Vanguard Magazine

I IRBs tional work which, in our view, rarely if ever results in sustain- able, meaningful work. Our advice was intended to support normal marketplace activity. More flexibility around banking, judicious use of multipliers on investments and technology transfers and the government's willingness to consider, at least on a case-by-case basis, swaps and trading of IRB credits would better simulate normal business activity. Q Could the IRB process be better connected to the government's efforts to encourage more innovation? Page: Tom Jenkins offered advice last year around improv- ing innovation in the Canadian economy. I'm not sure where implementation of that report has gone. We know that DRDC has identified a limited number of critical technology gaps it sees in the global market place, and that Industry Canada, through its enhanced priority technology list, has stipulated that five percent of an obligor's IRB requirements must be met in those areas. That is a good step. We think the list should be expanded, with input from industry. By targeting specific capa- bilities, the IRB program is encouraging innovation in Canada and DND might begin to see IRBs more as an investment for their future needs than a cost burden to their current procure- ment priorities. Q What sets other countries apart? Page: Our view is that other countries are using their tool more strategically. They have decided what is important to them from sovereignty, security and economic reasons and they are using their offset tool to deliver outcomes that address those priori- ties. Other countries have also worked hard to make the man- agement of their offset programs as efficient as possible to paral- lel normal market and business operating practices. Selected Recommendations (For the full report, please see: www.defenceandsecurity.ca) annual or regular update on the "strength of Canada's defence and security industrial base to meet Canada's national interests" and the ef- fectiveness of the IRB policy in advancing this objective. • Stimulate the participation of more Canadian companies in high-value global value chain (GVC) production by broadening and clarifying the GVC definition, increasing the focus on sup- plying products and services vs assembly, and attributing GVC credit to related indirect benefits achieved. • Achieve more, higher value business outcomes for Canadian companies that reach beyond a particular project by broadening the scope of pooling and making it easier to access. • Engage the government's industrial develop- ment programs to support achievement of the industrial and economic development objec- tives in the framework (these programs could include IRB, SADI, IRAP, regional development agencies, BDC, CCC, EDC, the Office of Small and Medium Enterprises at PWGSC, and the In- ternational and Industry Programs Directorate at DND). • Cabinet to approve an industrial and economic development plan for major procurements at the options analysis phase of the procurement, before preliminary project approval is request- ed from Treasury Board; and Industry Canada to take on the responsibility of producing an • Stimulate more proactive, larger and longer IRB projects by eliminating banking depreciation or pushing it out to ten years, and introduce transferability and earlier pre-contract banking. • Expand the innovation and industry growth po- tential of the enhanced priority technology list (EPTL) for Canadian companies in key technol- ogy capability areas by dramatically expanding the scope of the technologies in EPTL via an open collaborative process with industry, pro- viding attractive incentives, and placing greater emphasis on the 'intellectual quality' of a trans- action. • Support Canadian business development and exports, and eliminate unnecessary costs, by 36 OCTOBER/NOVEMBER 2012 www.vanguardcanada.com introducing trading, swaps and abatements of IRB credits and obligations, not only within Can- ada, but also with countries where Canadian companies exert an important presence. • Create a more productive business climate and improve the performance of the IRB program by increasing the role of the Industry Sector of In- dustry Canada, DFAIT, and the regional develop- ment agencies in IRB decision-making to bring more of an industry development focus, and by empowering and equipping IRB managers to make business decisions in a more open and productive environment with a focus on antici- pated outcomes. • Increase the efficiency and effectiveness of the IRB program and create a more attractive business climate for long term business invest- ment in Canada by scaling back the onerous and time consuming verification, causality and crediting processes currently being employed, introducing a better understanding of industry risk-taking and increased focus on assessing the outcomes of business transactions and in- vestments, streamlining reporting processes and implement a new computerized reporting and information retrieval system to improve efficiency and facilitate outcome assessments, implementing performance standards for the timing, transparency and industry feedback in the responses from the IRB Directorate, and creating an off-line IRB appeal process.

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