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Offsets in Canada: Key Players

Last Updated: Oct 13, 2016 10:13AM EDT
The world of offsets is a complicated place. It is OMX's mission to make it simpler. First, if you are looking to get involved in the offset business, you will need to know who the key players are. 
 
Prime Contractors 
Prime Contractors are generally large original equipment manufacturers (OEMs) that sell their products directly to the Canadian Government. These are the companies that will have offset obligations that they will need to fulfill through sourcing Canadian supply chain. 
 
Some examples of prime contractors include: Lockheed Martin, BAE, Oshkosh, Chantier Davie, Boeing, Mercedes Benz, Embraer, MTU, Seaspan or Irving. 
 
Eligible Parties
Eligible Parties are usually large tier 1 contractors that sell to the prime contractor on a certain procurement program. These suppliers provide large components for the final product such as engines and communication systems and often have complex supply chains of their own. Tier 1 suppliers become an eligible party when they are responsible for such a large portion of the prime's delivery that they have some of the prime's obligations legally flowed down to them. Thus, eligible parties also have offset obligations that they will need to fulfill by identifying Canadian suppliers to partner with. 
 
In some instances, a company that may be a tier 1 or eligible party on one contract could be a prime contractor on another, depending on what they are supplying to the procurement program. 
 
Examples of eligible parties/tier 1 suppliers include: Wartsila, MAN Diesel, L-3 Communications, and Pratt and Whitney. 
 
Suppliers
Suppliers make up the majority of Canada's industrial base. These are the companies that are the recipients of offset transactions from primes and eligible parties. 
 
Often, Canadian suppliers are small to medium enterprises (SMEs). Prime contractors and eligible parties or tier 1s have an obligation to award contracts to Canadian SMEs and include them within their Value Proposition under the ITB policy (read more here). Canada's offset policy is an opportunity for these companies to win business as a result of defence procurement. 
 
Academic Institutions 
Academic Institutions can also be the recipients of offset transactions from a prime contractor or eligible party. Under Canada's ITB policy, primes and eligible parties are incentivized to include Canadian innovations and R&D efforts within their Value Proposition to maximize their rated points
 
Academic institutions can be included on consortium R&D transactions, along with the prime or eligible party and a Canadian SME. Thus, academic institutions can also play a large role in leveraging offsets. 
 
Consultants 
Consultants help prime contractors and eligible parties with their offset strategy. Due to their knowledge of the Canadian industrial base, they can also help primes and eligible parties identify the Canadian companies that will best fill the gaps in their supply chain and maximize their offset points. 
 
Government Departments and Agencies 
Various government agencies exist that can help primes and eligible parties identify Canadian suppliers and fulfill their regional obligations. These agencies can help the prime or eligible party engage Canadian industry. 
 
Some examples of government departments that are heavily involved in helping primes and eligible parties identify Canadian suppliers are the regional development agencies: Western Economic Diversification, Atlantic Canada Opportunities Agency, FedDev Ontario, FedNor, and Canada Economic Development for the Regions of Quebec. 
 
Our goal has been to make OMX the go to ecosystem for all of these players to streamline the fulfillment of offset obligations in Canada and around the world. All of these players are able to use OMX as a tool that makes their job easier. 

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