Vanguard Magazine

IRBs terest to Canada. Our research showed that CADSI members believe the program is producing short- term transactional results and is not enabling long- term, sustainable business relationships. Our report recommended banking and incentives for technology transfers among other tweaks to the existing policy in order to drive better outcomes for Canada. Our continuing emphasis on an industrial strategy that ar- ticulates where Canada has industrial interests for eco- nomic and/or national security reasons would then allow IRB objectives to be more prescriptive and its outcomes better able to measure. QGiven that Industry Canada's changes to the program are only a few years old, is it too early to evaluate their impact? Page: If you ask government offi cials they'll say it is too early. We're trying to say to the minister, if you don't change the way the changes are being imple- mented, you're unlikely to change the results. That's why we have recommendations on both how the government could improve the IRB tools and then, equally important, how changes to the management of the program could positively change outcomes. Thorsteinson: We're looking for the IRB program to be less transactional, less risk adverse and more strate- gic. To be of strong value to Canada the IRB system needs to be outcomes driven, not process driven. Risk adverse behaviour has grown signifi cantly within the federal public service over the last few years. It must be tempered across the federal public service and within the IRB program by the tools to accomplish the busi- ness of government, which is why we have called for a defence and security industrial strategy for Canada. Q You've called for cabinet approval of an industrial and economic development plan for major procurements at the options analysis phase. What would this do? Page: CADSI believes that the IRB program would be more effective if domestic industrial participation were actively considered by the government at the front end of the defence procurement process. DND is often quick to say, don't worry whether you've got the chance for meaningful direct industrial involve- ment in defence procurements because you have the IRB program, which they then damn as an unwelcome cost to them. Our view is that if the government asked questions and required answers at the front end of the procurement cycle as to domestic industrial participa- tion, the Canadian economy would be better off, the I IRB program would be used more effectively, and the military would still get the kit it needs to perform the duties asked of it by the government. QIs the current requirement for OEM's to provide a strategic IRB plan not enough? Page: It's a good start and it could go farther. It ap- plies to procurements over 100 million dollars only. Beneath that dollar value, you can if you want but there is no real incentive to provide a strategic plan because currently there is no rating of plans. We've called in this report for rated IRB plans, which if supplemented with an industrial strategy and, cabinet approval of a domestic industrial plan at the front end of the procurement cycle would provide clear guid- ance to industry on what the government of Canada expects to achieve economically from defence spend- ing. We want to encourage companies, as they are writing their IRB plans, to think about and be re- warded for how they meet the defi ned military re- quirement and how they intend to build and sustain economic activity in Canada. Q You had some disagreement on rated IRB plans? How would a rating system work? Page: There was a hung jury within our working group on the question of rated IRB plans but not within the CADSI board of directors which, in ap- proving the report, also approved the rating issue. It seems to me net value to Canada should be a pretty good measuring stick. If the government articulates a defence procurement strategy that includes key in- dustrial capabilities, a rating might well be related to how those industrial capabilities are brought into the companies' response to an RFP. Thorsteinson: The government has a policy that they seek best value in their procurements. To that end they assign points to the technical part of the proposal. Similarly, I think you could assign points to an IRB proposal whereby a proposal with more value to Canada would get more points, and then when you carry out your best value calculation you would factor in not only the best value of the technical pro- posal but also of the IRB proposal. QWhat's the danger to ignoring your suggestions on banking, swaps, pooling, etc, of IRB credits? Page: If you don't allow that activity, you are con- straining the normal functioning of the marketplace and you are driving companies to design transac- www.vanguardcanada.com OCTOBER/NOVEMBER 2012 35

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