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ITB Market Segments

Last Updated: Oct 13, 2016 12:11PM EDT
When talking to different suppliers and users on OMX, we often run into confusion regarding Market Segments and how they work in procurement programs. Specifically, how Canadian businesses can leverage the Market Segments to gain business from these large defence procurements. 

Background: What are they? 
In February of 2013, Tom Jenkins identified several Key Industrial Capabilities (KICs) in his report, Canada First: Leveraging Defence Procurement through Key Industrial Capabilities. These serve as a method for analyzing the capability within Canada's industrial base and were identified as areas in which Canada's defence industrial base has the potential for growth. 

The KICs identified by Jenkins are:
  • Arctic and Maritime Security 
  • Protecting the Soldier
  • Cyber Security 
  • Training Systems
  • Command and support
  • In-service support

As a part of the new ITB policy that was announced in the Defence Procurement Strategy, bidders for large government procurements will have to respond to a series of identified market segments in their supply chain in their Value Proposition (read about the policy change). These market segments are rooted in Jenkin's KICs but are created custom based on the specific procurement. The market segments for a given procurement are established based on the capability that the Government of Canada wants to target or further develop through the procurement. 

Some examples of market segments include: Shelter Systems, Marine In-Service Support or Aircraft Maintenance. However, the targeted areas are not always so straight forward or directly related to the procurement program. In some instances, we have seen the Government target market segments that are not directly related to defence, aerospace or shipbuilding, but prime contractors still have an obligation to spend in these areas. 

Why do Market Segments matter to your company?
If you are a supplier that fits within a targeted market segment on a procurement program, you should be reaching out to the primes or eligible parties bidding on the program. These companies have a requirement to identify suppliers in their Value Proposition and spend in those areas specified under the market segments, even if they do not seem related to the procurement program. The requirement for prime contractors and eligible parties to spend within these targeted market segments is a great opportunity for Canadian SMEs to leverage the ITB policy to gain business from large defence procurements. 

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