Information for Applicants

This section outlines the Strategic Aerospace and Defence Initiative (SADI) application process:

• Phase 1: Preparation and Submission of the Proposal
• Phase 2: Eligibility and Completeness Screening
• Phase 3: Due Diligence Review
• Phase 4: Project Approval
• Phase 5: Decision

Selection Process

• Who is eligible?
• Selection Process
• Successful Applicants
• Application Process Flowchart
• Service Standards

The Industrial Technologies Office (ITO) accepts proposals submitted to the Strategic Aerospace and Defence Initiative (SADI) at any time throughout the year. There are no submission deadlines, and ITO considers proposals in the order they are received. ITO sends a letter to the applicant confirming receipt of a proposal.

ITO has produced the Proposal Development Guide to help applicants ensure that they include all the necessary information to allow their application to be processed without delay. The Proposal Development Guide is a three-part document, described as follows:

• Part 1 — Statement of Work (SOW): The applicant must identify the main objective and major activities of the project and complete the SOW which will become a contractual obligation of the applicant.
• Part 2 — Application Form: The applicant must provide detailed information describing how the objective and major activities (as outlined in the Statement of Work) will be met and/or completed and include other information required to conduct due diligence;
• Part 3 — Certifications: The applicant must certify up-front that it is in compliance with government regulations and other requirements of SADI.

The guide contains all the information required to complete an application, including all of the required forms. Applicants are encouraged to fill out each part as they will, together, become their proposal.

ITO uses the information in the proposal to conduct its eligibility screening and completeness review, as well as to carry out its due diligence review.

Learn more about the next phase in SADI's application and approval process in Phase 2: Eligibility and Completeness Screening.

ITO officials screen each proposal they receive to ensure that the applicant and project meet the six eligibility requirements and that the proposal contains adequate information upon which to start a due diligence review.

The screening is based on the information in the proposal, so applicants must ensure that it clearly addresses all of the eligibility requirements. If these basic requirements are not met, ITO will not consider the proposal further.

ITO will inform applicants of the results of the screening. Those proposals that pass will proceed to the due diligence review. If the proposal does not pass, ITO can either reject the proposal or accept a resubmission which addresses areas of concern.

Applicants whose proposals are deemed eligible for a full due diligence review will receive a letter confirming the Eligible Costs date. Applicants may incur up to 20 percent of eligible project costs between the Eligible Costs date and the Contribution Agreement (CA) date. The eligible costs date is the date on which the proposal is deemed complete and ready for the in-depth due diligence review. The CA date is the date on which the CA between the applicant and the Minister of Industry is signed. Once the CA is signed, recipients may submit claims for eligible project costs in accordance with the terms of their CA. ITO will not reimburse applicants for any eligible costs should their proposal be rejected after the due diligence review or should the CA not be signed, for whatever reason.Once the proposal is reviewed, ITO informs the applicant whether or not the proposal meets the eligibility criteria. If the proposal is eligible, a letter is sent to the applicant indicating that the proposal will proceed to the next stage of review, the project assessment. If a proposal does not meet the eligibility criteria, ITO rejects the proposal.

Please read, Phase 3: Due Diligence Review.

The review comprises a series of meetings with company managers, a site visit, a review of additional supporting information and confidential discussions with external experts to ensure that financial assistance from SADI will result in the anticipated benefits to Canada.

The technical feasibility and capability of the applicant to accomplish the R&D project, as described in the application form, will be assessed by third-party technical reviewer(s). The applicant may provide the names and resumes of up to three technical reviewers for consideration by ITO. ITO reserves the right to select the technical experts who will perform the due diligence.

The purpose of the due diligence is to determine whether a project meets the following review criteria:

• Technological Feasibility
• Managerial Capability
• Collaboration with Academia
• Market Analysis
• Financial Information
• Benefits

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Technological Feasibility

The proposal must demonstrate that the project is technologically feasible, setting out a plan that shows a clear understanding of the activities, resources and management processes required to achieve each of the objectives in the SOW. The proposal must also outline technological risks and risk mitigation strategies.

Managerial Capability

The proposal must show that the applicant's management team has strengths in the core areas of project management, strategic planning, marketing and technology management, and financial planning and controls. In particular, ITO assesses the experience of key members of the management team and the company's plans to address any gaps in management capability.

Collaboration with Academia

One of the objectives of SADI is to increase collaboration with post-secondary institutions. As such, the applicant must have a plan to collaborate and agree to make this a contractual commitment.

Market Analysis

The proposal must demonstrate that the applicant has a marketing and distribution strategy in place to successfully exploit the technology in the marketplace.

Financial Information

The proposal must clearly demonstrate that the applicant has, or can reasonably be expected to obtain, the financial resources to complete the project and repay the Crown.

Benefits

The proposal must contain information that shows how the project will enhance the competitiveness of the firm and generate broader economic and social benefits for Canada.

ITO will inform an applicant about whether the project has satisfactorily completed due diligence and will proceed for project approval consideration, or provide feedback in the case of a project that is rejected. The applicant may choose to amend the proposal and resubmit it to ITO.

Please proceed to the final phase, Phase 4: Project Approval.

Project approval involves consideration of the results of the due diligence review by senior Industry Canada officials.

Final project approval rests with the Minister of Industry. When the funding request is for more than $10 million, approval of Treasury Board is also required. Cabinet and Treasury Board must both approve requests for more than $20 million.

Should a project approval be received, a SADI Contribution Agreement (CA) must be completed. This contribution agreement is then signed by the successful applicant (now known as the recipient) and the Crown. This legally binding contract outlines the obligations and responsibilities of both parties and the conditions under which payment will be made.

ITO will provide feedback in the case of a project that is rejected. The applicant may choose to amend the proposal and resubmit it to ITO.

This section has provided background information of a general nature on SADI's application and approval process. To obtain more details and to apply to SADI, consult the Proposal Development Guide.

The Industrial Technologies Office (ITO) and Industry Canada senior management review the recommendation from ITO officials as to whether or not to approve a project proposal submitted to the Strategic Aerospace and Defence Initiative (SADI).

The recommendation is then submitted to the Deputy Minister, the Minister of Industry, the President of the Treasury Board and/or Cabinet, depending on the amount of funding being requested.

If the project is approved, ITO will advise the applicant and send a contribution agreement to the applicant for signature.

Applicants with unsuccessful proposals will be notified by ITO and may be given the chance to reapply.

This section has provided background information of a general nature on SADI's application and approval process. To obtain more details on applying to SADI, consult the Information Booklet.

• Eligibility Requirements
• What are Eligible Costs?
• What are Non-Eligible Costs?
• Additional Information

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Eligibility Requirements

To be eligible for support from SADI, applicants and projects must meet six requirements, as follows:

1. The applicant must be a Canadian incorporated company that conducts research and development in the aerospace and defence industries, and creates opportunities for Canadians to contribute to a highly skilled and knowledge-based workforce.
2. The project must comprise either industrial research or pre-competitive development, as follows:
   1. Industrial research means planned research or critical investigation aimed at discovery of new knowledge, with the objective that such knowledge may be useful in developing new products, processes or services, or in bringing about a significant improvement to existing products, processes or services.
   2. Pre-competitive development means the translation of industrial research findings into a plan, blueprint or design for new, modified or improved products, processes or services whether intended for sale or use, including the creation of a first prototype. It may further include the conceptual formulation and design of products, processes or services and of initial demonstration or pilot projects.

      Pre-competitive development does not include:

      1. initial demonstration or pilot projects if these are used for industrial application or commercial exploitation; or
      2. routine or periodic alterations to existing products, production lines, manufacturing processes, services, and other on-going operations even though these alterations may represent improvements.
3. The project must include strategic research and development activities involving one or more technologies that do the following:
   1. support the development of next-generation aerospace and defence-related products and services;
   2. build on Canadian strengths in aerospace and defence technology development;
   3. enable Canadian companies to participate in major platforms and supply chains; and
   4. help Canada meet its international obligations.
4. The applicant must demonstrate that SADI support is essential to the location, scope and/or timing of the project.
5. The project must comprise research and development that takes place in Canada.
6. The project must involve collaboration with academia in Canada.

What are Eligible Costs?

• These are costs incurred by the recipient that are required to carry out the project.
• Costs may include labour, material, overhead, specialized equipment and other costs related to the project.
• SADI's repayable contributions may also cover eligible project costs incurred prior to the signing of contribution agreements with recipients. In such cases, these costs will not have been incurred prior to the date when the Industrial Technologies Office (ITO) received the project proposal, and they will not exceed a specific percentage of total project costs.
• SADI shall not reimburse eligible costs incurred by the recipient should the proposal be rejected.
• Through SADI, Industry Canada also supports projects under the Joint Strike Fighter (JSF) program and the Defence Development Sharing Agreement (DDSA). Applicants are to refer to the procedures set out in the Proposal Development Guide to apply for funding under JSF or DDSA programs.

What are Non-Eligible Costs?

SADI does not support costs such as those associated with land and buildings.

Additional Information

Companies that wish to obtain more detailed information about how to apply for repayable contributions through SADI should consult the Proposal Development Guide.

The process of application and approval of the Strategic Aerospace and Defence Initiative (SADI) project has five steps.

1. Preparation and Submission of the Proposal: Interested applicants submit a project proposal to the Industrial Technologies Office (ITO) for SADI repayable contributions, after self assessing for eligibility.
2. Eligibility and Completeness Screening: ITO officials screen each proposal they receive to ensure that the applicant and project meet the six eligibility requirements and that the proposal contains adequate information upon which to start a due diligence review.
3. Due Diligence Review: This review examines the feasibility of the project and the company's ability to deliver on the project's proposed technological, social and economic benefits.
4. Project Approval: The Deputy Minister, the Minister of Industry, Treasury Board and/or Cabinet decides whether or not to approve the project.
5. Decision

If a project is approved, applicants will be required to sign a contribution agreement. Approved projects will be subject to reporting requirements and monitored for compliance.

Discover how the process starts in Phase 1: Preparation and Submission of the Proposal.

If your project application has been approved, your company has passed its first milestone under the Strategic Aerospace and Defence Initiative (SADI). With such approval comes a number of responsibilities for successful applicants, and they are explained in detail here.

• Contribution agreement
• Claims
• Repayments
• Monitoring
• Audits

Contribution agreement

When a project application is approved by the Deputy Minister, Minister of Industry, Treasury Board and/or Cabinet, a detailed contribution agreement is prepared by the Industrial Technologies Office (ITO) in consultation with the recipient.

This contribution agreement is then signed by the successful applicant (now known as the recipient) and the Crown. This legally binding contract outlines the obligations and responsibilities of both parties and the conditions under which payment will be made.

Among other things, the contribution agreement contains provisions concerning:

• regulations regarding a recipient's use of lobbyists;
• anticipated milestones and timelines of a project;
• eligible project costs and the reimbursement of claims;
• the calculation of repayments and a recipient's obligation to repay;
• ITO's right to undertake audits to monitor SADI contributions; and
• the terms outlining what will take place in cases of default.

ITO will manage the contribution agreement and other administrative matters according to the authority authorized by the Minister.

Claims

Project claims are paid based on incurred eligible costs, as per the contribution agreement and must be submitted monthly or quarterly.

In addition, progress reports, which detail both the project work completed and work in progress, must be submitted along with documents that list the eligible costs being claimed.

Project claims must undergo a rigorous verification process to validate the eligibility and accuracy of claimed costs and cost breakdowns.

All projects are subject to being audited to ensure they are in compliance with the provisions outlined by the contribution agreement. Project claims are included in audits.

Repayments

Repayment plan options are limited because ITO takes a standardized formula-based approach to SADI repayments. ITO applies interest charges on overdue repayments.

Repayments, which are based on the gross business revenue of a company or the relevant company division, begin approximately one year after a project's R&D phase has been completed. On average, the repayment period will last 15 years.

Monitoring

ITO monitors a project's progress through detailed status reports submitted by the recipient on a regular basis.

Once a project has been completed, the recipient must submit annual reports on project benefits for the length of the repayment period, as well as financial information relevant to the calculation of repayments. This lets ITO:

• carry out post-contribution monitoring;
• manage the repayment of the contribution after the R&D phase ends; and
• evaluate the effectiveness of the contribution.

Audits

ITO ensures that projects contracted through its programs are monitored, in order to verify compliance with provisions of the contribution agreement.

This monitoring includes audits, a regular function of ITO. Audits may be performed by either government or external auditors. Audits verify various aspects of the obligations under the contribution agreement, including eligible costs claimed, project completion, sales reported and royalties paid.

Audits performed for ITO are consistent with the procedures for contribution audits in the Treasury Board publication, A Guide on the Audit of Federal Contributions.

The Project Portfolio section details R&D projects underway courtesy of SADI repayable contributions.

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