Just to make this as simple and straightforward as possible...

To earn IPs, all you need to do is have a competition involving 2 or more Squadrons, where the activity and overall rankings of the Squadrons are kept. In order to be eligible for the IPs, you need to have 33% activity in all events... ie, 9 submissions for 3 events. If your team has those participation, and the others do not, your team is eligible, while theres is not.

IPs cannot be used to modify craft that are given to you, or any craft that you have won in competitions. They can be used to modify fighters you have created however. For IPs to be given, the SHW and/or his staff must have been notified in advance, and the competition must have been approved by the Chancellor.