NyRAD

By: Stephanie Batstone, Managing Partner, NyRad

May 19, 2026

In Part 3 of this series, we discussed the importance of implementation and the need for the ITB Authority to operate in a way that supports the broader objectives of Canada’s Defence Industrial Strategy (DIS). The central argument was that Canada does not need to choose between strong oversight and strategic economic development. It needs an ITB framework that can deliver both.

That discussion naturally leads to another important issue: operational reform.

As Canada increases defence spending and looks to build sovereign industrial capability, the operational administration of the ITB Policy will matter just as much as the policy changes themselves. Today, many parts of the system are too slow, too resource-intensive, and too focused on compliance over outcomes. If these operational challenges are not addressed, they risk undermining many of the objectives set out in the DIS.

Timelines and Service Standards

One of the biggest concerns in the current ITB framework is the time required to approve transactions and make administrative decisions.

In many cases, companies wait months, and sometimes years, for transaction approvals. Unsurprisingly, during that time, investment opportunities are lost. Small and medium-sized businesses (SMBs), in particular, cannot put business growth or hiring plans on hold indefinitely while waiting for government decisions.

The problem is not a lack of industry interest. Companies are willing to invest in Canada’s defence industrial base. The issue is that the system often moves too slowly to support real-world business timelines.

In many situations, it takes less time for a company to internally approve spending millions of dollars than it takes for the Government of Canada to approve the transaction under the ITB Policy.

The current service standard of six months for approvals is far too long for a modern defence and technology environment. Canada is competing globally for investment, innovation, and production capability. In this context, six months is enough time for an opportunity to disappear entirely.

Other offset jurisdictions understand this reality. In some countries, when an offset authority apologizes for a delay in the approval process, they are referring to approvals taking 2 weeks rather than less. Transaction approvals and rejections are generally turned around very quickly because those authorities recognize that when industry is prepared to make strategic investments, governments need to respond at the speed of business. Delays are treated as a problem to solve, not simply part of the process. Canada should adopt the same mindset. Transaction approvals should generally take no more than one month.

There is also growing concern about the lack of transparency around service standards themselves. The Auditor General previously criticized the ITB program for weaknesses in performance tracking and administration, yet industry has seen little evidence that timelines are improving. In practice, our experience is that approval timelines have become longer, not shorter.

While staffing pressures are often cited as part of the problem, operational inefficiencies also play a major role. Many offset jurisdictions around the world can manage their offset policies with a fraction of Canada’s staffing levels. They are successful because they empower officials to make timely, objectives-based decisions and use administrative processes that maintain compliance without becoming unnecessarily resource-heavy. The issue is not only the number of people involved. It is how resources are being used and whether the system is designed to support efficient decision-making. Canada would benefit from looking more closely at offset jurisdictions that are already delivering faster, more efficient, and more strategic outcomes through leaner and more commercially responsive administrative models.

Operational Efficiencies – Verification as an Example

Verification is one area where significant operational improvements could be made.

Under the current system, companies submit detailed annual reports outlining ITB activities and credit claims for the year prior. These reports are time-consuming and resource-intensive for industry to prepare. Yet after submission, approvals for credits often take much longer than the six-month service standard. In some cases, companies are preparing the next year’s annual report before credits from the previous year have even been approved.

This is not an isolated issue. It is happening regularly across the system.

At the same time, the verification process itself has become increasingly inconsistent. Some ITB managers appear to be conducting reviews that resemble full financial audits, even though they may not have formal audit training or certification. Different programs are managed differently, and companies are often unclear about what standards are actually being applied.

The “risk-based approach” used to determine which claims receive deeper verification also lacks transparency.

In principle, focusing on higher-risk activities makes sense. However, in practice, industry is seeing low-risk transactions repeatedly selected for extensive reviews and onsite verifications, even after years of successful compliance.

For example, there are cases where direct transactions that have already passed verification continue to be reviewed every year. In another case, government officials travelled for nearly a full working week to conduct an on-site verification of a company that had never had a claim disallowed after 10+ years of ITB reporting on that contract.

These activities consume significant resources on both the government and industry sides without clearly improving accountability or reducing risk.

There are more efficient ways to manage verification while still maintaining strong oversight.

One option would be to use written attestations from Canadian recipient companies confirming that the reported activity occurred and that the claim is accurate. NyRad has managed this process in other offset jurisdictions, and our experience was that any discrepancies between the amount claimed by the obligor and the recipient company were resolved before the Annual Report was ever submitted. This made the work of the offset authority relatively simple and efficient, with credits often awarded within a week of filing the Annual Report. Other offset jurisdictions already use this approach successfully because it reduces administrative burden while still maintaining accountability.

Canada should also significantly reduce the use of on-site verifications except in genuinely high-risk situations. Repeated on-site reviews of long-standing, low-risk companies are difficult to justify when approval backlogs already exist elsewhere in the system.

At the same time, ITB officers should receive more standardized training, and clear verification processes should be published publicly on the ISED website so that industry understands how claims are assessed and what standards are being applied.

Reducing verification inefficiencies would free up resources to support faster transaction approvals and more timely decision-making.

Conclusion

Operational reform may not receive as much attention as policy reform, but it is critical to the success of Canada’s Defence Industrial Strategy.

The DIS emphasizes faster procurement, stronger industry partnerships, greater support for innovation, and the growth of Canadian sovereign capability. None of those objectives can be fully achieved if companies face years of uncertainty waiting for approvals or verification decisions.

Canada does not need a less rigorous ITB system. It needs a more effective one.

A modernized ITB framework should maintain accountability while operating in a way that is commercially realistic, transparent, and responsive. Faster approvals, clearer processes, and more efficient verification practices would not weaken oversight. They would strengthen the ability of the ITB Policy to deliver the strategic industrial outcomes Canada is trying to achieve.

If Canada wants industry to invest quickly, government must be prepared to move quickly too.