Program Highlights 2012–2013

7. 2012–2013 Highlights

New Agreements

GasTOPS Ltd.

The government announced a $1.276 million repayable contribution to GasTOPS Ltd on . This Ottawa-based company is developing a method to measure metallic contaminants in jet engine oil to be used on the Joint Strike Fighter program. The project will enable aircraft personnel to measure contaminants more quickly than before and do this measurement on-site rather than in a lab or another location.

The full press release can be found at http://news.gc.ca/web/article-eng.do?nid=704409.

NGRAIN (Canada) Corporation

The government announced a $9.5 million repayable contribution to NGRAIN (Canada) Corporation on . This funding will support the Vancouver-based company's research and development in advanced 3D technologies that provide training and performance support on complex equipment to aerospace and defence personnel. This new software will be used to guide workers through repair jobs, even in the field, and will help reduce equipment maintenance time. The technology developed could be adapted for use in other fields, such as automotive production, civil aviation, nuclear power, oil and gas, and medicine.

The full press release can be found at http://news.gc.ca/web/article-eng.do?nid=753149

Engineering Services Inc.

The government announced a repayable contribution of $778,800 on to Engineering Services Inc. (ESI). The Toronto-based company will perform research and development to create a next-generation mobile robotics platform capable of carrying out such tasks as reconnaissance in law enforcement, defence and other security sectors. This project is expected to expand the use of robotics and automation in other Canadian companies and among supply chain partners and will increase reliability in security-related work.

The full press release can be found at: http://news.gc.ca/web/article-eng.do?nid=719599

Héroux Devtek Inc.

The government announced a repayable contribution of $48.9 million to Quebec based Héroux-Devtek Inc on . The contribution will support a research and development project to reduce the company's environmental impact and develop new technologies. This contribution will help Héroux-Devtek develop a completely integrated aerospace landing gear system for both commercial and military aerospace markets. Research on the project will lead to new technologies that reduce or eliminate a number of environmentally harmful processes thus reducing greenhouse gas emissions and improving Héroux-Devtek's overall environmental footprint.

The full press release can be found at: http://news.gc.ca/web/article-eng.do?nid=729019

Norsat International Inc.

The government announced a repayable contribution of $13.3 million to British Columbia based Norsat International Inc on . Norsat is a major provider of broadband communications products for data transmission in remote and austere environments. The contribution will support a research and development project aimed at improving the company's existing line of satellite terminals, microwave components and radio frequency antennas and develop next generation satellite terminals and microwave components. This repayable contribution will allow Norsat to broaden its research capacity and maintain its leadership position in the industry while fostering collaboration with university researchers.

The full press release can be found at: http://news.gc.ca/web/article-eng.do?nid=729229.

Service Standards

ITO is committed to continual improvement with aggressive service standards. We consistently respond in a timely manner to incoming requests to assist applicants in understanding the program and submitting an application.

Our target is to process claims within 45 days, 90 percent of the time. In 2012–2013, we substantially met this target by processing 137 of 154 claims (89 percent) under the 45 day period. Of these claims 72 percent were processed in under 30 days.

 

While we strive to complete the processing of applications for under $10 million within six months, we do not compromise our due diligence and take the extra time when it is required to ensure appropriate oversight. Out of the five agreements approved in 2012–2013, three were under $10 million. Of these, one was approved under six months. The others required more time to complete the appropriate oversight.

In 2012–2013, ITO processed 90 percent of all amendments to existing contribution agreements within six months.

Table 4: ITO Service Standards
Service Standard 2010–2011 2011–2012 2012–2013
Application Assistance Response Time
  • Respond within one business day to requests for assistance with a project application
Target: 100%
100% 100% 100%
Claims Processing Time
  • Process completed claims and release the payment within 45 calendar days.
Target: 90%
93% 100% 89%
Application Processing Time
  • Complete the proposal review and provide a funding decision within 6 months of receiving a completed application for applications requesting less than $10 million.
Target: 100%
1 out of 3 projects was approved in 6 months 1 out of 1 project approved in 6 months 1 out of 3 projects was approved in 6 months
Amendment Processing Time
  • Process an amendment and provide an approved amended agreement within 6 months.
Target: 90%
n/a n/a 90%

Service standards results are published annually on ITO's website.

Recipient Audits

In 2012–2013, ITO performed a total of 13 SADI and TPC project audits: three cost audits, seven revenue audits and three lobbyist audits. Projects were selected for audit based on risk and materiality. The projects audited are part of a multi-year audit plan which identifies audits planned for the period ending 2016-17. Recipients were found to be in compliance with the conditions of the contribution agreements and where audit issues were found all were resolved satisfactorily.

 

SADI Evaluation

In 2011-2012, the department conducted an evaluation of SADI to assess the program's relevance and performance. The evaluation concluded that SADI addresses a demonstrable need for R&D support to the aerospace and defence sector, is aligned with the priorities of the department, and is consistent with the overall federal responsibility to increase competitiveness. The evaluation recommended that the program further streamline the application process; improve client uptake, particularly among small and medium sized enterprises; and further enhance collaboration.

ITO developed a new application form, which it continues to improve to make information requirements more transparent and reduce the application processing time for potential recipients. Further effort has been made to process applications efficiently without compromising the required due diligence. ITO also embarked on a renewed outreach effort to raise awareness of the program, particularly among small and medium sized enterprises. In addition, collaboration commitments are now systematically included in contribution agreements as contractual requirements.

Auditor General Report

In 2012, the Auditor General completed a review of Industry Canada's aerospace programs which included SADI. The Auditor General concluded that Industry Canada is managing its aerospace programs in a sound manner, detailed due diligence is completed before signing contribution agreements, new projects meet eligibility criteria, claims are carefully reviewed before issuing payments, appropriate steps are taken to obtain repayments, and sufficient information is collected to determine progress against objectives.

The Auditor General's report also made recommendations in areas where the department can improve. In response to these recommendations, ITO revised its claims standard to apply it to a broader base of claims, is publishing more information on program results and accomplishments on its website, notably through annual Program Highlights reports, and implemented the other administrative improvements as proposed.

The ITO website has been overhauled to provide easy reference to program descriptions and application forms. Companies are now more able to quickly determine whether ITO programs are relevant to them, understand the assessment and approval process, and download application forms.

Aerospace Review: Beyond the Horizon: Canada's Interests and Future in Aerospace

In 2011, the government launched a review of the aerospace and space sector. On , David Emerson, head of the review, publicly released his reports, Beyond the Horizon: Canada's Interests and Future in Aerospace and Reaching Higher: Canada's Interests and Future in Space. These reports made recommendations to government to improve the long-term competitiveness of the sector.

Reflecting extensive consultation with industry, the report concluded that SADI is an essential tool in the government's tool box for helping companies finance R&D in Canada at levels they would not otherwise be able to justify given other demands on their resources. In the case of multinational companies, the report noted that SADI encourages R&D to be performed in Canada when it might otherwise be undertaken elsewhere.

The report recommended that the government maintain SADI funding at current levels and that modifications be made to improve the effectiveness of the program.

In response to the review, Economic Action Plan 2013 announced stable funding of almost $1 billion for SADI over the next five years and that a review of the SADI program would be undertaken to improve its effectiveness.

To enhance the incentive for the private sector to invest in R&D and reduce administrative burden, the program now supports 40 percent of eligible costs and supports indirect costs at a rate of 75 percent of direct labour. In addition, the program ensures that Canada captures the benefits of longer term production related activity and supports the international exploitation of intellectual property to enhance the competitiveness of Canadian-based companies. Repayments have also been delayed by one additional year to better align with the period of revenue generation potentially strengthening repayments of government contributions. A shorter four-month service standard for processing new applications for firms with under 100 employees seeking less than $2 million will better respond to the needs of small businesses.

The aerospace review also recommended the creation of a program to support, on a non-repayable basis, large-scale aerospace technology demonstration projects conducted by groups of collaborators.

Technology Demonstration Program (TDP)

Economic Action Plan 2013 announced the government's intention to create the Technology Demonstration Program with funding of $110 million over four years (2014-2018), and $55 million thereafter. On , the Minister of Industry launched the TDP fulfilling a key recommendation of the Aerospace Review.

In keeping with the Emerson report recommendation, the program will support large-scale technology demonstration projects conducted by groups of collaborators. It will leverage other investment of sufficient scale to accelerate innovation in the aerospace, defence, space and security sectors. Projects funded through this program are expected to be the basis for the next-generation of manufacturing and services in Canada and bring long-term benefits to Canada.

Demonstration activities involve moving new technologies out of the laboratory in order to test them to ensure that they fulfill their intended use in a safe and efficient manner. This is a critical phase in the pre-commercial development of technologies for new aerospace and defence products. Companies often find it difficult to finance this step in the technology development process, limiting the speed and scale with which innovation is advanced.

The program will align the research agendas of industry and academics, giving students relevant study/work experience and accelerating the diffusion of knowledge. The program will also accelerate technology development and save costs because project members will have the opportunity to prove their technologies simultaneously and share resources. Canadian industry leaders and their supply chain will be better positioned to compete against companies receiving similar assistance in other countries to form powerful R&D supply chains.

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