Vanguard Magazine

42 OCTOBER/NOVEMBER 2015 www.vanguardcanada.com K KNOWLEDGE Canada awards a defence contract to a foreign company, the exact dollar value of that contract must be reinvested back into the Canadian economy. This is done in one of three ways: through commercial activity directly related to what was pro- cured (direct); activity not directly related to the procurement (indirect); or through an investment agreement. It is worthwhile spending some time understanding the ITB model and Value Proposition, which requires bidders to make specific commitments or propose ac- tivities at bid time. These follow-on con- tractual commitments are scored as part of their bid evaluation, for their ability to provide economic benefits to Canada. In familiarizing yourself with the ITB policy: • Understand what would be expected of your company in fulfilling obligations to the Prime Contractor. • Keep lines of communication with the Prime Contractor open at all times – it's all about relationships. • In the case of an investment agreement, the Prime Contractor will conduct a due diligence of your books. Provide finan- cial forecasts that are solid and realistic. Only commit to what you can do. Do not overcommit. This will strengthen the relationship, which is based on trust. • Be precise, timely and accurate in your yearly reporting to the Prime Contractor. Understand and follow the specific rules as it takes nine to 12 months before ITB reports are submitted to the Prime, ap- proved by Industry Canada and monies received, if applicable and depending on the investment agreement scenario. That being said, CADSI has been working with Industry Canada to streamline this process and should see the timeframes improve over the next year. Remember that the Prime Contractor will require approval by Industry Canada for any ITB transactions it proposes. The Prime Contractor usually requires reports for the previous calendar year by mid-January. The Prime Contrac- tor then compiles all the reports from ITB beneficiaries and submits them to Industry Canada in March or April. Once approved by Industry Canada in early fall, ITB ben- eficiaries are notified. If a milestone pay- ment is due and invoicing is required, then the Prime Contractor will advise the com- pany and request an invoice. For more information and contact num- bers of Industry Canada's ITB managers: http://www.ic.gc.ca/eic/site/086.nsf/ eng/home For more information on the Industrial and Technological Benefits Program and Value Propositions, consult Industry Can- ada's Value Proposition Guide: http://www.ic.gc.ca/eic/site/086.nsf/ eng/00006.html Working with US Defence Contractors If your company is doing work with a US defence company, you will likely require a Technical Assistance Agreement (TAA). A TAA is defined by the US Internation- al Traffic in Arms Regulations (ITAR) as what controlled information can be dis- cussed or communicated, how and with whom. Your US defence partner company must apply for a TAA to the US Department of State on your behalf before you can do business with them. A TAA can be a multi- party document that can cover a variety of companies working on the same project. It can take several months, on average, to complete this stage. For more information on the US ITAR program, visit: https://www.pmddtc.state. gov/regulations_laws/itar.html and http:// www.international.gc.ca/sell2usgov-ven- dreaugouvusa/procurement-marches/ex- port-cont-export.aspx?lang=eng. Conclusion While we've tried to gather the salient information in one single place for you, defence contracting can still appear daunt- ing. With some of the largest defence procurements on the horizon, there are more opportunities than ever for SMEs. It is important to understand the various processes and to be aware of the opportu- nities that are available to your company, which in turn will allow your company to be well-positioned to benefit from the re- turns the Canadian defence sector has to offer. Good luck! RaceRocks 3D is a prime example of an SME that has seen success aer choosing to expand into the defence sector. On September 24, 2015, the company signed an agreement with Canada's largest shipbuilder, Chantier Davie Canada Inc. (CDCI), and Project Resolve Inc. (PRI), to deliver a full complement of modern Technology Enabled Learning (TEL) systems for the Resolve Class Auxiliary Oiler Replenishment (AOR) ship. Credit: projectresolve.ca

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