New procurement rules could benefit Quebec: AéroMontréal

The Montreal Gazette
November 26, 2014
By The Montreal Gazette
Nov. 26, 2014, Ottawa - It’s out with IRBs and in with value proposition. Ottawa’s requirements for military contracts will shift soon from so-called industrial regional benefits (IRBs) to proof that Canadian companies can add unique content, Infrastructure Minister Denis Lebel told assembled defence and security industry executives Monday.

The procurement process for military contracts in Canada has long been based on IRBs. That meant that regional suppliers in Canada signed up to provide content to a defence contract like the huge deal announced by Ottawa in 2010 to buy 65 F-35 fighter jets from Lockheed Martin Corp.

The new rules, labelled value proposition, are designed to simplify military supply contracts to make sure Canadian armed forces get the right equipment and to use Ottawa’s “defence matériel purchases to create jobs and ensure the economic growth of Canada,” Lebel said.

IRBs were widely seen as having been ineffective and exaggerated by companies eager to secure lucrative contracts.

“So instead of waiting until the acquisition phase (of a contract), we’ll consult with potential suppliers starting at the instant at which the need for equipment has been established.”

Technologies developed should be advanced, innovative and exportable from Canada, said Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries.

“The whole purpose is that now, you can’t win a bid without identifying the Canadian content. You can’t get in the door without high value added.”

Suzanne Benoit, president of Aéro Montréal, which represents Quebec’s aerospace industry, said that the new rules “will be a big boost for Quebec. We have a great number of innovative small and medium-size firms.”

The sector contributes $12.1 billion to the economy annually and employs 43,500 people in Quebec, including at more than 200 SMEs.

Cianfarani said that the rules are part of a progressive rollout of a comprehensive industrial policy.

“We’re all waiting for that, it’s the most anticipated piece of the policy for us.”

“We think it’s quite close, but they haven’t told us when” it will come into effect.

Sue Dabrowski, business development manager for software firm Mannarino Systems & Software Inc. of St-Laurent, recounted “very frustrating” obstacles that many SMEs face when dealing with U.S. defence firms.

Software codes for military systems are highly secret, making it hard for companies like hers to do work for the owners of the systems, like Sikorsky helicopters.

Despite being approved in record time to work on the helicopters, the U.S. Department of State’s Technical Assistance Agreement prohibited the source codes from being divulged.

“In the end, we didn’t get a dollar’s worth out of them.”


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