiting from investments under the Policy, there are slightly more SMEs than large companies. However, our analysis shows that SMEs receive approximately 12% of the total dollar amount of transactions, while large companies, the majority of which are foreign-owned, receive 88%.

  • Of the approximately $16 billion in ITB transactions that involve large firms, we find that only about 31% of these firms are Canadian-owned.

Yves Giroux
Parliamentary Budget Officer