Question Period Note: Auditor General’s Audit of the Industrial and Technological Benefits Policy

The Auditor General has revealed that the Industrial and Technological Benefits Policy is not meeting its objectives. How is this Government ensuring defence procurements benefit Canadian industry?

• We thank the Auditor General for her audit on the Industrial and Technology Benefits (ITB) Policy.
• National Defence will support Innovation, Science, and Economic Development Canada in their efforts to improve the collective management and reporting of data associated with the Policy.
• The ITB Policy applies to a number of defence-related procurements.
• For example, Canada’s Industrial and Technological Benefits Policy applies to the Canadian Multi-Mission Aircraft (CMMA) project.
• This requires Boeing to make investments in the Canadian economy equal to the value of the aircraft purchase.
• The CMMA will support over 3,000 jobs and add approximately $358 million to Canada's economy, every year for the next 10 years.
• The Policy also applies to the River-Class Destroyer project, which will create at least 10,800 jobs annually throughout the 25-year construction period.
• Through these investments, contracts with Industrial and Technology Benefits will not only contribute to Canadian defence, but also generate broader economic value for Canada.

Responsible Principals: Assistant Deputy Minister (Review Services); Assistant Deputy Minister (Materiel).

Quick Facts

• On December 2, 2024, the Auditor General of Canada (AG) conducted a performance audit of the Industrial and Technological Benefits (ITB) Policy.
  • Innovation, Science and Economic Development Canada (ISED) is responsible for administering the ITB Policy with support from Public Services and Procurement Canada and National Defence.
• The audit assessed whether the ITB Policy meets its objective to leverage certain defence and Canadian Coast Guard procurement contracts to undertake business activity in Canada equal to the contracts’ values. It focused on procurements of $20M and more that National Defence awarded from 1 April 2020 to 15 June 2024.
• The Auditor General concluded that ISED was unable to demonstrate that the ITB Policy met its objectives, including to support the long-term viability and growth of the defence industry. The Auditor General provided six recommendations to ISED, including one in which National Defence will support:
  • To improve the accuracy of data and tracking and reporting for the ITB, ISED, in collaboration with Public Services and Procurement Canada and National Defence, should ensure appropriate controls are in place for accuracy of databases and reporting.

ITB Projects Value

• The ITB Policy applies to all defence and Canadian Coast Guard procurements over $100 million that are not subject to trade agreements, and which do not qualify for a national security exception.
• Defence procurements valued between $20-100 million are reviewed for the possible application of the Policy.
• ISED has uploaded a public breakdown of current obligations by contractors for companies considered by the ITB Policy.
• In August 2024, Boeing made a $61 million investment in the British Columbian aerospace sector. This investment is part of the ITBs included in Canada’s decision to procure the P-8A Poseidon from Boeing for the CMMA.

Key Industrial Capabilities

• In April of 2018, the Government of Canada released a list of Key Industrial Capabilities (KICs) designed to help target priority activities in areas of emerging technology with potential for rapid growth, established industrial capabilities in Canada, and where domestic capacity is essential to national security. The KICs include:
  • Emerging Technologies: Advanced Materials; Artificial Intelligence; Clean Technology; Cyber Resilience; Remotely-piloted Systems and Autonomous Technologies; and Space Systems.
  • Leading Competencies and Critical Industrial Services: Aerospace Systems and Components; Armour; Defence Systems Integration; Electro-Optical / Infrared (EO/IR) Systems; Ground Vehicle Solutions; In-Service Support; Marine Ship-Borne Mission and Platform Systems; Munitions; Shipbuilding, Design and Engineering Services; Sonar and Acoustic Systems; and Training and Simulation.