ITB - Model Terms and Conditions

Industrial and Technological Benefits (ITB) - Model Terms and Conditions

Appendix A: Value Proposition Commitments and Transactions
Appendix B: Transaction Sheet
Appendix C: Template—Annual Report
Appendix D: Template business plan
Appendix E: Certificate of causality
Appendix F: Certificate of Compliance
Appendix G: Certificate of Eligible Donor
Appendix H: Incrementality Checklist
Appendix I: Defence Sector Definitions
Appendix J: Key Industrial Capabilities

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1. Definitions

1.1. For the purpose of this Industrial and Technological Benefits (ITB) Terms and Conditions Annex to the Contract, the following definitions apply. Terms not otherwise defined in this Annex have the meaning given to them in the Contract.
- 1.1.1. "Achievement Period" means the period commencing on [insert date] and ending 1 year after the completion of the Work under this Contract;
- 1.1.2. "Affiliated Entities" means with respect to a Canadian Company, an entity that, directly or indirectly, Controls or is Controlled by or is under common Control with the Canadian Company;
- 1.1.3. “Allowable Investment” means:
  - for cash contributions, a grant payment to, or purchase of, non-Controlling common or preferred shares of a Canadian Company. Cash contributions do not include either the purchase of debentures or a repayable loan; and
  - for in-kind contributions, a licence for Intellectual Property (e.g. authorization to use the licensed material for commercial use); equipment; knowledge transfer (e.g. lending of an employee to provide technical or managerial know-how); marketing and sales support (e.g. lending of an employee to undertake marketing or sales activities and share market intelligence, or a licence for trademarks);
1.1.4. “Canadian Company” means a commercial enterprise that is incorporated pursuant to the federal laws of Canada or the laws of a province or territory of Canada and which has ongoing business activities in Canada;
1.1.5. “Canadian Content Value” or “CCV” has the meaning ascribed thereto in Article 9 of this document;
1.1.6. “Capitalization” means the total value of a company's issued shares plus the value associated with instruments which can be converted into shares. For publicly traded companies, this is equal to the total number of issued shares multiplied by the market price plus the equity portion of any derivative instrument according to Canadian generally accepted accounting principles. For privately held companies, this is equal to the total number of issued shares multiplied by the most recent price at which they were sold plus the equity portion of any derivative instrument according to Canadian generally accepted accounting principles;
1.1.7. “Collaborative Research” means a Contractor or Eligible Donor working with one or more Post-Secondary or Public Research Institutions, and in the case of consortium Transactions, with a Canadian Company, under a formal written agreement, and sharing Intellectual Property, technical or scientific expertise, or testing equipment or facilities to achieve the common goal of producing scientific knowledge or intellectual knowledge for the benefit of all parties;
1.1.8. “Commercialization Activity” means a process through which economic value is extracted from knowledge through the production and sale of new or significantly improved goods and services. It can also include advertising, sales promotion and other marketing activities. Specific Commercialization Activities consist of business and market planning, project feasibility studies, identifying customer needs, market engagement and testing, profitability analysis and financing, and launch advertising;
1.1.9. “Commitment” means the Contractor's specific undertakings related to its activities, its Plans and its Transactions, as referenced in Appendix A (Value Proposition Commitments, Plans and Transactions);
1.1.10. “Contract Price” for the purposes of ITB Commitments, includes the value of the contract and any exercised options or option periods, but excludes applicable taxes [tbc project by project];
1.1.11. “Control(s)”, “Controlled” or “Controlling” means the (i) ownership of 50% or more of voting power of an entity or (ii) ability to direct management and policies of an entity through Control in Fact, whether by contract, ownership structure, governing documents or any other arrangement that provides effective decision-making authority;
1.1.12. “Control in Fact” exists where a person’s influence has the capacity to affect the economics, operations and day-to-day management of an entity, regardless of formal ownership or legal control;
1.1.13. "Credit” means the amount attributed to a Transaction, measured in CCV, which has been achieved in whole or in part, as confirmed by written notice from the ITB Authority. All Transactions are subject to annual reporting and verification before Credit is awarded;
1.1.14. “Defence Sector” means businesses engaged in the manufacture and delivery of products and services for use in government defence and security applications including:
1. ammunition and other munitions;
2. missiles and rockets;
3. firearms and other weapons;
4. military systems deployed in space, space launch vehicles, land-based systems for the operation, command and control of space launch vehicles or systems deployed in space and related components;
5. primarily airborne electro-optical, radar and sonar and other sensor/information collection systems, and fire control, warning and countermeasures systems and related components;
6. primarily land-based or man-portable electro-optical, radar and sonar and other sensor/information collection systems, and fire control, warning and countermeasures systems and related components;
7. primarily airborne communications and navigation systems and other information systems including processing and dissemination, software, electronics and components;
8. primarily land based, man portable or non-platform specific communications and navigation systems and other information systems including processing and dissemination, software, electronics and components;
9. naval shipborne systems (ie mission systems) and components;
10. naval ship fabrication, structures and components;
11. naval ship maintenance, repair and overhaul;
12. combat vehicles and components;
13. combat vehicles maintenance, repair and overhaul;
14. aircraft fabrication, structures and components;
15. military aircraft maintenance, repair and overhaul services;
16. unmanned aerial systems/vehicles and components;
17. simulation systems for aircraft;
18. simulation systems for naval vessels;
19. simulation systems for land vehicles or other applications;
20. live personnel and combat training services;
21. troop support.
All as more particularly described in Appendix I (Defence Sector Definitions);
1.1.15. “Designated Regions of Canada” means the following regions that have been designated by the government of Canada for socio-economic purposes: the Atlantic Region (consisting of the provinces of Newfoundland and Labrador, Prince Edward Island, New Brunswick, and Nova Scotia); the Quebec Region (consisting of the province of Quebec); the Northern Ontario Region (consisting of that part of the province of Ontario as defined by the Federal Economic Development Agency for Northern Ontario’s catchment area and census divisions); the Southern Ontario Region (consisting of that part of the province of Ontario as defined by the Federal Economic Development Agency for Southern Ontario’s catchment area and census divisions); the Western Region (consisting of the provinces of Manitoba, Alberta, Saskatchewan, and British Columbia); and the Northern Region (consisting of the territories of Yukon, Northwest Territories and Nunavut);
1.1.16. “Direct Transaction” means a Transaction that is entered into for Work under the Contract, as detailed in [insert location of Project Statement of Work and activities];
1.1.17. “Eligible Donor” means the parent corporation of the Contractor, and all of the parent's subsidiaries, divisions and subdivisions; and, the Contractor's Tier-One Suppliers related to the performance of the Work, their respective parent corporations and all of the parent's subsidiaries, divisions and subdivisions. See Article 8.1.4;
1.1.18. “Export” means sales of domestic services and goods, produced developed, or manufactured in Canada leaving the country for a foreign destination;
1.1.19. “Grouped Transaction” means a Direct Transaction that has more than one Recipient;
1.1.20. “Indigenous Peoples” describes a First Nations, Inuit/Inuk, or Métis person, and has the meaning assigned by the definition “Aboriginal Peoples of Canada” in subsection 35(2) of the Constitution Act, 1982;
1.1.21. “Indirect Transaction” means a Transaction that is entered into for a business activity that is not Work under the Contract, as detailed in [insert reference to Statement of Work Article number];
1.1.22. "In-Kind Valuation”
1. for a tangible asset, means a written valuation report that: (a) is signed by a senior financial official of the Contractor or Eligible Donor; (b) includes a breakdown of costs substantiated by, for example, receipts, quotes, financial statements, or book value estimates. For equipment, includes the depreciated replacement cost for used equipment and includes the market cost for new equipment; and (c) is satisfactory to the ITB Authority in its sole discretion;
2. for an intangible asset that is a licence for IP, a written valuation report that (a) is provided, at the cost of the Contractor or Eligible Donor, by a Chartered Business Valuator in good standing with the Canadian Institute of Chartered Business Valuators who specializes in the ‘valuation of intangible assets for financial reporting’ or by an equivalent valuator satisfactory to the ITB Authority in its sole discretion; (b) conforms to Practice Standard 110 of the Canadian Institute of Chartered Business Valuators or an equivalent standard that is satisfactory to the ITB Authority in its sole discretion; (c) is submitted by the Contractor with the relevant Transaction within 12 months from the date of the written valuation report; and (d) is satisfactory to the ITB Authority in its sole discretion;
3. for the lending of an employee for knowledge transfer or marketing and sales support, means a written valuation report that (a) is signed by a senior financial official of the Contractor or Eligible Donor; (b) includes the costs to the Contractor or Eligible Donor of lending the employee’s time, in terms of salary time or hourly wages; and (c) is satisfactory to the ITB Authority in its sole discretion;
1.1.23. “Intellectual Property” or “IP” means all patents, inventions, trademarks, copyrights, industrial designs, trade secrets, technical information, and other Intellectual Property belonging to or licensed to a company;
1.1.24. “ITB Annual Report” has the meaning set out in Article 4 of this Annex;
1.1.25. “ITB Authority” means the means the Minister of Industry or any other person designated by that Minister to act on the Minister's behalf. The ITB Authority is responsible for evaluating, accepting, monitoring, verifying and crediting ITB, and for assessing the Contractor's ITB performance under these Terms and Conditions;
1.1.26. “Key Industrial Capabilities” or “KICs” are areas of emerging technology with the potential for rapid growth, established industrial capabilities in Canada, and where domestic capacity is essential to national security. Maintaining and growing these sovereign industrial capabilities helps ensure that Canadian industry can provide our military with the equipment and services they require. A list of KICs is provided as Appendix J;
1.1.27. “Obligation” means each of the contractual Obligations that the Contractor must meet, as set forth in Article 3, which are collectively referred to as the Obligations, including options;
1.1.28. “Overachievement” means the amount by which the Contractor’s Credits, awarded during the Achievement Period, are greater than the Obligation;
1.1.29. “Permanent Resident” has the meaning as defined in the Immigration and Refugee Protection Act S.C. 2001, c27;
1.1.30. “Plans” means the Plans prepared by the Contractor, that is the company business Plan, the ITB management Plan, the regional development Plan, the Small and Medium Business development Plan, the Export target market overview and the gender and diversity overview, all dated xx and all bearing reference number xx [from the contractor’s proposal];
1.1.31. “Post-Secondary Institution” means a higher education institution or other organizational entity in Canada that is eligible to receive funding from at least one of the three federal granting councils (the Social Science and Humanities Research Council, the Natural Science and Engineering Research Council, or the Canadian Institutes of Health Research). For informational purposes only: Information on the federal granting councils can be found on the Government of Canada website: Selecting the Appropriate Federal Granting Agency;
1.1.32. “Proposal” means the proposal submitted by the Contractor on (date, month, year) bearing reference number (xx);
1.1.33. “Public Research Institution” means a federal, provincial, or territorial organization in Canada that: is engaged in research, research training and related activities in Canada; has as its primary goals the conduct of research, peer review, and the dissemination of results by way of publication, technology transfer or training; and, is funded primarily from public resources and has established processes, systems, procedures and controls to ensure achievement of public objectives;
1.1.34. “Recipient” means the Canadian Company or organization that receives, from the Contractor or Eligible Donor, the commercial or business activity described in a Transaction;
1.1.35. “Reporting Period” means each 12 month period within the Achievement Period upon which the Contractor’s annual reporting will be based. Notwithstanding the foregoing, the first Reporting Period may include more than 12 months in that it commences on the first day of the Achievement Period and ends on the last day of the twelfth month after the effective date of Contract award. Subsequent Reporting Periods (e.g. Period 2) will follow in consecutive 12 month periods until the end of the Achievement Period;
1.1.36. “Research and Development or "R&D” means a scientific investigation that explores the development of new goods and services, new inputs into production, new methods of producing goods and services, or new ways of operating and managing organizations. Specific R&D activities consist of standard test, measurement, or analysis; test, measurement, or analysis reports; specific thermo-mechanical analysis methodology development projects; product, process design, or engineering; customized product, process, or technology development project; related evaluation and feasibility studies; applied research projects for new product concepts, new technology platforms and new test, measurement, or analysis; basic scientific research for creating better understanding and insights in new phenomena; research to advance scientific knowledge with or without a specific practical application in view; and support work in engineering, design, operations research, mathematical analysis, computer programming, data collection, testing, or research;
1.1.37. “Research Skills Development” refers to the knowledge and expertise acquired by students through the conduct of research at a Post-Secondary Institution or through Collaborative Research led or supervised by a faculty member in Canada;
1.1.38. “Semi-processed Goods” means goods converted from their natural state of a raw material through the use of a specialized process into a state of readiness for use or assembly into a final product;
1.1.39. “Shortfall” means the amount by which the Contractor’s Credits, awarded during the Achievement Period, are less than the Obligation;
1.1.40. “Skills Development and Training” means a specific activity intended to enhance, or address a gap in, Canadian workforce skills and training capability or capacity through a cash or in-kind contribution (e.g. equipment or a knowledge transfer);
1.1.41. “Small and Medium Business” or “SMB” means a Canadian Company whose number of full-time employees, or equivalent, does not exceed 250 personnel as of the date of entering into a Transaction, provided the total number of employees of the Canadian Company combined with its Affiliated Entities does not exceed 500 full-time personnel. Neither agents nor distributors of foreign goods and services qualify as a Small and Medium Business;
1.1.42. “Small Middle-Capitalisation” or “Small Mid-Cap” means a Canadian Company that is not an SMB whose number of full-time employees, or equivalent, combined with its Affiliated Entities does not exceed 500 full-time personnel as of the date of entering into a Transaction. Neither agents nor distributors of foreign goods and services qualify as Small Mid-Caps;
1.1.43. “Strategic Investment Transaction” means an Allowable Investment that is intended to create a new industrial capacity or increase industrial capacity in Canada that will generate increased economic activity, including job creation, sales and exports;
1.1.44. “Supplier Development” means the Contractor or an Eligible Donor undertaking Transactions with Canadian Companies that are neither (i) agents nor distributors of foreign goods and services nor (ii) any subsidiaries of the Contractor or an Eligible Donor;
1.1.45. “Tier One Supplier” means a company that performs a specific portion of the Work directly for the Contractor, producing or servicing a major subassembly or major component that is installed or used in the platform or system being procured under this Contract;
1.1.46. “Transaction” means a commercial or business activity involving the Contractor or an Eligible Donor and a Recipient, which is carried out by means of a contract, sales agreement, license agreement, letter of agreement or other similar instrument in writing, has an identified dollar value, and is approved by the ITB Authority;
1.1.47. “Value Proposition” or “VP” means the portion of Commitments and Transactions, along with any other information, which was submitted in the Proposal at the time of bid; and,
1.1.48. “World Product Mandate” means a purchase of goods or services from a Canadian Company where there is a long term supplier relationship between the Contractor or an Eligible Donor and the Canadian Company, pursuant to which the Canadian Company has been legally authorized to carry out and has sole responsibility for specific activities, including the design, development, manufacture and marketing related to the supply of products, components, modules or services destined for domestic and world markets.

2. Canada’s Industrial and Technological Benefits Objectives

2.1. Canada has responsibility to set in place programs and policies that ensure that Canada’s significant investments in defence-related goods and services generate long-term and high-value economic benefit to Canadian industry and encourages the growth of industry in emerging technologies, established and globally competitive capabilities, and domestic capacity related to national security issues. Canada’s Industrial and Technological Benefits (ITB) Policy objectives include:

2.1.1 the economic development and long-term sustainment of Canada's Defence Sector, by maximizing the amount of business activities in Canada involving work directly on the procurement and work in the Defence Sector more broadly;
2.1.2. increased productivity and competitiveness among Canadian-based suppliers, through meaningful opportunities for growth and supply chain integration into major global systems suppliers;
2.1.3. strengthened innovation and R&D in Canada, that positions Canadian Companies to move up the value chain, capture market opportunities and benefit from subsequent commercialization opportunities;
2.1.4. Canadian Company success in tapping traditional and non-traditional export markets that have been leveraged from the Project, sharing in long-term jobs and growth;
2.1.5. developing, growing, and sustaining a diverse, talented, and innovative Canadian workforce;
2.1.6. encouraging the participation of Canadian Companies in the Designated Regions of Canada, assisting with long-term quality improvements to their capability, capacity, international competitiveness and growth potential; and,
2.1.7. encouraging the participation of Canadian SMB as suppliers on major federal procurements and to increase their competitiveness and export market access.

3. Statement of Obligations

3.1. By the end of the Achievement Period, the Contractor must:

3.1.1. achieve Transactions totaling not less than 100% of the Contract Price
This Article relates to the contractor's overall Obligation.
3.1.2. achieve VP Commitments
This Article would contain the Contractor's VP Commitments, as presented in its Proposal.
3.1.3 achieve Transactions in the Designated Regions of Canada.
This Article would contain a summary of the Contractor's regional commitments as derived from its Proposal.
3.1.4. achieve Transactions involving SMBs
This Article would contain a percentage summary of the Contractor's SMB commitment, as presented in its proposal. A minimum of 15% is standard, but the percentage will be determined on a project by project basis.
3.1.5. carry out each and every Transaction as set out in the Transaction list.
This Article references the Contractor’s Transactions, which would be listed in Appendix A. The list would be based initially on Transactions presented and accepted in the Contractor’s Proposal, and then would be amended periodically as new Transactions are submitted and accepted .

3.2. The Contractor must:

3.2.1. achieve Credits by a specific milestone.
This Article references the specific percentage of Contract Price that must be achieved by a specific reporting period. It is determined on a project by project basis.
3.2.2. identify Transactions by specific milestones
This Article references the specific milestone schedule for which the Contractor must identify Transactions that bring the total identified Transactions to 60% and 100% of Contract Price. The milestones shown below are the default milestone schedule. This is determined on project by project basis.
- 3.2.2.1. at 1 year following the effective date of the Contract, such that the cumulative total of Transactions is not less than 60% of the Contract Price, including any exercised options, measured in CCV; and
- 3.2.2.2. at 3 years following the effective date of the Contract, such that the cumulative total of Transactions is not less than 100% of the Contract Price, including any exercised options, measured in CCV.

3.3. The Contractor must submit to the ITB Authority annually:

3.3.1. ITB Annual Reports describing the performance achieved during each Reporting Period as outlined in Article 4; and,
3.3.2. demonstration that the capacity to Export conditions are maintained throughout the Achievement Period, as set out in the Contractor’s international Export strategy in Appendix A (Value Proposition Commitments, Plans and Transactions).[TBD on each project]

4. Annual Reporting

4.1. The Contractor must submit ITB Annual Reports to the ITB Authority. These reports must be submitted 60 calendar days after the end of the annual Reporting Period. Each ITB Annual Report must have five parts (Parts A through E), as described below. The Contractor must use the format and electronic template for the ITB Annual Report provided by the ITB Authority.

4.1.1. Part A must include:
- 4.1.1.1. Overview and status of the work on the project:
  - A high level overview of the Work performed on the Project over the past year, including major highlights and schedule changes.
- 4.1.1.2. Progress payments:
  - A list of all the progress payment claims that have been submitted to the Contracting Authority for Work completed since the effective date of the Contract, broken down by Reporting Period and including the amount, date submitted and payment status.
- 4.1.1.3. Plans:
  - A description of any substantive changes to the Plans, including changes to company officials responsible for administering the Obligation.
- 4.1.1.4. Value proposition overview:
  - A detailed overview of each of the Contractor's VP Commitments, the related activities during the Reporting Period and a cumulative summary of the achievement status of each.
  - Confirmation that the following five capacity to export conditions remain in place:
    - signing authorities to pursue international sales from Canada;
    - access to Intellectual Property rights needed to export from Canada;
    - World Product Mandate [or exclusive authority, tbd on each project] to export the product/service outside of Canada;
    - a management team in place to pursue international sales from Canada; and,
    - human and financial resources set aside and in use to pursue international market opportunities from Canada.
4.1.2. Part B must include, for each Transaction being reported:
- 4.1.2.1. an update on any changes to details, such as the CCV percentage or Recipient contact information;
- 4.1.2.2. a description of significant achievements and activities, particularly those associated with Transactions involving multipliers; and
- 4.1.2.3. a description of any delays, problems or achievement Shortfalls, along with a plan of action to resolve them.
4.1.3. Part C must include, for each Transaction being reported:
- 4.1.3.1. the CCV of the achievement claimed for the current Reporting Period.
4.1.4. Part D must include, for each Transaction reported:
- 4.1.4.1. the CCV of the achievement claimed to date in all the Reporting Periods since the beginning of the Achievement Period.
4.1.5. Part E must include:
- 4.1.5.1. SMB and regional development activities:
  - Overview and highlights of activities undertaken during the Reporting Period;
- 4.1.5.2. New, changed or cancelled Transactions:
  - A list of Transactions which have been cancelled, added or substantially altered during the Reporting Period with the approval of the ITB Authority, and their status vis-à-vis contract amendment; and
- 4.1.5.3. As evidence of the achievement of the Obligations and compliance with the Lobbying Act, a certificate of compliance, using the template attached as Appendix F (Certificate of Compliance) to this Annex, signed by a senior company official with the authority to bind the Contractor. In addition, the Contractor is required to provide certificates of compliance signed by each Eligible Donor.

5. Contract Price Changes

5.1. In the event that the Contract Price is increased (e.g. options exercised) or decreased, the Contractor's Obligations in Article 3.1 will correspondingly be either increased or decreased.

5.2. If the Contract Price increases after the xx year following the effective date of the Contract, the Contractor must submit to the ITB Authority Transactions valued at 100% of the increase, measured in CCV, within 1 year of the date of the increase.

6. Transaction Excess Achievement

6.1. The Contractor may achieve Credits for any Transaction in excess of its original value. When this excess Credit occurs, it can be applied to Transactions that have not yet met their original value or used to meet identification milestones in Article 3, as long as the relevant regional, SMB and VP Commitments are achieved.

7. Transaction Types

7.1. Transactions may be Direct Transactions or Indirect Transactions depending on the Transaction type. The Transaction types listed below describe specific terms and conditions for receiving Credit.

7.2. Purchases: Direct or Indirect Transactions may involve the purchase of good or services from a Canadian Company. These Transactions are valued for Credit by calculating the CCV of the goods or services, in accordance with article 9.

7.2.1. Purchases may be Grouped Transactions if the activities involve Canadian Companies that supply goods or services with similar characteristics of one or more product, services, size or region and with similar CCV percentages.
- 7.2.1.1. For Grouped Transactions involving SMB Recipients, the Grouped Transaction cannot include non-SMBs.
- 7.2.1.2. The total CCV of Grouped Transactions cannot be more than 10% of the Obligation specified in subsection 3.1.1.

7.3. For purchases type Transactions under 7.2, that are not Grouped Transactions, an enhancement to the actual CCV may be eligible. For each annual Reporting Period, if the CCV is confirmed after verification to be 70% or greater, it will be deemed to be 100% for reporting and verification purposes. The following conditions apply for eligibility and Credit:

7.3.1. World Product Mandate: When an Indirect Transaction involves a World Product Mandate and where the CCV of the product is verified to be 70% or greater, the CCV will be deemed to be 100% for reporting and verification purposes for the Reporting Period.
7.3.2. Small and Medium Business Transactions and Small Mid-Cap:
- 7.3.2.1. A Transaction, that is not a Grouped Transaction, where an SMB is the Recipient, and the SMB’s product or service is verified by the ITB Authority as having a CCV of at least 70% will be deemed to have 100% CCV for reporting and verification purposes.
- 7.3.2.2. The valuation for Credit set out in paragraph 7.3.2.1 may apply to a Transaction where a Small Mid-Cap is the Recipient, provided that the Small Mid-Cap qualified as a Small Mid-Cap within 5 years prior to and including the date the Transaction was proposed to the ITB Authority.
7.3.3. Canadian Company Boost:
- 7.3.3.1. A Canadian Company boost Transaction is a Direct Transaction that is also a Supplier Development Transaction, where the Recipient’s product or service achieves a CCV of not less than 70%. A Canadian Company boost Transaction cannot be a Grouped Transaction.
- 7.3.3.2. Valuation for Credit purposes
  - 7.3.3.2.1. After verification by the ITB Authority, the portion of the Transaction attributable to CCV will be deemed to constitute 100% CCV for the Reporting Period.
  - 7.3.3.2.2. Where the Recipient is a Small and Medium Business, the Transaction will receive a Credit multiplier of 2 times the calculated Credit.
  - 7.3.3.2.3. The valuation for Credit set out in paragraph 7.3.3.2.2. may apply to a Transaction where a Small Mid-Cap is the Recipient, provided that the Small Mid-Cap qualified as a Small Mid-Cap within 5 years prior to and including the date the Transaction was proposed to the ITB Authority.

7.4. Cyber Certification Transaction

7.4.1. A cyber certification Transaction is an Indirect Transaction that will receive Credit for the value of the contribution if it involves:
- 7.4.1.1. a contribution to the cyber certification of a Canadian Company granted by a governmental or non-governmental provider that provides nationally, internationally, provincially, or territorially recognized cyber certification, which allows Canadian Companies to better access opportunities in Canada and abroad.
7.4.2. Valuation for Credit purposes
- 7.4.2.1. The value will be the cash contribution from a Contractor or Eligible Donor to a Recipient.

7.5. Skills Development and Training Transactions

7.5.1. A Skills Development and Training Transaction is an Indirect Transaction, unless the contribution aligns with 7.5.1.3, that will receive Credit for the value of the cash contribution or in-kind contributions if it involves:
- 7.5.1.1. donations of tangible assets such as equipment or other resources intended for skills development or training purposes;
- 7.5.1.2. the lending of an employee for knowledge or technology transfer to the Recipient;
- 7.5.1.3. salaries of students for work-integrated learning (e.g. co-operative education and work placements); which may qualify as a Direct Transaction or Indirect Transaction;
- 7.5.1.4. sponsorship costs for apprentices enrolled in a nationally, provincially, or territorially recognized apprenticeship program to obtain the necessary training to complete an apprenticeship program;
- 7.5.1.5. a cash contribution to the personal certification of a Canadian citizen or Permanent Resident granted by a provincially, territorially, nationally, or internationally (if no equivalent Canadian association exists) recognized trade association or representative body of a specific profession;
- 7.5.1.6. a contribution to skills development programs, including a contribution to a charity registered with the Canada Revenue Agency or a not-for-profit organization incorporated federally under the Canada Not-for-profit Corporations Act or in the province or territory where it operates, for work related to Skills Development and Training; or
- 7.5.1.7. educational costs, including tuition or course fees, and travel expenses incurred in Canada and covered by the Contractor or Eligible Donor to provide employees with new or upgraded skills that are demonstrably different, improved, or expanded as compared to employees’ current skills and which will enhance their career or employment potential;
7.5.2. Documentation requirements:
- 7.5.2.1. The Contractor must provide an In-Kind Valuation for the value of any in-kind contributions.
7.5.3. The following Credit multipliers will be applied to the value of the cash contribution:
- Cash for Skills Development and Training for Recipients who are not the donor of the Transaction be they an Eligible Donor or the Contractor: 5
- Cash for Research Skills Development under section 7.6 or 7.7: 5
- Cash for Skills Development and Training for Indigenous Peoples or majority Indigenous Controlled educational or training facilities: 10
7.5.4. Credit Limitations
- 7.5.4.1. The total issued Credits associated with Skills Development and Training Transactions will not exceed 25% of the Obligation specified in subsection 3.1.1.
7.5.5. The following will not be eligible for Credit:
- 7.5.5.1. any contribution made directly to the Contractor or Eligible Donor by any level of government to cover the cost in whole or in part of the Skills Development and Training activity; and
- 7.5.5.2. the value of an in-kind contribution that involves a licence for Intellectual Property.
- 7.5.5.3. contributions to programs primarily intended for youth engagement (e.g. camps, outreach activities not tied to career pathways);
- 7.5.5.4. any activity not demonstrably linked to employment or career advancement.
7.5.6. Valuation for Credit purposes
- 7.5.6.1. An initial value will be calculated based on the cash contribution(s) from a Contractor or Eligible Donor to a Recipient;
- 7.5.6.2. Once the initial value is established, it will be multiplied by 5 or 10 as per subsection 7.5.3.
- 7.5.6.3. The value of any in-kind contributions will then be added, based on an In-Kind Valuation. In-kind contributions will not be eligible for a Credit multiplier.

7.6. Research and Development Transactions

7.6.1. A Research and Development Transaction is an Indirect Transaction that will receive a Credit multiplier of 5 times if it involves a cash contribution to:
- 7.6.1.1. a Post-Secondary Institution for research;
- 7.6.1.2. a Post-Secondary Institution for the establishment of research chairs; or,
- 7.6.1.3. Collaborative Research undertaken with a Post-Secondary Institution or Public Research Institution.
7.6.2. Documentation requirements
- 7.6.2.1. At the discretion of the ITB Authority, Contractors may be asked to submit a copy of the formal Collaborative Research written agreement covering the roles and responsibilities of the parties to the ITB Authority prior to approval of the Transaction.
- 7.6.2.2. The Contractor must provide an In-Kind Valuation for the value of any in-kind contributions.
7.6.3. The following will not be eligible for Credit:
- 7.6.3.1. The value of an in-kind contribution that involves a licence for Intellectual Property.
7.6.4. Valuation for Credit purposes
- 7.6.5.1. An initial value will be calculated based on the cash contributions;
- 7.6.5.2. Once the initial value is established, it will be multiplied by 5; and
- 7.6.5.3. The value of any in-kind contributions will then be added, based on an In-Kind Valuation.

7.7. Consortium Transactions

7.7.1. A consortium is an Indirect Transaction that involves investments for R&D or Collaborative Research that must include:
- 7.7.1.1. the Contractor or an Eligible Donor;
- 7.7.1.2. a minimum of one Canadian Company as a Recipient; and
- 7.7.1.3. a minimum of one Post-Secondary Institution or Public Research Institution as a Recipient.
7.7.2. The Contractor or Eligible Donor must demonstrate how its contribution leveraged the other consortium members to contribute and how all contributions will benefit the other Recipient consortium members.
7.7.3. Documentation requirements
- 7.7.3.1. At the discretion of the ITB Authority, Contractors may be asked to submit a copy of the formal consortium written agreement covering the roles and responsibilities of the parties to the ITB Authority prior to approval of the Transaction.
- 7.7.3.2. The Contractor must provide an In-Kind Valuation for the value of any in-kind contributions.
7.7.4. The following will not be eligible for Credit:
- 7.7.4.1. any contribution made to the consortium by Post-Secondary Institutions or Public Research Institutions; and
- 7.7.4.2. any contribution made directly into the consortium by any level of government; and
- 7.7.4.3. any in-kind contribution that is not for a tangible asset or the lending of an employee.
7.7.5. Valuation for Credit Purposes
- 7.7.5.1. An initial value will be calculated and will be the sum of the value of the cash contributions from the Contractor or an Eligible Donor to the consortium and the combined value of contributions from all other consortium members, up to a maximum value equal to that of the contribution of the Contractor or an Eligible Donor, which have been leveraged by the Contractor or Eligible Donor’s participation in the consortium;
- 7.7.5.2. once the cash value is established, it will be multiplied by 5; and
- 7.7.5.3. the value of any in-kind contributions will then be added, based on an In-Kind Valuation. In-kind contributions will not be eligible for a Credit multiplier.
7.7.6. Other consortium criteria
- 7.7.6.1. The combined total investment of non-Canadian Companies in the consortium will not exceed 50% of the total investment in the consortium.
- 7.7.6.2. In cases where an Eligible Donor participates in the same consortium as the Contractor, separate Transaction sheets will be submitted that describe the Contractor’s and the Eligible Donor’s respective contributions to the consortium.
- 7.7.6.3. The Contractor and the Eligible Donor may only claim the Credits associated with the contributions that each has made or leveraged into the consortium.

7.8. Investment Framework Transactions

7.8.1. An investment framework Transaction is an Indirect Transaction that involves a long-term, innovation-related contribution made directly to an SMB and must meet the following criteria:
- demonstrated link to either R&D activities, Commercialization Activities, or both, in Canada;
- the Recipient is an SMB or a Small Mid-Cap, provided that the Small Mid-Cap will only be an eligible Recipient for new investment framework Transactions if it qualified as a Small Mid-Cap within 5 years prior to and including the date the Transaction was proposed to the ITB Authority;
- the Eligible Donor and Recipient cannot be the same company;
- the Transaction common eligibility criteria, as outlined in article 8;
- be an Allowable Investment; and
- have a duration of at least 5 continuous years, beginning at the date the investment is made.
7.8.2.Documentation requirements:
- 7.8.2.1. A business plan must be submitted to the ITB Authority, in the form attached in Appendix D (Template – Business Plan)
- 7.8.2.2. If the Allowable Investment is for a licence for IP, a copy of the licence must be submitted to the ITB Authority.
- 7.8.2.3. If the Allowable Investment is for cash contributions that are a purchase of non-Controlling common or preferred shares of a Canadian Company, recent financial statements and disclosure of Control must be provided that are satisfactory to the ITB Authority.
- 7.8.2.4. The Contractor must provide an In-Kind Valuation for the value of any in-kind contributions.
7.8.3. Valuation for Credit Purposes
- 7.8.3.1. Contributions made in cash will be valued based on the actual amount of money that has been invested. The in-kind contribution’s value will be based on an In-Kind Valuation.
- 7.8.3.2. The following Credit multipliers will be applied to the value of the contribution:
  - cash for R&D activities: 9
  - in-kind contribution of a licence for IP other than trademarks: 9
  - cash to purchase, or in-kind transfer of, equipment: 7
  - in-kind transfer of knowledge or marketing/sales support of lending an employee: 4
- 7.8.3.3. The total issued Credits associated with investment framework Transactions will not exceed 25% of the Obligation, specified specified in subsection 3.1.1.
7.8.4. Timeline for Credit Award
- 7.8.4.1. 50% of Credits will be awarded once the Allowable Investment is made according to the business plan, then reported to and verified by the ITB Authority. The remaining 50% of Credits will be apportioned over the remaining years of the Transaction, as annual reporting requirements are achieved.
- 7.8.4.2. The entire investment must remain with the SMB or Small Mid-Cap for at least five continuous years and be used for the purposes outlined in the business plan in order for Credit to be awarded each year.

7.9. Venture Capital Fund Transactions

7.9.1. A venture capital fund (VCF) Transactions is an Indirect Transaction that involves those instances where the Contractor or an Eligible Donor provides funds to a VCF to assist the growth of SMBs or Small Mid-Caps, provided that a Small Mid-Cap will only be an eligible Recipient for new VCF Transactions if it qualified as a Small Mid-Cap within 5 years prior to and including the date the Transaction was proposed to the ITB Authority
7.9.2. VCF criteria
- 7.9.2.1. Only VCF investments disbursed to SMBs or Small Mid-Caps involved in the development, manufacture, or commercialization of advanced technology products or services will be eligible for Credit.
- 7.9.2.2. As part of the proposed Transaction assessment, the Contractor or Eligible Donor must provide the ITB Authority with information about the composition of the VCF in terms of SMB or Small Mid-Cap participation.
- 7.9.2.3. The Contractor or Eligible Donor must also commit to a specific percentage of their investment to be disbursed to SMBs or Small Mid-Caps. This percentage will form the CCV of the Transaction.
7.9.3. Valuation for Credit Purposes
- 7.9.3.1. An initial value will be the sum of the cash contributions’ CCV from the Contractor or an Eligible Donor to the VCF.
- 7.9.3.2. Once the initial value is established, it will be multiplied by five.
- 7.9.3.3. 50% of the resulting multiplied value as per 7.9.3.2 will be awarded in Credit once the Contractor or Eligible Donor’s investment is deposited into the VCF.
- 7.9.3.4. Contractors or Eligible Donors are required to submit claims once per year as part of their ITB Annual Reports.
- 7.9.3.5. The remaining 50% of Credits will be apportioned over the years of the Transaction, as funds are disbursed to Recipient companies and annual reporting requirements are achieved
- 7.9.3.6. The multiplied Credit related to the VCF investments will not exceed 5% of the overall Obligation value in subsection 3.1.1.
7.9.4. The following will not be eligible for Credit:
- 7.9.4.1. In the event that an SMB or Small Mid-Cap decides to make an initial public offering (IPO), no further Credit will be granted by the ITB Authority for that SMB or Small Mid-Cap within the VCF Transaction as of the date of the IPO.

7.10. ITB Investments for Future Sales

7.10.1. An ITB investment for future sales Transaction is an Indirect Transaction thats involves an Allowable Investment to a Canadian Company for its business purposes, including research, design, development, sales, or support of products or services.
7.10.2. The full CCV of any Allowable Investment, including future sales Credits and the initial investment form part of the Obligations.
7.10.3. A clear description of the specific product or service that will be claimed for Credit must be provided with the submission of the proposed Transaction. Any Credit will be limited to the product or service described in the Transaction submission.
7.10.4. Allowable Investments will be assessed as to whether they:
- help provide a capability that does not already exist in Canada;
- develop strategic partnerships with Canadian Companies that contribute to their long-term viability and increase sales; and
- do not result in overcapacity, shutdowns of existing companies or losses of prospective sales by existing companies in Canada.
7.10.5. The capital associated with the purchase of a Canadian Company that is considered a “going concern” is not an Allowable Investment for Credit. If the investment is for a Canadian Company that is insolvent, or has initiated, or had initiated in respect of it, any proceeding seeking relief under any bankruptcy or insolvency law, or similar law affecting creditors’ rights, then the investment can be considered for ITB purposes.
7.10.6. Eligible future sales
- 7.10.6.1. Eligible future sales are limited to work that is not associated with this Contract and to work that is not counted for Credit on any other IRB or ITB contract or agreement.
- 7.10.6.2. Allowable Investments received by the Recipient through this Contract or through any other ITB or IRB contract or agreement must be disclosed by the Eligible Donor or the Contractor to the ITB Authority and will form part of the non-attributable calculation under 7.10.8.2
- 7.10.6.3. Credit will be eligible for up to 25 years from the date of Transaction approval. Follow on Allowable Investments will be prorated as per 7.10.8.2.
- 7.10.7. Documentation requirements
  - 7.10.7.1. The Contractor must provide a business plan to the ITB Authority in the form attached in Appendix D - Business Plan.
  - 7.10.7.2. For an Allowable Investment of cash contributions that are a purchase of non-Controlling common or preferred shares of a Canadian Company, the Contractor must provide to the ITB Authority disclosure of ownership structure and any other information deemed relevant by the ITB Authority to determine Control, and recent financial statements, all to the satisfaction of the ITB Authority in its sole discretion.
  - 7.10.7.3. For an Allowable Investment of an in-kind contribution of reasonable transfer costs described in 7.10.8.4, an In-Kind Valuation must be provided by the Contractor to the ITB Authority.
7.10.8. Valuation for Credit purposes
- 7.10.8.1. Credit is first awarded on the eligible CCV of future sales, as determined under subsection 7.10.6, achieved by the Recipient as a result of the Allowable Investment:
- 7.10.8.2. Eligible future sales will be pro-rated, to establish attribution of the Allowable Investment, using the ratio of the value of the Allowable Investment, relative to either:
  - the Recipient’s Capitalization at the time the Allowable Investment was made (in cases of the purchase of non-Controlling shares); or
  - the combined total contributions made by all parties in the activity (in all other cases).
- 7.10.8.3. In the case of an Allowable Investment made via cash contribution:
  - The value of the Allowable Investment itself will receive Credit once the Recipient’s future sales achievement surpasses the amount of the Allowable Investment; or
  - In the case of Supplier Development Transactions, the value of the Allowable Investment will receive Credit after the Allowable Investment is provided by the Contractor or Eligible Donor to the Recipient and verified by the ITB Authority.
- 7.10.8.4. In the case of an Allowable Investment made via in-kind contributions, only the value of reasonable transfer costs, as determined by the ITB Authority, will receive Credit. The value of the Allowable Investment itself will not be credited. Reasonable transfer costs eligible for Credit may only include the Contractor or Eligible Donor’s in-kind contribution costs:
  - for lending an employee for knowledge transfer or sales support to the Recipient, including technical advice and assistance related to the Allowable Investment;
  - for donating specialized equipment to the Recipient related to the Allowable Investment.
  - 7.10.8.4.1. Credit for the value of reasonable transfer costs will be eligible once the Recipient’s future sales achievement surpasses the amount of reasonable transfer costs
  - 7.10.8.4.2. In the case of Supplier Development Transactions, Credit for the value of reasonable transfer costs will be eligible once the Recipient’s future sales achievement surpasses 50% of the amount of the reasonable transfer costs.
- 7.10.8.5. The Allowable Investment will remain with the Recipient for a minimum of three years, starting from the date the investment is placed with the Recipient. Failure to do so will result in the immediate deduction of all Credits for the Transaction.

7.11. Strategic Investment Transactions

7.11.1. A Strategic Investment Transaction is an Indirect Transaction that must meet the following criteria to the satisfaction of the ITB Authority in its sole discretion:

7.11.1.1. Be an Allowable Investment for:
- 7.11.1.1.1 The establishment of a new facility in Canada under the operation of a Canadian Company;
- 7.11.1.1.2 The expansion of an existing facility in Canada under the operation of a Canadian Company for new product lines, manufacturing capacity, or enhanced efficiency and productivity; or
- 7.11.1.1.3 The development of a new capacity in Canada, including through Research and Development or Commercialization Activities.
7.11.1.2. Demonstrate a clear link to Key Industrial Capabilities or priority areas identified in the Defence Industrial Strategy;
7.11.1.3. Have a total Allowable Investment value equal to not less than $5 million (not including multipliers); and,
7.11.1.4. Not involve regular business operations such as the maintenance, or replacement of existing facilities and equipment that feature no capacity enhancement.

7.11.2. A Strategic Investment Transaction may involve Allowable Investments related to, but not part of, the Statement of Work on this Contract or a government of Canada contract.

7.11.3. Documentation Requirements

7.11.3.1. The Contractor must provide the following documentation to the ITB Authority:
- A business plan in the form attached in Appendix D – Business Plan
- For a licence for IP, a copy of the licence;
- For any in-kind contributions, an In-Kind Valuation;
- For cash contributions involving the purchase of non-Controlling common or preferred shares of a Canadian Company, recent financial statements and disclosure of Control, both satisfactory to the ITB Authority in its sole discretion.
7.11.3.2. The Strategic Investment Transaction business plan must:
- 7.11.3.2.1 describe how the proposed Transaction meets the criteria set out in subsection 7.11.1.;
- 7.11.3.2.2 identify which capacity areas listed under 7.11.1.1 are involved;
- 7.11.3.2.3 describe how the Transaction will create the new or increased industrial capacity in Canada;
- 7.11.3.2.4 describe what type of Allowable Investment(s) will be provided; and
- 7.11.3.2.5 describe how the specific Allowable Investment(s) will support the criteria set out in subsection 7.11.1. and qualify as a Strategic Investment Transaction.

7.11.4. Credit Limitations

7.11.4.1. The total Credits issued for all Strategic Investment Transactions on a project will not exceed 25% of the Obligation, specified in subsection 3.1.1.
7.11.4.2. A portion of the Allowable Investment must be provided to the Recipient within twelve months of the Transaction’s approval by the ITB Authority, or within twelve months after Contract award if the Transaction was submitted in a bid proposal.
7.11.4.3. If after the first verification period for the Transaction, a portion of the Allowable Investment is not provided within the twelve-month period set out in paragraph 7.11.4.2., the Transaction will be deemed ineligible by the ITB Authority, and no Credit will be provided.
7.11.4.4. The Contractor or Eligible Donor may resubmit the Transaction for eligibility if the Allowable Investment or portion thereof is made within six months of the ITB Authority’s ineligibility decision as set out in paragraph 7.11.4.3.
7.11.4.5. After verification by the ITB Authority that the Allowable Investment meets or exceeds $5 million (not including multipliers), Credit and Credit multipliers will be provided in accordance with subsection 7.11.6.
7.11.4.6. If, after the fifth reporting period, the total Allowable Investment does not meet or exceed $5 million (not including multipliers), the Transaction will be deemed ineligible, and no Credit or Credit multipliers will be provided.

7.11.5. Other Sales based Transactions

7.11.5.1. Sales resulting from a Strategic Investment Transaction may be assessed for eligibility and Credit under the purchase Transaction in section 7.2 but not under the ITB investments for future sales Transaction in subsection 7.10.

7.11.6. Valuation for Credit Purposes

7.11.6.1. Cash contributions will be valued based on the actual amount of money invested.
7.11.6.2. In-kind contributions will be valued based on an In-Kind Valuation.
7.11.6.3. Allowable Investments of trademarks will not be valued for Credit.
7.11.6.4. The following Credit multipliers will be applied to the value of the Allowable Investment:
- cash for the establishment or expansion of a facility: 5
- cash for R&D or Commercialization Activities: 5
- cash for the development of IP (other than trademarks) that will be owned by a Canadian Company: 5
- in-kind contribution of a transfer of IP (other than trademarks) ownership to a Canadian Company: 5
- in-kind contribution of an exclusive licence to a Canadian Company for IP (other than trademarks): 5
- cash to purchase, or in-kind transfer of, equipment: 4
- in-kind transfer of knowledge or marketing/sales support of lending an employee: 1
7.11.6.5. The portion of the Strategic Investment Transaction that exceeds an Allowable Investment of $100,000,000 (not including multipliers) will not be eligible for multipliers described in 7.11.6.4. beyond the initial investment of $100,000,000 in CCV.

7.11.7. Contributions made by any level of government will not be eligible for Credit.

7.11.8. Timeline for Credit Award

7.11.8.1. 50% of Credits will be provided for the verified Allowable Investment value, in accordance with the completed business plan (Appendix D), when the Allowable Investment or portions meet the criteria outlined in paragraph 7.11.4.5.
7.11.8.2. The remaining 50% of Credits will be apportioned over the remaining years of the Transaction, as annual reporting requirements are achieved.
7.11.8.3. Subsequent Allowable Investment portions will receive 50% Credit after verification by the ITB Authority, and the remaining 50% Credit will be apportioned over the remaining years of the Transaction, as annual reporting requirements are achieved.

8. Common Transaction Eligibility Criteria

8.1 Each proposed Transaction is assessed by the ITB Authority against all of the eligibility criteria outlined below:

8.1.1. Causality: each Transaction must be one which was brought about by either the Contractor or an Eligible Donor, due in part to a current or anticipated ITB or IRB obligation to Canada. It will not be one which probably would have been entered into if an obligation had not existed or been anticipated. Causality may be demonstrated to a specific project or more broadly to a company's obligations in general..
- 8.1.1.1. The Contractor or an Eligible Donor must demonstrate causality by providing a detailed statement on causality using the space provided in the transaction sheet template attached at Appendix B (Template – Transaction Sheet) [a transaction sheet with project-specific requirements will be generated by the ITB Authority and included in the final RFP as Appendix B]. The statement must outline the steps and timelines involved in its decision about a business activity and clearly show the link between the steps and decision on that business activity and Canada’s ITB Policy.
- 8.1.1.2. The Contractor or an Eligible Donor must also provide evidence that will certify causality, in support of its detailed statement referred to in paragraph 8.1.1.1. A certification template is found in Appendix E (Certificate of Causality).
8.1.2 Timing: Transactions must be implemented within the Achievement Period.
- 8.1.2.1. Transactions that are identified after the effective date of Contract award must only involve work occurring after the date that the Transaction was proposed to the ITB Authority.
8.1.3 Incrementality: Transactions must involve new work in Canada.
- 8.1.3.1. Should an Indirect Transaction involve the purchase of goods or services from an existing Canadian supplier to the Contractor or an Eligible Donor, the incremental method of calculating the Credits will apply, as follows:
  - A three-year average of previous purchases is calculated, based on the three years immediately preceding the date that the Transaction was proposed to the ITB Authority; and,
  - Credit will be awarded only for the amounts which exceed the three year average, in each of the Reporting Periods.
- 8.1.3.2. The incremental method of calculation outlined in paragraph 8.1.3.1 does not apply in cases where the product or service being purchased in the Transaction:
  - involves a Direct Transaction;
  - is substantially different than what was previously purchased;
  - involves a different end use (market sale, application, etc) for what was previously purchased; or,
  - follows a competitive process to re-select the Canadian supplier.
- 8.1.3.3. The Contractor or an Eligible Donor must demonstrate incrementality by providing a statement on incrementality for every proposed indirect Transaction, using the template attached at Appendix H (Incrementality Checklist). The Contractor or an Eligible Donor will also provide supporting evidence of incrementality as indicated in the template.
8.1.4 Eligible Donor: Transactions must be undertaken by the Contractor or an Eligible Donor.
- 8.1.4.1. For proposed Eligible Donors that are Canadian Companies with less than 500 employees, the Canadian Company must certify that it understands and has the capacity to undertake Obligations with respect to this Contract. Capacity includes factors such as: company size, product offerings, market conditions, corporate ownership, management processes, and level of Canadian content. A certification template is attached in Appendix G (Certificate of Eligible Donor). At the discretion of the ITB Authority, Contractors or Eligible Donors that have signed the eligible donor certificate may be asked to submit additional information to confirm their status.
- 8.1.4.2. For Transactions proposed after the effective date of the Contract award, Contractors must clearly demonstrate that the Canadian Company has the capacity to undertake ITB Obligations with respect to this Contract and the ITB Authority may seek additional information confirming Canadian Company capacity.
- 8.1.4.3. The Contractor, and not the Eligible Donors, will be fully responsible to Canada for all Obligations related to this Contract, regardless of any subcontracting arrangements with Eligible Donors.
- 8.1.4.4. The Contractor must include in the subcontract with each Eligible Donor the consents, authorities and approvals that it requires to meet its Obligations under these Terms and Conditions.
- 8.1.4.5. A list of approved Eligible Donors for the Contract is found in article 22.
8.1.5 Other Eligibility Criteria:
- 8.1.5.1. Transaction Recipient: Transactions will have one Recipient, unless it is a Grouped Transaction. Government organizations cannot be Recipients, unless it is a Public Research Institution.
- 8.1.5.2. Level of Technology: Indirect Transactions will involve a level of technology that is the same or higher than that of the Project, with applications in Canadian advanced technology industries.
- 8.1.5.3. CCV:Indirect Transactions will have a CCV of no less than 30% of the total value of the Transaction.
- 8.1.5.4. Alignment with policy features: Transactions will comply with any specific criteria and valuation features outlined within these Terms and Conditions.

8.2. The ITB Authority will assess eligibility prior to a proposed Transaction becoming an Obligation in the Contract. Contractors should note that all Transactions are subject to annual reporting and verification before Credits are confirmed.

8.3. One Transaction may be used to meet more than one of the Obligations in article 3. Credits will be awarded based on how much of the Transaction value is attributable to each Obligation.

8.4. Failure to provide the information and certifications outlined in the above Articles may result in a proposed Transaction being rejected. Further, the provision of this information and certification should not be seen as limiting the discretion of the ITB Authority in any decisions related to the eligibility of proposed Transactions.

9. Canadian Content Value

9.1. CCV means that portion of the value of a product or service that involves Canadian costs. The CCV of any Direct and Indirect Transaction will be determined by the net selling price method or the cost aggregate method, described below.

9.1.1. Net selling price method: This method is used when a product or service included in a Transaction has a substantiated selling price. This method of calculating CCV is as follows:
- begin with the total selling price of the product or service;
- minus the applicable customs duties, excise taxes, Goods and Services Taxes, Harmonized Sales Taxes and all provincial sales taxes;
- minus any ineligible costs, as detailed in section 9.2; and
- the remaining value is the CCV.
9.1.2. Cost aggregate method: This method is used where a product or service contained in a Transaction cannot be assigned a substantiated selling price (i.e. in-house production). This method of calculating CCV is the aggregate of the following items:
- 9.1.2.1. the cost of parts produced in Canada and the cost of materials, to the extent that they are of Canadian origin, that are incorporated in the product in the factory of the manufacturer in Canada;
- 9.1.2.2. the cost of parts or materials of Canadian origin, in that they have been exported from Canada and subsequently imported into Canada as parts or finished goods;
- 9.1.2.3. transportation costs, including insurance charges, incurred in transporting parts and materials from a Canadian supplier or frontier port of entry to the factory of the manufacturer in Canada for incorporation in the product, to the extent that such costs are not included in the foregoing paragraph; and
- 9.1.2.4. such part of the following costs, as are reasonably attributable to the production or implementation of the product, service or activity:
  - 9.1.2.4.1. wages and salaries paid for direct and indirect production and non-production labour, paid to employees residing and working in Canada, who are Canadians or Permanent Residents;
  - 9.1.2.4.2. materials of Canadian origin used in the work but not incorporated in the final products;
  - 9.1.2.4.3. utilities paid in Canada, such as light, heat, power and water;
  - 9.1.2.4.4. workers compensation, employment insurance and group insurance premiums, pension contributions and similar expenses incurred with respect to wages and salaries of Canadians or permanent residents referred to above;
  - 9.1.2.4.5. taxes on land and buildings in Canada;
  - 9.1.2.4.6. fire and other insurance premiums relative to the production plant, its equipment and production inventories, paid to a company authorized by the laws of Canada or any province to carry on business in Canada or such province;
  - 9.1.2.4.7. rental for factory or office premises in Canada paid to a Canadian Company;
  - 9.1.2.4.8. maintenance and repairs that are executed in Canada to buildings, machinery and equipment used for production purposes;
  - 9.1.2.4.9. tools, dies, jigs, fixtures and other similar plant equipment items of a non-permanent nature that have been designed, developed or manufactured in Canada;
  - 9.1.2.4.10. engineering and professional services, experimental work and product or process development work executed and completed in Canada by Canadians or Permanent Residents;
  - 9.1.2.4.11. miscellaneous factory and office expenses paid in Canada, such as: administrative and general expenses; depreciation with respect to production machinery and permanent plant equipment and the installation costs of such machinery and equipment; and, a capital allowance not exceeding 5% of the total capital outlay incurred for buildings in Canada owned by the producer of the work;
  - 9.1.2.4.12. R&D activities performed in Canada;
  - 9.1.2.4.13. Canadian citizen and Permanent Resident travel expenses specifically associated with Direct Transactions on the Project and incurred in Canada, including transportation, meals, and accommodations;
  - 9.1.2.4.14. fees paid for services performed by Canadian citizens or Permanent Residents in Canada not elsewhere specified; and
  - 9.1.2.4.15. pre-tax net profit upon which Canadian taxes are paid or are payable.

9.2. Costs or business activities that are ineligible for Credit:

9.2.1. repayable and non-repayable funding from any level of government (municipal, provincial, territorial, or federal);
9.2.2. the value of materials, labour and services imported into Canada;
9.2.3. in the case of an Indirect Transaction, the value of raw materials and Semi-processed Goods exported from Canada;
9.2.4. the value of any remuneration, living costs, travel expenses and relocation costs paid to non-Canadians for work on the Project;
9.2.5. the amount of all Excise Taxes, Import Duties, Federal and Provincial Sales Taxes, Goods and Services Taxes, Harmonized Sales Taxes and other duties;
9.2.6. the value of any royalties and license fees paid by the Contractor or an Eligible Donor to a person, company or entity outside of Canada;
9.2.7. the value of goods and services with respect to which Credits have been received or are being claimed by the Contractor or an Eligible Donor as a Transaction to Canada under any other obligation or agreement;
9.2.8. any proposal or bid preparations costs;
9.2.9. all transportation or travel costs not covered under subsection 9.1.2.
9.2.10. the cost of government furnished equipment (equipment supplied by Canada to be used in the production process; for example, tooling, jigs, dies, production equipment);
9.2.11. license fees paid by the Recipient and any on-going royalty payments;
9.2.12. Transactions claimed by a Contractor that pertain to its influence or that of an Eligible Donor over any country's purchasing agent/department;
9.2.13. interest costs associated with letters of credit or other financial instruments to support Transactions;
9.2.14. fees paid to lobbyists (as per the Lobbying Act); and
9.2.15. fees paid to third-party consultants or agents for work related to obtaining Credit against this Contract. This includes, but is not limited to: providing advice on the ITB/IRB policy; preparation of proposed Transactions and/or reports; representing the interests of the Contractor to the ITB Authority; and/or searching for potential Recipients.

10. Strategic Plans

10.1. Contractors are encouraged to address their ITB Obligations in a strategic manner, considering how the Contractor’s broad corporate plans and vision for Canada might translate in Transactions.

10.2. At the discretion of the ITB Authority, Contractors that hold IRB/ITB obligations in Canada may be asked to submit a strategic plan to the ITB Authority and to meet to review, discuss or update it. The Contractor’s strategic plan should include:

a description of the Contractor’s broad corporate plans and overarching strategic vision for its business in Canada over the medium term (3–5 years) and long term (5+ years);
how these corporate plans and vision may translate into Transactions;
an overview of the Contractor's current and anticipated obligations to Canada
ITB relationships with Eligible Donors and other major Contractors; and
notice of potential pooled Transactions that may be submitted for approval to be pooled.

10.3. If the Contractor has multiple ITB Obligations totaling less than 1 billion dollars, it may also submit a strategic plan to the ITB Authority; however, neither the ITB Authority nor the Contractor will be required to meet to discuss the strategic plan.

11. Pooling

11.1. Pooling refers to the act of splitting the Credits achieved on a single Transaction and applying each portion to one of two or more obligations.

11.2. Pooled Transactions must meet the following criteria:

11.2.1. meet all of the Transaction eligibility criteria as described in article 8 (Transaction Eligibility Criteria) of this Annex and align with this Annex;
11.2.2. have a value of not less than $50,000,000, measured in CCV; and
11.2.3. have strategic and long-term impacts on the Recipient, including but not limited to R&D support; first purchase of innovative Canadian technologies; World Product Mandate; global value chain activities; consortium activities; SMB activities; and technology advancement.

11.3. The Contractor must describe and document how any proposed Transaction for pooling meets the criteria in section 11.2.

11.4. A portion of a pooled Transaction may be applied to this Contract. The Contractor must report on the pooled Transaction through the annual reporting process and schedule agreed to with the ITB Authority at the time of pooled Transaction approval.

11.5. If a portion of a pooled Transaction originates in the bank and Credits have already been confirmed, the value of those Credits will transfer to the Contract, if the Eligible Donor criterion is met. In addition, any uncredited Transaction value, measured in CCV, will also be transferred to the Contract and be subject to the annual reporting and verification processes and the remedies in these Terms and Conditions.

11.6. For informational purposes only: Pooling guidelines are available ITB Website.

12. Banking

12.1. The Contractor may apply Transactions from the ITB bank (bank) to this Contract up to a total value of 50% of the Obligation cited in subsection 3.1.1, measured in CCV.

12.1.1. Any bank Transaction applied to this Contract, or portion thereof, must clearly state that it originated from the bank and be the same in description and details as the approved bank Transaction. The Transaction must meet the Eligible Donor criteria outlined in subsection 8.1.4.

12.2. The Contractor may submit certain Overachievements to the bank arising from Transactions in this Contract. In order to submit these Overachievements to the bank, the Contractor must:

12.2.1. complete all of its Obligations in section 3.1.1. through 3.1.4. early on the Contract, before the end of the Achievement Period;
Article references would include the high level obligations such as the 100%, SMB, Direct, regional, and VP.
12.2.2. elect to continue business activities on selected Transactions and to continue its annual reporting process until the end of the Achievement Period; and,
12.2.3. apply to bank, within one year after the final notification of Credits from the ITB Authority, those overachieved portions of the selected Indirect Transactions. Overachieved portions are those Credits that were achieved between the start date of the first Reporting Period after which all Obligations were completed and the end date of the Achievement Period.
12.2.4. With respect to a pooled Transaction, all portions of a pooled Transaction must be achieved before any Overachievement can be applied to the bank.
12.2.5. With respect to any Transaction involving an Overachievement, the bank account holder is deemed to be the donor for the purposes of assessing the Eligible Donor criteria.
12.2.6. A Transaction involving an Overachievement that is banked, or any portion thereof, can only be banked once. It is not eligible to be re-banked at a later date as part of a subsequent Overachievement.

12.3. Trading and transfer between companies of bank Transactions is not permitted.

12.4. For informational purposes only: Banking guidelines are available on the ITB Website

13. Public Communications

13.1. The Contractor, its Eligible Donors and Recipients are strongly encouraged to be as transparent as possible regarding its Obligations, Commitments and specific Transactions, making them publicly available whenever possible.

13.2. The Contractor and the ITB Authority will jointly coordinate public communications related to the Transactions. The two parties will also collaborate to identify success stories associated with specific Transactions.

13.3. The Contractor consents to public announcements regarding the Project, made by or on behalf of the ITB Authority, which are related to Obligations, Commitments and Transactions. These announcements would include company names, general descriptions of the work being proposed and approximations of CCV. In these cases, the ITB Authority will make all reasonable efforts to ensure that the Contractor has the opportunity to participate in the announcement and/or the preparation of any related materials. The Contractor must obtain a similar consent from each of the Eligible Donors and Recipients.

13.4. The Contractor consents to allow the ITB Authority to publish and openly disclose the Contractor's track record in fulfilling its Obligations, in a manner that respects commercial confidentiality.

13.5. For all other public communications regarding the Transactions, drafts of announcements and their publication schedule will be delivered by either party to the other as soon as is reasonably possible, but in any event prior to the proposed release date. Each party must make every effort to inform the other, and seek resolution of, any objections to the content or timing of a proposed announcement.

13.6. Nothing in this Article shall be interpreted as preventing the fulfillment by any company involved in an Obligation or Transaction of its reporting obligations under applicable securities laws.

14. Information Management

14.1. It is understood and agreed that the Contractor will submit detailed corporate and transactional business information to the ITB Authority in the implementation of these Terms and Conditions and/or through a strategic plan, some of which may contain information that is sensitive and confidential to the Contractor. The ITB Authority will ensure, to the best of its ability, that this information is protected, stored and used according to the Government of Canada's information management and security guidelines.

14.2. The Contractor agrees that the overall, aggregate information related to Obligations, Transactions and Credits is considered by the ITB Authority to be information available to Parliament and the public.

14.3. Subject to all applicable federal laws and processes, such as the Access to Information Act, the Privacy Act and the Library and Archives of Canada Act, the ITB Authority will not release or disclose outside the Government of Canada any of the Contractor's commercially confidential business information.

14.3.1. Data may be used by the ITB Authority for internal policy analysis purposes. Certain relevant information may also be shared, subject to applicable laws and processes, with other government organizations and agencies with whom the ITB Authority collaborates in the administration of the ITB policy.

15. Transaction Alterations

15.1. The Contractor must not alter the Transactions listed in Appendix A (Value Proposition Commitments, Plans and Transactions) unless:

15.1.1. the Contractor has submitted a proposal to the ITB Authority through the Contracting Authority, with respect to the alteration; and
15.1.1. the ITB Authority through the Contracting Authority has given written approval to the Contractor and requested the Contracting Authority to amend the Contract accordingly.

15.2. The Contractor may propose alterations to or substitutions for any of the Transaction(s) listed in Appendix A (Value Proposition Commitments, Plans and Transactions), and the ITB Authority may accept these requests provided that in the judgment of the ITB Authority:

15.2.1. the circumstances requiring the change are exceptional and likely to result in undue hardship upon the Contractor if a change is not made;
15.2.2. the Obligations in article 3 of these Terms and Conditions are maintained;
15.2.3. the proposed alterations or substitutions meet the eligibility criteria stated in this Contract;
15.2.4. the proposed substitute Transaction is not less than the Transaction to be replaced as to the level of technological sophistication of the work to be performed, the CCV, and the extent to which it meets the original Proposal submitted by the Contractor. For example:
- 15.2.4.1. if the Contractor fails to achieve a Transaction involving an Allowable Investment or Credit multiplier, the full CCV of this Obligation at the multiplied value must be made up with other Transactions;
- 15.2.4.2. a Transaction in one VP evaluation criteria area must be replaced by a new Transaction under the same VP evaluation criteria area; and
- 15.2.4.3. the proposed substitute Transaction(s) would not have lowered the Contractor’s VP score as determined in the original selection process.

15.3. Mutual Abatement and Trading

15.3.1. Mutual abatement is the reduction of the Contractor's Obligation in exchange for the reduction of a Canadian Company's obligations to a foreign offset authority and is not permitted. Trading of Obligations, or of Credits, is also not permitted.

16. Verification and Access to Records

16.1. The Contractor must implement the procedures and practices as described in the ITB Management Plan.

16.2. The Contractor must keep proper records and all documentation relating to the Transactions attached to this Contract, including invoices and proof of payments. The Contractor will not, without the prior written consent of the ITB Authority, dispose of any such records or documentation until the expiration of 2 years after final payment of this Contract, until settlement of all outstanding claims and disputes, or the end of the Achievement Period, whichever is later.

16.3. All such records and documentation must, during the aforementioned retention period, be open to verification, inspection and examination by the ITB Authority, through access at reasonable times, and within 30 calendar days of being notified by the ITB Authority. The Contractor must obtain similar undertakings in the subcontracts of all Eligible Donors and arrange for the same in respect of work performed by such Eligible Donors for which Credits are claimed. The Contractor and its Eligible Donors must ensure through its subcontracts and arrangements that Recipients keep pertinent records.

16.4. Where, subsequent to the verification action taken pursuant to this Article, the ITB Authority determines that the records are insufficient to verify the Contractor's achievements in respect of any ITB Obligation or Commitment, the Contractor must provide such additional information as may be required by the ITB Authority.

16.5. Where it cannot be verified that a Transaction has been achieved as claimed, that portion of the Transaction which cannot be verified will be considered as not having been achieved and the ITB Authority will give notice to the Contractor of the verification results through the Contracting Authority.

16.6. If the ITB Authority determines that a significant deficiency in the Contractor’s achievements exists such that the ITB Authority believes that the Contractor will not meet its Obligations, the ITB Authority may give, through the Contracting Authority, notice to the Contractor and request the Contractor to submit a proposal showing how the Contractor plans to correct the deficiency. The Contractor must submit its proposal within 60 calendar days of receipt of such notice. If the proposal is not provided within this time period or is not acceptable to the ITB Authority, the ITB Authority may exercise its remedies under article 18.

17. Conflict Resolution

17.1 The ITB Authority and the Contractor acknowledge that they have entered into a long-term relationship, with the goal that the Contractor achieves the Obligations and Commitments stated herein, delivers long-term economic benefits to Canada and carries out these Terms and Conditions of this Contract.

17.2 Guiding this long-term relationship are common values and approaches, such as mutual accountability, open communication, mutual respect and effective collaboration. The relationship will involve officials at the project level (i.e. ITB and contract managers) and at the management level (i.e. departmental and executive officials). Discussions will be frequent and ongoing over the life of the Contract.

17.3 In the event that a disagreement arises between the ITB Authority and the Contractor regarding an ITB matter, each party will bring their concerns forward to the other for discussion and resolution. Parties are encouraged to raise concerns first at the project level. Should discussions at the project level fail to resolve the issue, the parties are then encouraged to engage at the management level.

18. Remedies

18.1. The long-term relationship between the Contractor and ITB Authority is supported by several processes aimed at promoting regular, ongoing engagement between the two parties. These processes include the Transaction identification schedule outlined in article 3 and the annual reporting process outlined in article 4. Taken together, these and other monitoring measures are aimed at encouraging positive engagement, use of best practices and the successful completion of the Contractor's Obligations in this Contract.

18.2. Notwithstanding the terms of the Contract that provide remedies in the event of default by the Contractor, one or more of the following remedies may be exercised in the event of default under these Terms and Conditions. Some or all remedies may apply, but combined will not exceed 10% of the overall Contract Price. In the event of a default by the Contractor of its obligations pursuant to these Terms and Conditions, the remedies contained in this Article are in addition to, and not in substitution for, any remedies provided elsewhere in the Contract.

Below is a summary of the remedies:

Holdback/Stop Payment [TBD on each project]
Holdbacks/stop payment would typically apply throughout the course of the contract, in those circumstances where the schedule for identifying Transactions, the achievement of Credit milestones, and/or the achievement of VP milestones is not met. Holdbacks will be a percentage of the milestone payment and would be released progressively as the deficiency is extinguished.
Liquidated Damages[TBD on each project]
Liquidated Damages would typically apply at the end of the contract in those circumstances where achievement of Obligations has not been met. The value of the liquidated damage will be based on 10% [TBD on each project] of the highest deficiency in any one of the following areas: 100%, regions, and SMB. The value of the liquidated damage will be based on 20% [TBD on each project] of the cumulative deficiency in each of the VP areas under 3.1.2.
Contract Termination [TBD on each project]
Contract termination could be used in circumstances where the Contractor has failed to satisfy certain pre-identified, major Obligations.
Letter of Credit [TBD on each project]
A letter of credit could be used in those circumstances where Canada requires additional guarantees that Liquidates Damages would be paid.
Performance Incentives [TBD on each project]
Performance incentives could be used throughout the course of the Contract to encourage timely achievement of Credits. In cases where achievement milestones are not met, the Contractor could be disfavored with respect to Contract tenure and profits.

For those remedies outlined above that apply to a specific project, below is the contractual language that would be present in the Terms and Conditions.

18.3. Holdback/Stop Payment

18.3.1. If the Contractor has failed to meet any of its Obligations contained in section 3.2, the ITB Authority will notify the Contractor in writing of such deficiency and Canada may apply a holdback (the Holdback) from any claim for payment then due or payable under the Contract.
18.3.2. With respect to the Holdback, a cure period of 60 calendar days (the Cure Period), beginning on the date of notification to the Contractor by the ITB Authority, will apply before the Holdback takes effect.
- 18.3.2.1. Within the Cure Period, the Contractor may take corrective action by providing to the ITB Authority a corrective action plan to remedy the deficiency. If the plan is accepted by the ITB Authority, no Holdback will be made.
- 18.3.2.2. If, after the Cure Period, the plan has not been accepted pursuant to subsection 18.3.2, the accruement of the Holdback will be equal to 10% (profit) of the [TBD by project; milestone, monthly, or progress] claim for payment and will accrue until it reaches the amount of the deficiency, or until the Contractor submits a plan that is approved by the ITB Authority, whichever occurs first.
18.3.3. The Holdback will be released progressively as the deficiency is extinguished. During the Holdback period, the ITB Authority will confirm the amount of Credits achieved or Transactions identified within a reasonable amount of time from when the claims for Credit or proposed Transactions are submitted by the Contractor. The corresponding amount of the Holdback will be released when the next payment under the Contract is made.

18.4. Liquidated Damages

18.4.1. If the Contractor fails to achieve any of the Obligations in subsections 3.1.1., 3.1.3., 3.1.4., or 3.1.5. by the end of the Achievement Period, after taking into account the provisions of article 6, Canada may in its sole discretion elect to require the Contractor to pay to Canada as liquidated damages 10% of the total deficiency, less the amount of any Holdback.
- 18.4.1.1. In the event that a deficiency is comprised of more than one of the Obligations in subsections 3.1.1., 3.1.3., 3.1.4. and 3.1.5. the Contractor will be liable only for the deficiency that arises under the Obligation that results in the highest liquidated damages.
18.4.2. If the Contractor fails to achieve any of the VP Obligations in subsection 3.1.2. by the end of the Achievement Period, after taking into account the provisions of article 6, Canada may in its sole discretion require the Contractor to pay to Canada as liquidated damages 20% of the total deficiency, less the amount of any Holdback.
18.4.3. In the event that a deficiency is comprised of more than one of the Obligations in subsection 3.1.2. the Contractor will be liable in respect to subsection 18.4.2. under all deficiencies on an additive basis.
18.4.4. The obligation of the Contractor to pay liquidated damages, if such obligation exists, pursuant to subsections 18.4.1. or 18.4.2., will be triggered by notice by either the Minister or the Deputy Minister of Public Works and Government Services to the Contractor, stating that the Contractor is in default under the Contract for failure to achieve the identified Obligations within the Achievement Period and that Canada is demanding payment of liquidated damages in accordance with this Article.

18.5. Contract Termination [TBD on each project]

18.5.1. In the event that the Contract is terminated for default pursuant to Section xxof General Conditions xx, the ITB Authority will notify the Contractor and the Contractor must identify Transactions within xx months of the date of termination equal to 100% of the value of Contract Price.
18.5.2. The Contractor must then, within xx days of the date of termination, in its sole discretion, elect either:
- 18.5.2.1. to take action to achieve all identified Transactions within xx years; or
- 18.5.2.2. to pay Canada as liquidated damages the amount calculated in accordance with section 18.4, less the amount of any Holdback, after taking into account the provisions of article 6.
18.5.3. For the purposes of section 18.5.1, the amount of liquidated damages will be calculated on the basis of the Contract Price. If the Contractor fails to identify the Transactions within the time period in subsection 18.5.1, then the requirement to pay liquidated damages as set out in subsection 18.4.1. will apply.
18.5.4. The parties agree that Canada’s right under Section xx of General Conditions xx to terminate this Contract for default will not apply to a failure to meet the Contractor’s Obligations under these Terms and Conditions, unless the Contractor fails or neglects, within 60 days of the ITB Authority’s demand to do so, to satisfy any of the material Obligations listed below: [TBD on each project.]
- 18.5.4.1. pay the liquidated damages amounts required by section 18.4.; and
- 18.5.4.2. satisfy its VP Obligations described in subsection 3.1.2.
18.5.5. The Parties agree that:
- 18.5.5.1. the Obligations contained in subsection 18.5.1. constitute material obligations under the Contract; and
- 18.5.5.2. the Obligations contained in subsection 18.5.1. will survive termination of this Contract.
18.5.6. In the event that the Contract is terminated for convenience pursuant to Section xx of General Conditions xx, the Contractor will have no further obligations and liabilities under these Terms and Conditions.
18.5.7. In the event of partial termination of the Contract under Section xx of General Conditions xx, the Contractor will be released from the terminated portions of the Obligations and from the provisions of article 3 as it relates to such terminated portions.

18.6. Letter of Credit [TBD on each project]

18.6.1 In the event that the Contractor has not completed its Obligations at the time of completing the Work under the Contract and being entitled to receipt of the final milestone payment from Canada, the Contractor may be required to provide Canada a guarantee for completion of the Obligations prior to the expiration of the Achievement Period in the form of a letter of credit. The letter of credit will be in the amount of monies that would be owing by way of liquidated damages should the Contractor not achieve any further Credits after the date of the final milestone payment.
18.6.2. The letter of credit will be:
- issued by a financial institution which is a member of the Canadian Payment Association;
- in form and substance satisfactory to the ITB Authority;
- solely at the cost of the Contractor;
- abated as set forth below;
- unconditional and irrevocable; and,
- subject to the Uniform Customs and Practice for Documentary Credits, as set out in Publication No. 600, July 2007.
18.6.3. The letter of credit will remain in force until the earliest of:
- the achievement of the Obligations; and
- 6 months following the submission of the ensuing final ITB Annual Report at which time the letter of credit will be abated in full and will be returned by Canada to the Contractor. Provided that, if the Obligations have not been achieved, Canada will draw down on the letter of credit in the amount of the outstanding Obligations prior to returning it to the Contractor.
18.6.4. The obligation of the financial institution to pay under the letter of credit will be triggered by notice executed by the Contracting Authority to the issuing bank, stating that the Contractor is in default under this Contract for failure to achieve the Obligations within the Achievement Period, that Canada has made a demand by notice for payment of liquidated damages in accordance with the liquidated damages Articles and that the Contractor has failed to pay Canada such liquidated damages. No other event will trigger payment under the letter of credit.

18.7. Performance Incentives [TBD on each project]

18.7.1 If, during the term of this Contract, a change in the Work is initiated by Canada which results in the Contractor no longer being able to source from a Canadian Company and, as a consequence, Obligations may not be met, the Contractor must immediately notify the ITB Authority through the Contracting Authority. The Contractor must fully describe the issue and provide all supporting data, including a complete record of attempts to purchase from Canadian sources and Canadian suppliers' responses, together with an analysis of specific technical, commercial or other factors which result in the inability to source from a Canadian Company. In such instances, the Obligations will be reduced to the extent the CCV associated with the change differs from the CCV of the original Work. Notwithstanding the foregoing, the Obligation in subsection 3.1.1. will remain.
18.7.2. The Contracting Authority in accordance with this Article, will have the right to holdback, drawback, deduct and set off from and against the monies owing at any time by Canada to the Contractor, any amounts owing under this Contract.
18.7.3. Nothing in this Article shall be interpreted as limiting the rights and remedies that the Contracting Authority may otherwise have, in law or in equity, in relation to any breach of the Contract by the Contractor.
18.7.4. Actual damages which would be sustained by Canada in the event of a breach by the Contractor of the Obligations in this Contract would be commercially impracticable or extremely difficult to compute or ascertain and, therefore, the provisions for liquidated damages are agreed to be a fair and reasonable best estimate of such actual damages, and the manner provided herein for the enforcement and collection of liquidated damages is agreed to be fair and reasonable.

19. Responsibilities of the Parties

19.1. The award of this Contract to the Contractor resulted from a procurement process in which the Contractor committed to fulfill the Obligations.

19.2. It is the responsibility of the Contractor to ensure that it can complete the Transactions and that these are not limited by applicable laws, regulations, policies or standards.

20. Compliance with the Lobbying Act

20.1. The Contractor represents, warrants and undertakes that it and the Eligible Donors are and will remain in compliance with Canada's Lobbying Act with respect to these Terms and Conditions.

21. Contingency and/or Success Fees

21.1. The Contractor represents warrants and undertakes that neither it nor an Eligible Donor will make or agree to make any payment to an individual, company or entity that is contingent on the approval of Credit by the ITB Authority under these Terms and Conditions or upon the entity's success in arranging meetings with public office holders.

21.2. The ITB Authority acknowledges that the Contractor, for the purposes of making the representation and warranties in sections 20.1 and 21.1 on behalf of the Eligible Donors, has relied on a representation provided by each of them to it.

22. List of approved Eligible Donors

22.1. The Eligible Donors to this Contract include the companies and coordinates listed below:

[List to be included at contract award]

Appendix A
Value Proposition Commitments, Plans And Transactions

Value Proposition Commitments:
[To be referenced from Contractor's Proposal.]

Plans:
[To be referenced from Contractor's Proposal.]

Transactions:
[Detailed list and tabular chart to be attached, based on the Contractor's Proposal and then updated throughout the Achievement Period.]

Appendix A
Transaction # and Version	Title	Description	Donor	Recipient	CCV$
					Sub-totals for direct, indirect, regional, SMB and VP criteria

Appendix B
Transaction Sheet

(The Contractor must submit proposed Transactions via the MyITB portal. The ITB Authority will provide the Contractor access to the MyITB portal.)

[A transaction sheet with project-specific requirements will be generated by the ITB Authority and included in the final RFP.]

Appendix C
Template—Annual Report

(The ITB Authority will provide electronically.)

Protected B (when completed)

General Information

Project Name:
Contractor Name:
ITB Manager:
Currency:
Contract Award:
Total # of Reporting Periods:
Period #:
Report Due Date:
Date of Report:

Contractual Obligations

Total Obligation:
Direct:
SMB:
Atlantic
Northern Ontario:
Southern Ontario:
Quebec:
West:
North:

PART A – Overview

An overview and status of Work on the Project:
Please provide a very high level overview of the project over the past year, including any Annual Report highlights and the project schedule. Proposed length of response is 5-10 lines.

Progress Payments:
Please provide a brief written overview of the progress payment activities since contract award. Proposed length of response is 5-10 lines. In addition, please populate the Progress Payments Tab below.

[Progress Payments chart on excel]

Plans:
Please provide an overview of any substantive changes to the Plans, including changes to ITB officials working on the project. Please indicate if no changes are proposed. Proposed length of response is 5-10 lines.

Value Proposition Overview:
Please provide a detailed overview of each VP Commitment and related activity during the Reporting Period, along with a cumulative summary of the achievement status of each.
Please provide an update on the international Export strategy, including details on the progress of target market activities and documentation demonstrating that the five capacity to Export conditions remain in place, as outlined in Article 4.1.1.4. Proposed length of response is 4-5 lines for each item, accompanied by the documentation as indicated.

PART B, C and D – Transactions

Please fill in all of the information requested in a chart format.

PART E – Additional Information

SMB and Regional Development Activities:
Please provide an overview of the activities that were undertaken on this project with Small and Medium Businesses. Include highlights of work activities undertaken during this period. Proposed length of response is 5-10 lines.

New, Changed or Cancelled Transactions:
Please provide a brief overview of any changes (listed by Transaction) including any cancelled, new or altered Transaction in the last Reporting Period. Ensure these changes are reflected in the Transaction Tab by highlighting in red all changes indicated below. Proposed length of response if dependent on the number of applicable Transactions.

Certificate of compliance:
Submission of this Annual Report should be accompanied by the completed and signed certificate of compliance. The template is available below.

Appendix D: Template Business Plan

(Electronic copy available from ITB Authority)

The business plan is to be used for the investment framework (IF), ITB investments for future sales (FS) and Strategic Investment (SI) Transactions. The business plan should describe the proposed investment, and provide details on the specific activities, goals, and planned duration. It should describe how the Allowable Investment will be used by the Recipient and provide information about the Recipient. For SI Transactions, it must describe how the Allowable Investment will result in a new or increased industrial capacity in Canada.

Appendix D
Template Business Plan
Protected B (when completed)
Transaction title:
Donor:
Recipient:
Date:

Transaction type (select one) ☐ Investment framework ☐ ITB investments for future sales ☐ Strategic Investment
For ITB investment for future sales, list the Allowable Investment amounts that will be provided. Cash grant value: Cash purchase on non-Controlling shares value: In-kind contribution of reasonable transfer costs value:
Description of activity: Provide a description of the activity: What are the goal(s) of the Allowable Investment and the expected duration in each reporting period? Include an outline of specific activities to be undertaken. Describe the Allowable Investment(s), including the value and type of investment provide a timeline for when the Allowable Investment(s) will be provided to the Recipient. Describe the the anticipated outcomes for the Recipient. Include any key assumptions and risks related to the anticipated outcomes. (Anticipated length: 8-10 paragraphs.)
Recipient profile Provide a description of the Recipient’s operations, product lines, corporate/organizational structure and ownership. For IF Transactions, the profile must include information to demonstrate that the Recipient is an SMB or Small Mid-Cap. (Anticipated length: 2-3 paragraphs + organizational chart and any related documents)
Market Assessment: Provide an outline of the opportunity, market size, key competitors, sales strategy and the Recipient’s competitive advantage. For SI Transactions, provide information on the anticipated impact of the increased capacity on sales and exports. (Anticipated length: 3-5 paragraphs)
Industrial Capacity (for SI Transactions only) Identify the area of investment: ☐ The establishment of a new facility in Canada under the operation of a Canadian Company ☐ The expansion of an existing facility in Canada under the operation of a Canadian Company for new product lines, manufacturing capacity, or enhanced efficiency and productivity. ☐ The development of a new capacity in Canada, including through Research and Development and Commercialization Activities. Describe how the area(s) of Allowable Investment(s) selected above will support a new or increased industrial capacity in Canada. Refer to the market assessment as required. (Anticipated length: 5-10 paragraphs)
Certification and signatures WHEREAS the ITB policy requires that a proposed IF, FS or SI Transaction be accompanied by a business plan outlining the activity in detail; NOW THEREFORE, we the undersigned, in our capacities as senior officers of the Contractor or Eligible Donor and Recipients, do hereby declare and certify that the information included in and attached to this business plan is complete, accurate and can be relied upon by the ITB Authority for the purposes of monitoring the compliance of the proposed Transaction. IN WITNESS THEREOF THIS CERTIFICATION HAS BEEN SIGNED THIS ______ DAY OF __________________, 20____ BY A SENIOR OFFICER WHO IS DULY AUTHORIZED IN THAT BEHALF. Donor ________________________________________ Signature _________________________________________ Name and Title of Senior Officer Recipient ________________________________________ Signature _________________________________________ Name and Title of Senior Officer

Appendix E—Certificate of Causality Industrial and Technological Benefits (ITB)

WHEREAS the ITB policy requires that, as evidence of causality, the Contractor must provide a detailed statement on causality and submit a signed certificate of causality as supporting evidence to the ITB Authority;

NOW THEREFORE, I ___________, in my capacity as a senior officer of the (donor company), do hereby declare and certify as follows:

I am aware of the meaning of causality, as outlined in the Terms and Conditions;
The information contained in the Transaction sheet(s) appended herewith provides a detailed statement on causality, which outlines the steps and timelines involved in the decision about a procurement or investment activity and which clearly shows the link between the steps and decision on a business activity and Canada’s ITB or IRB policy;
The information contained in the Transaction sheet(s) noted below and appended herewith, is to the best of our knowledge and ability complete, true and accurate;
Failure to provide a detailed statement on causality and this certificate may result in the proposed Transaction being rejected pursuant to the Terms and Conditions. Provision of this causality information should not be seen as limiting the discretion of the ITB Authority in decisions related to the eligibility of specific Transactions submitted for approval.

IN WITNESS THEREOF THIS CERTIFICATE OF CAUSALITY HAS BEEN SIGNED THIS ______________ DAY OF _______________ BY THE SENIOR OFFICER WHO IS DULY AUTHORIZED IN THAT BEHALF.

___________________________________
SIGNATURE

___________________________________
NAME AND TITLE OF SENIOR OFFICER

AT:________________________________

Project and Transaction number(s):______________________________

Title(s):______________________________

Recipient Company(ies):______________________________

Appendix F—Certificate of Compliance

For Annual Reporting Purposes

WHEREAS His Majesty the King in right of Canada as represented by the Minister of Public Works and Government Services (referred to herein as the Minister) on the ____ day of _____ has entered into contract with _________________________ for the Contract.

AND WHEREAS Such Contract requires that, as evidence of the achievement of Canadian Content Value (CCV) of Transactions and compliance with the Lobbying Act, the Contractor will submit a certificate of compliance to that effect to the ITB Authority;

NOW THEREFORE, The Contractor declares and certifies as follows:

The information contained in the documents appended herewith, which applies to the reporting of the Transaction periods, is to the best of our knowledge and ability complete, true and correct;
The information contained in the documents appended herewith is compliant with information contained in certificates of compliance submitted to the Contractor by Eligible Donors;
The CCV shown in documents appended herewith have been determined in accordance with article 9 of the Contract;
The Contractor and all Eligible Donors are, subject to article 20. in compliance with Canada’s Lobbying Actwith respect to this Contract.

IN WITNESS THEREOF THIS CERTIFICATE OF COMPLIANCE HAS BEEN SIGNED THIS ______________ DAY OF _______________ BY THE SENIOR COMPTROLLER WHO IS DULY AUTHORIZED IN THAT BEHALF.

_______________________________
SIGNATURE

____________________________________________
NAME AND TITLE OF SENIOR COMPTROLLER

AT:________________________________

Appendix G—Certificate of Eligible Donor Industrial and Technological Benefits (ITB)

WHEREAS the ITB policy requires Transactions be undertaken by an Eligible Donor, as outlined in the Terms and Conditions;

AND WHEREAS, the ITB policy requires that when a proposed Eligible Donor is a Canadian Company with less than 500 employees, it has the capacity to undertake Obligations with respect to this Contract;

NOW THEREFORE, I ___________, in my capacity as an officer of (Canadian Company name), do hereby declare and certify as follows:

I am familiar with Canada’s ITB policy, goals and objectives
I am aware of the meaning of Eligible Donor, as defined in article 8 of the Terms and Conditions;
I understand and accept the responsibilities associated with acting as an Eligible Donor and strategic partner in the delivery of the Obligation on the (insert project name) project. These responsibilities may include sharing a portion of the Obligation, remedies, planning and undertaking Direct and Indirect Transactions, record keeping and supporting the prime contractor in the areas of annual reporting and verification.
My company has the capability and resources to undertake the role of Eligible Donor on this project.
Failure to provide a certificate of Eligible Donor may result in the proposed Transaction being rejected pursuant to the Terms and Conditions. Provision of this certificate should not be seen as limiting the discretion of the ITB Authority in decisions related to the overall eligibility of specific Transactions submitted for approval.

IN WITNESS THEREOF THIS CERTIFICATE OF ELIGIBLE DONOR HAS BEEN SIGNED THIS ______________ DAY OF _______________ BY THE SENIOR OFFICER WHO IS DULY AUTHORIZED IN THAT BEHALF.

_________________________________
SIGNATURE

_________________________________
NAME AND TITLE OF OFFICER

AT:_________________________________

Appendix H—Incrementality Checklist

For Indirect Transactions, complete this checklist and attach supporting documentation

Appendix H
Incremental work is the purchase of a good or service that represents new or additional purchases from a Canadian supplier. These new or additional purchases may take various forms. They may involve:	Please check the appropriate box
i) purchase of a new product or service from a new Canadian supplier on an Indirect Transaction	Written statement attesting the Canadian Recipient is a new supplier + Purchase Order (or PO equivalent if the order has not taken place)
ii) purchase of a new product or service from an existing Canadian supplier on an Indirect Transaction	Written statement attesting the product/service has not previously been purchased + Purchase Order (or PO equivalent if the order has not taken place)
iii) purchase of an existing product or service from an existing Canadian supplier on an Indirect Transaction, but which involves a new application or end use of the product (see example below)	Written statement detailing the new application or end use of the product/service + New part number (where applicable) + Purchase Order (or PO equivalent if the order has not taken place)
iv) purchase of an existing product or service from an existing Canadian supplier on an Indirect Transaction, but where there has been a new competitive process to re-select the supplier	Written statement detailing the Request for Quote (or equivalent) proving a new competition has taken place + Purchase Order (or PO equivalent if the order has not taken place)
v) purchase of an existing product or service from an existing Canadian supplier on an Indirect Transaction, but where none of the above circumstances apply. (in these cases, a three-year average of previous purchases will be calculated, based on the three years immediately preceding the date of identification of the Transaction to the ITB Authority, and Credit may be awarded on those purchase amounts which exceed the three year average, in each of the ensuing Reporting Periods)	Written statement detailing the three-year average calculation
vi) other: ___________________________	Written statement detailing the activity + other evidence
An example of a new application or end use: The Contractor has previously purchased military tripods from a Canadian supplier that mount to Gun A for sale to Country A. The new application or end use could be the purchase of the same military tripods from the Canadian supplier, but instead of mounting to Gun A for sale to Country A, they are mounted to Gun A for sale to Country B, or they are mounted to Gun B for sale to Country.	The ITB Authority at its discretion will determine if the proposed Transaction is incremental taking the information provided into account.

Appendix I—Defence Sector Definitions

Ammunition and Other Munitions: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services, and disposal activities such as relating to:

Conventional ammunition in small/medium/large calibers, artillery and mortar rounds, bombs, grenades, torpedoes, mines, other munitions and related precision manufacturing;
Related propellants and explosives like explosive plastics, gels, liquids, and powders; and nuclear, biological and chemical warheads.

Excluded are sales of missiles, rockets and other related parts and components which should be reported under the category for, 'Missiles and Rockets'.

Missiles and Rockets: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to military missiles and rockets, including advanced missiles used by anti-ballistic missile (ABM) systems.

Excluded here are sales relating to:

Space launch vehicles,
Munitions/sub-munitions and other types of warheads carried on, or delivered by missiles and rockets.

Those are to be reported under either the categories for 'Ammunition and Other Munitions' or for military space systems as appropriate.

Firearms and Other Weapons: This category includes military sales related to production as well as research, development, design, engineering, testing and evaluation services relating to technologies aggressively used to gain or defend a tactical advantage over an adversary; to attack, defend and protect assets and personnel. This includes lethal and non-lethal kinetic and non-kinetic weapon systems like:

Light/medium/heavy firearms;
Vehicle-based or mobile weapons like tank guns, howitzers, mortars and missile launchers;
Acoustic, laser, and other electromagnetic based weapon systems.

Military Systems Deployed in Space, Space Launch Vehicles, Land-based Systems for the Operation, Command and Control of Space Launch Vehicles or Systems Deployed in Space; and Related Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services:

Relating to primarily military systems deployed in space (e.g. satellites, spacecraft, and space robotic systems) and their sub-systems and components; as well as space launch vehicles.
Related design, engineering and production of earth-based systems used for the operation, Command & Control of military systems deployed in space and space launch vehicles (e.g. ground stations, satellite tracking systems, and launch facilities).

Primarily Airborne Electro-Optical, Radar, Sonar and Other Sensor/Information Collection Systems; Fire Control, Warning and Countermeasures Systems, and Related Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to Primarily Airborne:

Electro-optical systems (e.g. image intensification night-vision systems, thermal imaging systems, lasers), radars, dipping sonar, other sensors, and fire-control systems used to aid weapons in target acquisition, tracking and engagement;
Warning systems (e.g. technologies that detect enemy radars, enemy laser targeting systems, and approaching threats such as missiles); and
Countermeasures (e.g. electronic jamming equipment, smoke screens, flares to counter heat-seeking missiles).
Other related aircraft avionics systems.

Note: sales relating to similar systems, parts and components but which are integrated into naval vessels should be reported under the category for: “Naval Shipborne Systems (i.e., Mission Systems) and Components”.

Primarily Land-Based or Man-Portable Electro-Optical, Radar, Sonar and Other Sensor/Information Collection Systems; Fire Control, Warning and Countermeasures Systems, and Related Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to Primarily Land-based or Man-Portable:

Electro-optical systems (e.g. image intensification night-vision systems, thermal imaging systems, lasers), radars, sonar, other sensors, and fire-control systems used to aid weapons in target acquisition, tracking and engagement;
Warning systems (e.g. technologies that detect enemy radars, enemy laser targeting systems, and approaching threats such as missiles); and
Countermeasures (e.g. electronic jamming equipment, smoke screens, flares to counter heat-seeking missiles).

Note: sales relating to similar systems, parts and components but which are integrated into naval vessels should be reported under the category for “Naval Shipborne Systems (i.e., Mission Systems) and Components”.

Primarily Airborne Communications and Navigation Systems; and Other Information Systems (Including Processing and Dissemination), Software, Electronics and Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to Primarily Airborne:

Military communications systems, secure cyber/information systems, and other military Information Technologies (including software);
Navigation and guidance systems (e.g. Global Positioning System [GPS] based systems, gyroscopes, accelerometers) and other geomatics related systems and services (e.g. geographic information system (GIS) products and services for military applications, remote sensing services for military applications);
Other technologies for the receipt, exchange/disseminating, processing, synthesizing, analysis and integration of multiple types of data;
Display technologies, digital control systems and other avionics;
Other mission system avionics, computers and electronics; and other aircraft avionics for military aircraft not elsewhere specified.

Primarily Land-Based, Man-Portable or Non-Platform Specific Communications and Navigation Systems; and Other Information Systems (Including Processing and Dissemination), Software, Electronics and Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to Land-Based or Man-Portable:

Military communications systems, secure cyber/information systems and other military Information Technologies (including software);
Navigation and guidance systems (e.g. Global Positioning System [GPS] based systems, gyroscopes, accelerometers) and other geomatics related systems and services (e.g. geographic information system (GIS) products and services for military applications, remote sensing services for military applications);
Other technologies for the receipt, exchange/disseminating, processing, synthesizing, analysis and integration of multiple types of data;
Display technologies and digital control systems;
Other defence computer and electronics related products not elsewhere specified.

Note: sales relating to similar systems but which are integrated into naval vessels should be reported under the category for: “Naval Vessel-Borne Systems (i.e., Mission Systems) and Components”.

Naval Shipborne Systems (i.e., Mission Systems) and Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to such systems as:

Naval vessel mission/combat systems: command, control, and communications; radar, sonar, electro-optical and other sensors, navigation systems, displays, other Information Technologies (including Software) and electronics, countermeasures; guns, and missile or torpedo launchers.

Excluded from this category are sales related to the actual missiles, torpedoes and other munitions or projectiles launched or fired from/by naval vessels' weapon systems; as well as associated warheads.

Such sales are to be reported under either the category for 'Missiles and Rockets' or the category for 'Ammunition and Other Munitions' as appropriate.

Naval Ship Fabrication, Structures and Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to:

Naval surface and subsurface (e.g., submarines) marine vessels (platforms specifically designed or modified for use in combat or the transportation of military goods and personnel), related vessel structures, and associated sub-systems and components (e.g. ship assembly, manufacture of hull sections, bulkheads, ship propulsion and electrical power systems, ship machinery control systems, damage control systems and ballistic protection materials, air ventilation and water treatment systems, hydraulics, plumbing etc.).

Excluded from this category are sales related to naval vessels' combat systems such as command, control, and communications systems; radars, sonar, electro-optical systems, naval countermeasures, navigation systems, displays and other sensors and electronics, naval guns and missile launchers.

Those are to be reported under the category for:

'Naval Shipborne Systems (i.e., Mission Systems) and Components.

Similarly, sales related to maintenance, repair and overhaul services for naval vessels are to be reported under the separate category for such activities.

Naval Ship Maintenance, Repair and Overhaul: This category includes sales, carried out under contract, related to the provision of services for maintenance, repair, and overhaul of naval surface and subsurface marine vessels (e.g., submarines); as well as for related training activities.

Combat Vehicles and Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to:

Land-based vehicles designed for use in combat and to transport and protect soldiers, and the systems, sub-systems and components of such vehicles (e.g. vehicle structures, electrical systems, armour, engines, transmission systems, heating/cooling systems, engineering).

Excluded are sales relating to combat vehicle-based weapons systems such as guns and missiles launchers as such sales should be reported under the 'Firearms and Other Weapons' category. Sales relating to associated projectiles like tank gun rounds or missiles should be reported separately under the 'Ammunition and Other Munitions' or 'Missiles and Rockets' categories as appropriate.

Combat vehicle communication systems, electronics, sensors, fire-control and navigation systems sales should be reported under either the appropriate categories for:

'[Primarily Land-Based or Man-Portable] Electro-Optical, Radar, Sonar and Other Sensor/Information Collection Systems; Fire Control, Warning and Countermeasures Systems; and Related Components';
'[Primarily Land-Based, Man-Portable or Non-Platform Specific] Communications and Navigation Systems; and Other Information Systems (Including Processing and Dissemination), Software, Electronics, and Components'.

Similarly, sales relating to maintenance, repair, overhaul (MRO) and/or training services relating to combat vehicles should also be reported separately in the category for:

'Combat Vehicles Maintenance, Repair and Overhaul'.

Combat Vehicles Maintenance, Repair and Overhaul: This category includes sales, carried out under contract, related to the provision of services for maintenance, repair, and overhaul of land-based vehicles designed for use in combat and to transport and protect soldiers; as well as for related training activities.

Aircraft Fabrication, Structures and Components: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services relating to:

Military aircraft, and military aircraft structural elements, control surfaces, systems, sub-systems, parts and components of manned military aerial platforms, and complete manned military aerial platforms, intended for use in combat and military transport. This includes things like landing gear (e.g. wheels, shock absorbers and related parts for the retraction and extension of aircraft landing gear, helicopter pontoons); flight control actuators; and propulsion and power systems for military aircraft (e.g. aircraft gas turbine engines, compressors, fuel systems, etc.).

Excluded from this category are sales related to military aircraft maintenance, repair and overhaul (MRO) services; aircraft communication systems; navigation systems; avionics; air-borne sensors; missiles, rockets and projectiles made to be fired from aerial platforms; display units; and other electronics for manned military aerial platforms—these are to be reported under separate defence product and service categories as appropriate

Military Aircraft Maintenance, Repair and Overhaul Services: This category includes sales relating to maintenance, repair and overhaul activities (carried out under contract) in relation to military aircraft, engines and accessories; as well as for related training activities.

Unmanned Aerial Systems/Vehicles (UAS/V) and Components: This category includes sales related to production, research, development, design, engineering, testing and evaluation services relating to:

Military unmanned aerial vehicles/systems and drones, and related sub-systems, parts, components and accessories (including related ground control systems and launchers).

Excluded are sales relating to missiles; or to weapon systems (e.g., guns, missile launchers) and ammunition, munitions, and missiles carried on/delivered by unmanned aerial systems/vehicles.

Such sales should be reported under either the category for: 'Firearms and Other Weapons' or under the category for 'Missiles & Rockets'

Simulation Systems for Aircraft: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services for the hardware and software technologies used by military and security forces to develop, experiment and test operational doctrines and to train personnel using situational scenarios (e.g. intelligent software, visual systems, network simulations, real-time simulators, etc.) as primarily related to aircraft and operations in the air-domain.

Simulation Systems for Naval Vessels: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services for the hardware and software technologies used by military and security forces to develop, experiment and test operational doctrines and to train personnel using situational scenarios (e.g. intelligent software, visual systems, network simulations, real-time simulators, etc.) as primarily related to naval vessels and operations in the maritime-domain.

Simulation Systems for Land Vehicles or Other Applications: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services for the hardware and software technologies used by military and security forces to develop, experiment and test operational doctrines and to train personnel using situational scenarios (e.g. intelligent software, visual systems, network simulations, real-time simulators, etc.) as primarily related to land vehicles/ground-based systems and operations; or for other applications not elsewhere specified.

Live Personnel and Combat Training Services: This category includes sales related to the provision by operations in Canada of live training services to military personnel such as in relation to combat training, including military airborne training services and any similar land or maritime training services; and military marksmen and sniper training.

Excluded are sales of products and services related to:

Simulated or virtual training activities;
Training related to the maintenance, repair and overhaul (MRO) of military platforms and systems, as this should be reported under appropriate MRO categories under the survey; and/or to the basic operation of newly acquired or modernized military platforms and systems.

Troop Support: This category includes sales related to production as well as research, development, design, engineering, testing and evaluation services in support of soldiers at home or abroad.

Primarily covered are activities (not elsewhere captured) that relate to systems and services like:

Camp facilities and military shelters;
Bomb handling, and bomb/explosive/hazmat detection devices and equipment;
Military clothing, and personal body armour, hazmat and other protective clothing and devices and equipment;
Logistics and transportation support services;

Excluded are sales related to 'Live Personnel and Combat Training Services' which should be reported under that respective category.

Appendix J—Key Industrial Capabilities

Emerging Technologies include the following:

Advanced Materials: Includes a range of materials and related production processes that yield significant advances in operational capability and/or cost-efficiency of equipment used in military operations. These advances include reduced weight, increased strength and resilience, lower observability, and other attributes. The materials envisioned span a wide range of technologies, including (but not limited to) composite structures (includes aerostructures), textiles, metals, plastics, ceramics, and advanced feedstocks for additive manufacturing. The related production processes used in generating the materials include additive manufacturing, 3-D printing, advanced machining, and others. The materials have broad application across military aerospace, land, marine and space domains, as well as in commercial sectors.

Artificial Intelligence Artificial Intelligence (AI) spans a range of technologies that allow machines to execute tasks that normally require human intelligence, such as pattern and speech recognition, translation, visual perception, and decision-making. AI develops or draws on disciplines such as search and mathematical optimization, machine learning, deep learning, self-learning, and neural networks. AI can reduce operator workload and automate easily repeatable tasks that otherwise require significant human involvement. AI promises enhanced efficiency in the use of trained personnel, less exposure of humans to dangerous environments, and more rapid responses to changes in the military operating environment. It can also permit the analysis of large volumes of data in support of intelligence analysis, mission planning and rehearsal, logistics and business management, cyber security and resilience, and many other activities. AI is relevant across a broad set of both defence and non-defence domains.

Clean Technology “Clean Technology” means the design, development, engineering, manufacturing or integration of: energy-efficient or emissions-reducing propulsion systems (e.g., hybrid electric, electric), power distribution and management systems, and low-carbon intensity fuel sources (e.g., hydrogen, biofuels) for vehicle platforms; energy storage systems (e.g., pumped hydro storage, flywheel energy storage, zinc-ion batteries, lithium-ion batteries, flow batteries); renewable energy generation (i.e., solar, wind, hydropower, geothermal, wave energy, tidal current energy, river hydrokinetic energy, small modular reactors for nuclear fission, nuclear fusion); energy management & distribution systems (e.g., power system automation, automatic generation control, smart grids, microgrids) that improve energy efficiency, energy security, or reduce emissions; software and equipment used to measure, monitor and analyze the environmental impacts of pollution (e.g., particulates), waste (e.g., solid waste, waste heat, waste water), noise, or emissions; equipment and processes that directly reduce or eliminate pollution, waste, noise, or emissions; and, equipment and processes for water purification, water re-use, or that result in more efficient water-usage on vehicle platforms, or in forward operating bases, deployed camps, or other remote locations. These technologies have broad application across military domains, as well as in commercial sectors. For the purposes of this definition, the term ‘emissions’ refers to the following greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride, perfluorocarbons, hydrofluorocarbons, and nitrogen trifluoride.

Cyber Resilience Cyber resilience spans every element of the domestic commercial, civil and national security sectors and addresses the vulnerabilities created by the expansion of information technology and the knowledge economy. Activities in this segment include design, integration and implementation of solutions that secure information and communications networks. These and other technologies should focus on achieving effective development of the following cyber capabilities:

Information security: The practice of defending electronic and digital data and information from unauthorized access/intrusion, use, disclosure, disruption, modification, perusal, inspection, recording or destruction;
IT security: Secure content and threat management (endpoint, messaging, network, web, cloud), security, vulnerability and risk management, identity and access management and other products (e.g. encryption/tokenization toolkits and security product verification testing), and education, training services and situational awareness;
Operational technology (OT) security: Monitoring, measuring and protecting industrial automation, industrial process control and related systems. Cyber resilience may involve the development of tools and the integration of systems and processes that permit hardening of tactical systems or broader networks, encryption, cyber forensics, incident response, and others. Capabilities developed in this domain may increasingly draw on AI as an enabling technology; for example, networks may autonomously and dynamically defend against intrusions and repair themselves if disrupted.

Remotely-piloted Systems and Autonomous Technologies These are platforms and systems which make use of autonomous machine operations, including whole unmanned aerial, marine, or ground vehicle systems, and employ AI technologies to enable increasingly autonomous operations in both the military and commercial domains. These technologies rely on various forms of artificial intelligence, including (but not limited to) machine learning, self-learning, and neural networks, in order to increase operational speed or duration, reduce operator exposure to dangerous environments, and enhance overall mission effectiveness.

Space Systems

Earth Observation Software Applications Software and value-added services leveraging terrestrial satellite imagery and geospatial information. These solutions may be developed for a variety of applications, including navigation, surveillance and intelligence gathering, mapping, climate observation, or other military or civil purposes. These solutions may increasingly draw on capabilities contained in the AI domain to autonomously process data and execute preliminary analysis.
Satellite Systems: Design and manufacture of a wide array of satellite and other spacecraft sub-systems encompassing both space and ground segments. These include (but are not limited to) satellite buses, communications or imagery payloads, propulsion and power systems. Critically, this category also spans the ground control infrastructure needed to operate satellites and manage the data they produce.

Leading Competencies and Critical Industrial Services include the following:

Aerospace Systems and Components Design, fabrication, assembly, and integration of aircraft structural elements, control surfaces, systems, sub-systems, parts and components of manned aerial platforms, and complete manned aerial platforms. This includes the following systems and components: landing gear (e.g. wheels, shock absorbers and related parts for the retraction and extension of aircraft landing gear, helicopter pontoons); flight control actuators; avionics; and propulsion and power systems for military aircraft (e.g. aircraft gas turbine engines, compressors, fuel systems).

Armour Metal, ceramic, composite, or other material solutions used for both vehicle and individual soldier protection. This includes both the development and manufacture of underlying materials, and the design and manufacture of armour solutions for specific military, security, and law enforcement applications.

Defence Systems Integration Design and integration of complex military systems that hinge on the seamless linking together of multiple sub-systems to yield an effective operational capability. These capabilities span various military platforms and enable the operation and management of weapons, defensive systems, command and control systems, sensors, decision support systems, electronic warfare devices and a platform's core sub-systems in a tightly coordinated fashion essential under highly stressing combat conditions. These systems need to present information to their operators stemming from multiple sources in a manner that is understandable, secure, and supports decision-making in a complex environment. This definition does not include the various constituent systems (e.g., missile launching systems, radars, electronic warfare systems) that the work of defence systems integration aims to combine into a cohesive whole. Rather, the definition focuses on the skills and other capabilities needed to perform the integration work, and to create the user interface that is needed in such complex mission systems.

Electro-Optical / Infrared (EO/IR) Systems Design, manufacture and integration of electro-optical and infrared systems for surveillance, reconnaissance, night vision, and targeting. This category also includes components and assemblies that significantly drive system capability, as well as software that enhances system performance or contributes to superior exploitation of collected sensor information. Applications for these systems are either military or civil, and feature in multiple media, including airborne platforms, satellites, ground vehicles, ships and submarines, or in fixed infrastructure.

Ground Vehicle Solutions Design, engineering, advanced manufacturing, integration, and testing of sophisticated combat and combat support vehicles.

In-Service Support This represents a set of capabilities needed to operate and sustain a range of military platforms and systems operating in all domains across their lifespans. In this context, the phrase "operate and sustain" includes a wide array of activities, including maintenance, repair and overhaul; diagnostic, prognostic and health management; spares and supply chain management; configuration management; system and software modification and upgrade for both capability enhancement and life extension; and overall product support integration (PSI).

Marine Ship-Borne Mission and Platform Systems Design, engineering, development, manufacturing, testing and evaluation services related to:

Marine Vessel Mission/Combat Systems including command, control, and communications; data link; replenishment at sea; combat management systems; integrated navigation systems; countermeasures; and helicopter haul-down and rapid securing devices.
Platform Systems including bridge and platform management systems; propulsion, battle damage and machinery control systems, climate control/ventilation (HVAC) systems; and electrical systems.

Munitions This is defined as encompassing the full range of activities covered in Canada`s Munitions Supply Program (MSP).

Shipbuilding, Design and Engineering Services This spans the range of capabilities required to build, integrate, and sustain naval and other marine vessels. This includes engineering and process management capabilities crucial to shipbuilding and integration.

Sonar and Acoustic Systems This includes the design, manufacture and integration of sonar and/or acoustic systems used for navigation, surveillance, fire control, survey, scientific and other purposes, both military and civil. This spans both the "dry side" signal processing and system management capabilities, and the "wet side" sensor arrays.

Training and Simulation End-to-end training and simulation capabilities that span the full breadth of live, virtual and constructive training solutions. These include simulator design, manufacture, integration and modification, training courseware development, design and integration of targets and training aids, and the provision of live, virtual, and classroom-based training services.

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ITB - Model Terms and Conditions

Industrial and Technological Benefits (ITB) - Model Terms and Conditions

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1. Definitions

2. Canada’s Industrial and Technological Benefits Objectives

3. Statement of Obligations

4. Annual Reporting

5. Contract Price Changes

6. Transaction Excess Achievement

7. Transaction Types

8. Common Transaction Eligibility Criteria

9. Canadian Content Value

10. Strategic Plans

11. Pooling

12. Banking

13. Public Communications

14. Information Management

15. Transaction Alterations

16. Verification and Access to Records

17. Conflict Resolution

18. Remedies

19. Responsibilities of the Parties

20. Compliance with the Lobbying Act

21. Contingency and/or Success Fees

22. List of approved Eligible Donors

Appendix A
Value Proposition Commitments, Plans And Transactions

Appendix B
Transaction Sheet

Appendix C
Template—Annual Report

Appendix D: Template Business Plan

Appendix E—Certificate of Causality Industrial and Technological Benefits (ITB)

Appendix F—Certificate of Compliance

Appendix G—Certificate of Eligible Donor Industrial and Technological Benefits (ITB)

Appendix H—Incrementality Checklist

Appendix I—Defence Sector Definitions

Appendix J—Key Industrial Capabilities

Emerging Technologies include the following:

Leading Competencies and Critical Industrial Services include the following:

ITB - Model Terms and Conditions

Industrial and Technological Benefits (ITB) - Model Terms and Conditions

1. Definitions

2. Canada’s Industrial and Technological Benefits Objectives

3. Statement of Obligations

4. Annual Reporting

5. Contract Price Changes

6. Transaction Excess Achievement

7. Transaction Types

8. Common Transaction Eligibility Criteria

9. Canadian Content Value

10. Strategic Plans

11. Pooling

12. Banking

13. Public Communications

14. Information Management

15. Transaction Alterations

16. Verification and Access to Records

17. Conflict Resolution

18. Remedies

19. Responsibilities of the Parties

20. Compliance with the Lobbying Act

21. Contingency and/or Success Fees

22. List of approved Eligible Donors

Appendix A Value Proposition Commitments, Plans And Transactions

Appendix B Transaction Sheet

Appendix C Template—Annual Report

Appendix D: Template Business Plan

Appendix E—Certificate of Causality Industrial and Technological Benefits (ITB)

Appendix F—Certificate of Compliance

Appendix G—Certificate of Eligible Donor Industrial and Technological Benefits (ITB)

Appendix H—Incrementality Checklist

Appendix I—Defence Sector Definitions

Appendix J—Key Industrial Capabilities

Emerging Technologies include the following:

Leading Competencies and Critical Industrial Services include the following:

Appendix A
Value Proposition Commitments, Plans And Transactions

Appendix B
Transaction Sheet

Appendix C
Template—Annual Report