Extensive documentation accompanies each ITB transaction in a prime contractor’s bid and annual reporting to the Government of Canada. These include a Causality Certificate, Eligible Party Certificate, and Incrementality Certificate.
In order for an ITB transaction to be approved, it must be causal to the ITB obligation that a prime contractor or eligible party has with the Government of Canada. However, under the Incrementality section of the ITB documentation, a contractor may use its current suppliers for ITB credits as long as the supplier is given new work that is related to the ITB obligation. For instance, an increase in the amount of work with a certain supplier can be used towards the contractor’s obligation.
Incrementality is calculated by taking the three year average of previous purchases from the supplier in question for the three years prior to the date of the ITB transaction. ITB credits will be awarded for the purchases that exceed this three year average.
Incrementality does not apply when the transaction involves direct work, is different than previous products or services purchased, involves a different end use or application than the previous products or services that were purchased, or if the supplier is re-selected after a competitive process that was open to other Canadian suppliers. In these instances, the prime contractor will have to prove causality, similar to a transaction with a new supplier.