The following guidelines will help contractors understand how the Industrial and Technological Benefits (ITB) Branch assesses the eligibility criteria related to causality.
- Responsibility for demonstrating causality lies with the contractor, not the Canadian company receiving the work.
- Detailed causality statement is required. Contractors must provide a detailed causality statement for each purchase or investment, beyond generic statements. A detailed causality statement includes a timeline of all the steps involved in their decision and makes a clear link between the decision and Canada's ITB Policy. See below for additional guidance.
- Certificate supporting the causality statement is required. All causality statements must be supported by a certificate signed by the contractor. Note that the ITB Branch reserves the right to seek additional information should the causality statement raise questions.
- Scope of causality is broad. Causality can be linked to a specific project or to a contractor's obligations, or anticipated obligations in general. We recognize that the large volume of defence procurements means contractors are often engaged in business development on several projects at once.
- Good business-sense decisions are a priority. The causality provision does not require that ITBs be the contractor's only decision-making factor in making a purchase or investment in Canada; however, a contractor must show that there is a link between Canada's ITB Policy and their business decision.
- Acceptance and crediting. Causality decisions are made by ITB officials prior to accepting a business activity as eligible. All eligible business activities are still subject to annual reporting and verification before credits are confirmed.
- Government funding provided to a donor company may often mean that an associated ITB business activity is not causal to the ITB Policy (such as matching funding received from a grants and contributions program, for example).
Considerations when writing a causality statement
As causality is determined on a case-by-case basis, the following questions should be interpreted as guidance/represent advice and not as mandatory requirements:
- Is the business activity a Direct Transaction (related directly to the project's Statement of Work)? If so, it is causal by its very nature. Indirect business activities require further causality justification, including addressing the following points:
- Does your company have internal processes in place for ITB advocacy and awareness, across its corporate family? How were they used leading up to this particular business decision?
- What are the specific details, steps, timelines and officials involved in the decision? When and how did the ITB Policy become a factor in the decision-making process?
- Did you have any early discussions with ITB or regional development agency officials regarding the activity, before a decision was made?
- Does your causality statement address the likelihood of the business happening anyway, without the ITB Policy? (e.g., an existing supplier, intellectual property considerations, market share of the Canadian supplier).
- If the transaction is for the export of a product or service, did the foreign customer seek domestic work through offsets or other local content requirements? Can you demonstrate that you made concerted efforts to retain workshare and economic value in Canada? Please describe the steps that you undertook to resist offshoring work from Canada and the role that the ITB Policy played in that process.
- In all cases, it is strongly encouraged to provide supporting documentation as causality evidence such as company held documents, pursuit strategies, correspondence, acquisition documents, government policy statements, and foreign industrial capacity analysis.