Frequently Asked Questions

General Information

What will this initiative do?

The Strategic Aerospace and Defence Initiative provides repayable support for strategic industrial research and pre-competitive development projects in the aerospace, defence, space and security industries. Strategic projects are those that focus on next generation products/services, build on Canadian strengths, enable Canadian companies to participate in major platforms, and assist in meeting Canada's international obligations (e.g. the Joint Strike Fighter).

What are the objectives of this initiative?

The objectives are to accelerate innovation by A&D companies and foster collaboration between research institutes, universities, colleges, and the private sector.

Why do we need this initiative?

The aerospace, defence, space and security industries are the third largest investor in R&D in Canada, accounting for 11 percent of all Canadian industrial R&D.

A&D projects are characterized by being high-risk, with high development costs, long development lead times and long payback periods. These factors, combined with the cyclical nature of the industry, make it difficult for the private sector to entirely fund an R&D project.

Repayable government support ensures that A&D firms undertake R&D in Canada and that the country reaps the benefits of these investments. Supporting R&D in the industry also enables Canada to attract leading global A&D firms and world-leading scientific and engineering talent in high-technology industries.

What is strategic R&D?

Strategic R&D refers to technology projects that:

  • Support the development of next generation A&D related products;
  • Build on Canadian strengths in technology development (e.g. landing gear, simulators, gas turbine engines, regional aircraft);
  • Enable Canadian companies to participate in major platforms and supply chains; and
  • Assist the sector in achieving Canada's international obligations (e.g., the Joint Strike Fighter program).

How does this initiative foster collaboration between research institutes, universities and colleges, and the private sector?

Applications are assessed using a number of criteria to determine their suitability. One of the criteria is whether or not the project will be undertaken in collaboration with universities, colleges or research institutes belonging to post-secondary institutions.

Canadian A&D companies invest in universities through partnership R&D projects, and it is vital that this type of collaboration continue. Encouraging collaborative R&D relationships helps to advance technology transfer, spin-offs and innovation, in addition to contributing to a skilled workforce and opportunities for on-the-job training.

How will this initiative benefit Canadians?

Canadians will benefit from the economic spin-offs and technologies developed under this initiative. Investment in R&D by the A&D industries promotes technology development within diverse sectors of the Canadian economy, including electronics, nanotechnology and information technology. Past spin-offs from A&D technologies have resulted in applications in the medical field, electronics, and the automotive sector.

In addition, this initiative promotes collaboration between the industry, universities and colleges and research institutions belonging to post-secondary institutions, fostering technology transfer and the development of a highly skilled workforce.

How can I obtain more information?

For more information please contact us.

Eligible Applicants

Who is eligible to apply for funding?

Eligible applicants are A&D companies incorporated in Canada with eligible projects being undertaken in Canada.

The initiative funds projects from across the country and funding decisions are based on a set of clear, predetermined assessment criteria covering areas such as innovation and benefits.

In what research and development aspects of the security industry will SADI invest?

Due to the diverse nature of the security industry, potential applicants should contact ITO to discuss their project ideas with an investment officer.

Can research consortiums receive funding?

To be eligible for SADI funding, applicants must be legally incorporated in Canada, and must intend to exploit the intellectual property developed in a market.

Normally, research consortiums are not eligible to be a principle applicant for SADI funding, but they may be part of a collaborative arrangement.

Potential applicants should contact ITO to discuss their eligibility and project ideas with an investment officer.

Are small and medium-sized companies eligible for funding?

All Canadian companies undertaking R&D in the aerospace, defence, space and security industries are eligible to apply for funding through SADI. The size of a company is not evaluated as part of the eligibility criteria when an applicant is considered for funding.

Are there minimum/maximum dollar levels necessary to qualify?

There is no minimum level of funding, nor a maximum limit on how much a company can apply to receive through SADI. Typically, SADI contributes 30 percent of a project's eligible costs. A company may be asked to lower its request depending on availability of funds.

Can two or more companies enter into a collaborative arrangement for a project?

ITO is open to various types of collaborative arrangements. Collaboration involving universities, colleges or research institutes belonging to post-secondary institutions is most common.

If companies would like to enter into a collaborative arrangement for the purposes of an R&D project, there are several ways they can apply for funding through SADI:

  • As co-signatories on the same contribution agreement;
  • By identifying one lead company amongst the group who will be the principle applicant and the sole signatory on the contribution agreement.

As collaborative arrangements have an impact on various responsibilities, including those related to intellectual property and repayments, a company is encouraged to consult with its legal counsel before entering into any type of collaborative arrangement.

Application Process

How does a company apply for funding?

For information on submitting an application for funding, please visit the Information for Applicants section of the website.

Are proposals only accepted at certain times of the year?

Applications can be submitted throughout the year. Complete proposals are considered in the order in which they are received.

Are investment officers available for consultation during the proposal writing stage?

Companies interesting in submitting applications for funding are strongly encouraged to consult with an investment officer at the beginning of the proposal preparation process. To have an officer assigned to its file, a company should contact ITO.

Does ITO have regional investment officers to work with SADI applicants?

ITO does not have investment officers based in the regions, but investment officers in the National Capital Region are available to work with applicants by telephone. If they have not already been assigned an investment officer, applicants are strongly encouraged to contact ITO.

How are project proposals assessed?

Proposals are assessed using the following set of predetermined criteria.

Company capability to achieve the stated objectives
Proposals will be assessed against and must satisfy all of the following criteria:

  • Financial resources;
  • Management expertise;
  • A business plan to achieve benefits; and
  • Technical team's experience and expertise to conduct the research and development.

Technology benefits
Proposals will be assessed against and must satisfy at least one of the following criteria:

  • Degree of strategic technology innovation or excellence; and
  • Feasibility of strategic R&D leading to product or service applications.

Social and economic benefits
Proposals will be assessed against and must satisfy at least two of the following criteria:

  • Commercialization feasibility and benefits;
  • Technology spill-over and diffusion; and
  • Collaborative partnerships (e.g., with post-secondary institutions or research institutes belonging to post-secondary institutions).

A complete outline of the assessment process can be found in the Application Process Description.

What are the approval stages and how long does the entire approval process take?

ITO is targeting the application process to take 24 weeks from the day a complete application is submitted to the day it is approved. Applications that are not complete will be sent back to the company with an explanation about what type of information is missing.

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

Funding

Will this initiative fund entire projects undertaken by A&D companies?

Typically, SADI contributes 30 percent of a project's eligible costs.

If a company receives funding, is it considered a loan?

Funding through SADI is in the form of conditionally repayable contributions, rather than loans.

Companies are required to make repayments on these contributions, which are best described as investments. SADI funding has two repayment options. The standard repayment plan, applied to the majority of cases, is conditional repayment. It is based on a royalty applied to the company's gross business revenues, or in some circumstances, those of a relevant business unit or division. The royalty is a percentage of these gross business revenues, determined by a standardized formula-based approach. Therefore, repayment amounts vary depending on actual gross business revenues.

In some circumstances, repayment plans may be structured for the second repayment option, which provides for unconditional repayment. In these cases, annual repayments depend upon the financial performance of the company over a fixed period with a lump sum owed at the end in the event that the maximum amount of repayment has not been reached.

In all cases, ITO works to ensure the interests of Canadian taxpayers are protected.

How does funding get disbursed to successful applicants?

Once applicants are successful in having their projects approved for funding, they become recipients. Recipients do not receive their funds in a lump sum, but rather must submit project claims for incurred eligible costs as work is completed. Progress reports, which detail both the project work completed and work in progress, must also be submitted along with documents that list the eligible costs being claimed.

Project claims undergo a rigorous verification process by ITO 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 these audits.

What are eligible costs?

Eligible costs relate to direct labour, material, and equipment expenditures. A complete listing of eligible costs is available on the "Who is Eligible?" page.

Can a company receive funding for its R&D project from other provincial and federal government sources as well as through SADI?

Receiving funding from different levels of government is known as stacking, and is subject to the Treasury Board Secretariat's Policy on Transfer Payments

For a recipient to receive funding through SADI, the level of assistance from all government sources (federal, provincial, territorial, municipal) shall not normally exceed 75 percent of a project's eligible costs.

How do SADI repayable contributions affect a company's tax credits through the government's Scientific Research and Experimental Development (SR&ED) program?

SR&ED is a federal tax incentive program, to which Canadian companies can apply for investment tax credits for certain research and development expenditures. For information about which project specific SADI costs may be eligible for SR&ED tax credits, visit the CRA SR&ED website or contact your local SR&ED office.