Evaluation of the Strategic Aerospace and Defence Initiative

Final Report

January 2012

Recommended for approval to the Deputy Minister by the Departmental Evaluation Committee on January 25, 2012

Approved by the Deputy Minister on February 7, 2012

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Appendices (Separate document)
Appendices are available via an Access to Information

Appendix	Title
Appendix A	Definitions of Industrial Research and Pre-Competitive Development
Appendix B	Definition of Collaboration
Appendix C	The SADI Evaluation Matrix
Appendix D	Interview Participants and Interview Guides
Appendix E	The Focus Group of Defence SMEs
Appendix F	The Survey of A&D Non-Recipients
Appendix G	Collaboration Activities

Acronyms, Abbreviations and Definitions used in this Report

Acronym	Meaning
A&D	Aerospace and Defence
ADMB	Aerospace Defence and Marine Branch
AEB	Audit and Evaluation Branch
AEE	Augmented Engineering Environment
AMIS	Advanced Manufacturing and Investment Strategy
BERD	Business Expenditures on Research and Development
DDSA	Defence Development Sharing Agreement
DIRP	Defence Industrial Research Program
IRAP	Industrial Research Assistance Program
ITO	Industrial Technologies Office
JSF	Joint Strike Fighter
OEM	Original Equipment Manufacturers
PSIP	The Program for Strategic Industrial Projects
R&D	Research and Development
SADI	Strategic Aerospace and Defence Initiative
SME	Small and Medium-Sized Enterprise
SR&ED	Scientific Research and Experimental Development
S&T	Science and Technology
TPC	Technology Partnerships Canada
WTO	World Trade Organization

List of Tables

Table	Title
Table 1	Program Resources by Fiscal Year
Table 2	SADI Projects by Recipient
Table 3	Key Excerpts from Speeches from the Throne and Budgets
Table 4	SADI Operating Expenses as a Percentage of Total Program Expenses

List of Figures

Figure	Title
Figure 1	SADI Logic Model

Executive Summary

Program Overview

The Strategic Aerospace and Defence Initiative (SADI) provides repayable contributions for industrial research and pre-competitive development to aerospace, defence, space and industrial security (A&D) firms. The objectives of the program are to encourage strategic research and development that will result in innovation and excellence in new products and services; enhance the competitiveness of Canadian A&D companies; and foster collaboration between post-secondary institutions and the private sector. Since April 2007, the program has approved over $824 million in repayable contributions to 22 recipients for 24 projects.

SADI is managed and delivered by the Industrial Technologies Office (ITO) which is housed in Industry Canada's Science and Innovation Sector.

The 2011 Budget announced the launch of a comprehensive review of all policies and programs related to the aerospace/space industry. During this 12-18 month consultative review, the Government of Canada committed to ensuring that stable funding is provided to SADI.

Evaluation Purpose and Methodology

In accordance with the Policy on Evaluation and the Directive on the Evaluation Function, the purpose of this evaluation was to assess the core issues of relevance and performance of SADI.

The evaluation findings and conclusions are based on the analysis of multiple lines of evidence. The methodology included a review of documents, an environmental scan and literature review, interviews, case studies, a focus group of small and medium-sized enterprises (SMEs), and a survey.

Findings

Relevance

The evaluation found that SADI addresses a demonstrable need for research and development (R&D) financing for aerospace firms and for high-tech SMEs. Within the aerospace sector, R&D investments are considered high risk because of the long product development cycles. For high-tech SMEs, many firms are considered high risk from a financial perspective and lack viable funding options for their R&D projects.

To date, SADI has reached a relatively small proportion of the aerospace and defence sector. Part of the limited uptake can be attributed to the global economic recession. The business aircraft and general aviation subsectors were particularly hard hit. In addition, various elements of the program design were noted as some of the reasons why firms did not apply. For SMEs, limited awareness of the program was identified as a key factor.

Overall, SADI is aligned with the priorities of the federal government as outlined in Speeches from the Throne, Budgets, and the Science and Technology Strategy. SADI is also consistent with Industry Canada's strategic outcomes. In terms of alignment with the federal government's role and responsibilities, SADI is consistent with the overall federal responsibility of increasing competitiveness and encouraging the development of science and technology. Responsibility for economic development is shared with the provinces. In this context, SADI plays a complementary role with other programs because of its size and national scope.

Performance

In terms of its impact on R&D spending, some recipients increased their total R&D investments because of SADI. However, the most common benefit from SADI was its role in accelerating the timing of their R&D projects. In addition, some recipients reported that SADI repayable contributions allowed them to broaden the scope of their projects, take on riskier projects, and develop new areas of focus.

There has been a renewed focus within the program on fostering collaboration. Close to half of the recipients interviewed reported an increase in collaboration with post-secondary institutions that could be attributed to SADI. Most of these collaborations involved hiring more students, but there were also some research collaborations.

SADI's intermediate outcomes include the development and commercialization of innovative products, processes and services. These outcomes are expected to begin occurring five years after the launch of each project. Given that the program was in its fourth year at the time of the evaluation, the full results will be clearer when SADI projects reach the repayment phase. Nevertheless, more than half of the recipients have already developed products, processes and services, and some are beginning to reach the point of commercialization.

Overall, there were no significant unintended negative impacts or outcomes identified for SADI recipients. However, individual recipients experienced positive benefits from their SADI projects that they had not anticipated. These benefits included new areas of growth, cultural changes, and enhanced reputations as leaders in the marketplace.

In terms of the efficiency of the program, the evaluation determined that while SADI is largely meeting its service standard for most applications, the end-to-end application process itself was perceived as onerous and lengthy by A&D firms. The overall efficiency of ITO in delivering the program improved consistently year over year.

Recommendations

1. ITO should consider identifying additional ways to streamline the end-to-end application process;
2. ITO should consider examining whether changes in program design are required to improve uptake, particularly to attract SMEs and enhance collaboration; and
3. ITO should consider building greater awareness of the program, especially among SMEs.