Thank you, Mr. Chair and members of the committee, for the invitation.
My name is Demetrios Xenos. I'm the director general of the industrial and technological benefits branch at the Department of Innovation, Science and Economic Development.
Under Canada’s Defence Procurement Strategy framework, Innovation, Science and Economic Development Canada, or ISED, is responsible for leveraging some defence procurement to promote economic activity and growth across Canada. The purpose is to create a sustainable industrial base and ensure that certain large scale military purchases contribute more broadly to the Canadian economy.
The ITB policy applies to certain defence and Canadian Coast Guard projects over $100 million that are not subject to trade agreements or when a national security exception is invoked. The ITB policy contractually requires companies awarded contracts to undertake business activity in Canada equal to the value of the contracts they have won. Business activities can be directly related to procurement or can include activities in other high-value areas that strengthen Canada's industrial base in defence and other high-technology sectors and also advance key priorities.
The value proposition is at the heart of the Industrial and Technological Benefits Policy, which includes Canada’s economic benefits requirements for each procurement project. The value proposition is developed from a thorough market analysis, as well as engaging industry. This work is being done in parallel with other government departments to meet procurement project timelines.
Our economic benefit requirements also target business activities in Canada's key industrial capabilities, or KICs, which include areas of established strength, such as simulation and training, and emerging technology, such as artificial intelligence. KICs are designed to support a resilient domestic defence industrial base that can provide our military with the equipment and services they require. They also serve the needs of close allies such as the United States, which is our largest export market.
As a core department under Canada’s Defence Procurement Strategy, ISED participates in interdepartmental governance, and works closely with our partner departments in the procurement process.
This enables our officials to develop economic benefit approaches in parallel with the work of our partner departments to support timely decision-making and meet procurement project timelines.
Canada's regional development agencies also play an important role in the process and work closely with businesses to streamline the identification of potential suppliers for major prime contractors. As a market-sensitive tool, the ITB policy does not prescribe with whom a contractor must do business.
Since Canada has leveraged defence procurement for economic benefits for over three decades, most large contractors are well aware of the Industrial and Technological Benefits Policy and its associated obligations.
Under Canada’s defence procurement strategy, the ITB policy remains an important tool to foster economic growth, support innovation, contribute to exports and help maintain and build Canada’s defence industrial base. Under the current portfolio, the ITB has resulted in nearly $44 billion in economic obligations associated with defence procurements, with $39 billion of that completed to date. Over 715 Canadian organizations are benefiting from the ITB policy, of which close to 65% are small and medium-sized enterprises.
I would be pleased to answer your questions.