Frequently asked questions: Innovative Solutions Canada

From Innovation, Science and Economic Development Canada

General questions

What is Innovative Solutions Canada?

Innovative Solutions Canada is a new Government of Canada innovation procurement program designed to support Canadian small businesses.

The 20 participating federal departments and agencies will issue challenges through Innovative Solutions Canada. The challenges are designed to seek novel solutions and not commercially available products or services. The challenges issued by federal departments and agencies will be designed around desired outcomes rather than known products or process specifications.

Each participating department will allocate a minimum of one percent of their 2015-16 procurement and intramural research and development expenditures to support early-stage, pre-commercial research and development and late-stage prototypes from Canadian small businesses in response to challenges.

Which federal departments and agencies are participating?

Innovative Solutions Canada is a mandatory program for 20 federal government departments and agencies. The program will invest over $100 million by the end of Year 3 (March 2020) to support partnerships between government departments and Canadian innovators in the development of early stage, pre-commercial innovation with the ultimate goal of promoting the growth of Canada's small businesses.

The participating departments and agencies are:

  • Agriculture and Agri-Food Canada
  • Canada Border Services Agency
  • Canadian Food Inspection Agency
  • Canadian Space Agency
  • Correctional Service Canada
  • Employment and Social Development Canada
  • Environment & Climate Change Canada
  • Fisheries & Oceans Canada
  • Global Affairs Canada
  • Health Canada 
  • Indigenous and Northern Affairs Canada
  • Innovation, Science and Economic Development Canada
  • National Defence and the Canadian Armed Forces
  • National Research Council Canada
  • Natural Resources Canada
  • Public Health Agency of Canada
  • Public Service and Procurement Canada
  • Royal Canadian Mounted Police
  • Shared Services Canada
  • Transport Canada
What is the breakdown of the annual $100 million into the program?

The program will see the above 20 federal departments and agencies set aside one percent of existing procurement and intramural research and development expenditures towards early-stage, pre-commercial research and development and late-stage prototypes from Canadian innovators and entrepreneurs. Each department's contribution will combine to reach over $100 million annually.

What are the financial instruments?

The financial instruments being used are either contracts or grants, which will be established between the participating federal department or agency and the small business for the performance of research, experimental, or developmental work.

What is the difference between Innovative Solutions Canada and regular government procurement and transfer payments?

Innovative Solutions Canada is a different way of doing business; it seeks novel technologies, products and process solutions from small businesses and works with the business to support research and development. It is a challenge-based program seeking solutions, instead of seeking a specific pre-existing technology or product.

Will I receive feedback on my application?

Yes, all Applicants will be provided limited feedback.

Who will oversee this program?

Innovative Solutions Canada is administered by Innovation, Science and Economic Development Canada. Day-to-day administration of the program is performed by the Innovative Solutions Canada Secretariat. Participating departments will partner with the Secretariat to develop challenges and evaluate incoming applications.

Eligibility questions

Who is eligible to apply?

Please refer to the eligiblity requirements.

Should the employee count include the employees of affiliated businesses?

Yes, the employee count must include full time equivalent employees in all affiliated businesses (within Canada or outside of Canada).

What is considered an "affiliate" relationship?

Under the Innovative Solutions Canada program, an "affiliate" relationship exists in the following situations:

  • An affiliate is a corporation that is a subsidiary of another corporation
  • If a corporation has two subsidiary corporations, the two subsidiaries are affiliates of each other; or
  • If two corporations are controlled by the same individual or business, the two corporations are also affiliates of each other.

For greater clarity, the business applying in response to a challenge must include the full-time employees of its parent company (if it has one) as part of its calculation of total full-time employees that includes affiliates located within and outside of Canada.

Who determines if my business is eligible?

Applicants or bidders must self-certify at the time of application or bid submission that their company is a small business as defined by the Innovative Solutions Canada program.  Applicants and bidders should be certain of their compliance with the eligibility requirements before formally certifying as an eligible small business. The Innovative Solutions Canada Secretariat reserves the right to seek additional information, clarification or to pursue deeper inquiries into an applicant's eligibility.

Why is Innovative Solutions Canada limited to incorporated businesses?

Incorporated businesses have certain advantages over sole proprietorships and partnerships when it comes to performing research and development and the ability to scale up quickly.

First, incorporated businesses have the advantage of continuance. Unlike a sole proprietorship, a corporation has an unlimited life span; the corporation will continue to exist even if the shareholders leave the business, or if the ownership of the business changes. This is important as the life cycle of Innovative Solutions Canada projects could last up to 2.5 years if a business performs research and development in Phases 1 and 2.

Second, incorporated businesses have the ability to scale up more quickly as a result of being able to raise money through equity financing. While corporations can borrow and incur debt like any sole proprietorship or partnerships, they can also raise money by equity financing, which involves selling shares in the corporation to angel investors or venture capitalists. Evaluations of the US Small Business Innovation Research program indicate that businesses that pass through Phases 1 and 2 attract more venture capital investment which enables faster scale up and expansion.

Innovative Solutions Canada's limitation to incorporated businesses is aligned with other business innovation program.

Why should a small business participate in Innovative Solutions Canada?

If you have a desire to push the envelope of your businesses research and development and in the process develop a viable product for the marketplace, this program is for you.

By applying for and winning an Innovative Solutions Canada grant or contract, you will receive funding to conduct research and development, retain the rights to the intellectual property and have the opportunity to make a first sale to the Government of Canada.

This program is about helping Canadian small businesses grow to scale.

The benefits of Innovative Solutions Canada is that you do not give up equity in your company, you do not give up rights to the intellectual property, and you do not return the funding – this is not a loan or a repayable contribution.

What is expected is truly novel research that will lead to a commercial product that benefits Canada. Getting into the program sends a powerful signal to potential investors and customers. It says your innovation has the potential to address a pressing need expressed by the Government of Canada.

Will Innovative Solutions Canada be open to groups or individuals other than for-profit, small businesses?

The program is specifically designed for Canadian small businesses with 499 or fewer employees. Small businesses may partner with individuals or other organizations (e.g., universities, colleges, research organizations, other businesses, etc.) to develop solutions. These partners would effectively be sub-contractors for the eligible small business.

Under Phase 1, the applicant small business must perform at least two-thirds (2/3) of the research and development. The remainder can be sub-contracted to partner organizations.

Under Phase 2, the applicant small business must perform at least half (1/2) of the research and development with the remainder being sub-contracted to another organization.

I don't have a business, can I still apply?

To apply, Applicants must have a privately-held business either federally or provincially incorporated. Innovators that wish to apply for the challenges but do not have a small business, are encouraged to learn more about how to start a business

Can non-Canadian companies apply to the program?

In order to apply, companies not headquartered in Canada must at least be physically located in Canada with research and development activities in Canada. They must also meet all of the eligibility requirements.

Is this program exclusively for small businesses?

Yes. Please refer to the eligibility requirements.

Can an eligible business use as a sub-contractor, or otherwise partner with, another company, researcher, academic or some other organization to respond to a challenge?

Answer: Only applicants/bidders that are eligible businesses can respond to a challenge. However, applicants/bidders are allowed to use sub-contractors to perform the anticipated work in Phases 1 and 2. Sub-contractor(s) may be academic, industrial or not-for-profit. Applicants/Bidders must perform at least two-thirds (2/3) of the research and development (R&D) work in Phase 1 and a half (1/2) of the work for Phase 2. The remaining R&D can be sub-contracted to other organizations or individuals.

Funding questions

What is the federal commitment to Innovative Solutions Canada?

The federal commitment to Innovative Solutions Canada is over $100 million by the end of Year 3 (March 2020). The funding supports partnerships between government departments and Canadian innovators in the development of early stage, pre-commercial innovation with the ultimate goal of promoting the growth of Canada's small businesses.

How much am I eligible to receive?

In Phase 1, successful Applicants can receive up to $150,000 for up to 6 months through grants and contracts to develop the proof of concept of a solution in response to a challenge. The Department of National Defence is the only department which may exceed this amount of funding to develop a proof of concept.

In Phase 2, up to $1 million for up to 2 years can be made available to the small businesses that have been assessed to have successfully passed through Phase 1. The Department of National Defence is the only department which may exceed this amount of funding to develop a prototype.

In Phase 3, a federal department may opt to procure the solution developed from Phase 2. Resources in this phase are separate than those provided in Phases 1 and 2.

Who owns the Intellectual Property (IP) rights for an innovation developed under Innovative Solutions Canada?

The default position of Canada is to allow small businesses to retain the IP rights of innovations developed under Innovative Solutions Canada. Under a grant-based challenge, the small business applicant retains the IP rights to the solution. Under a contract-based challenge and on an exceptional basis, the IP rights could be negotiated with potential bidders.

Regardless of whether an Innovative Solutions Canada challenge is supported by a grant or a contract, each business responding to must certify that it owns, or has the rights to, the required background IP required to develop a proposed solution.

Under a contract-based challenge, the Government of Canada will own the components and/or prototype.

Will a company that participates in Phases 1 and 2 be guaranteed a government procurement contract in Phase 3 for its innovative product or service?

No, the program does not guarantee any procurement contracts.

Application questions

Is the application form the same for grants and contracts?

No. The Application/Bid Submission form for grants and contracts have several different fields. It is therefore important to ensure that you access the Application/Bid Submission form through the "Propose a solution" button on the specific challenge page of the ISC website, for which you are submitting a proposal. Once you have downloaded the form, ensure to select the Challenge ID from the drop-down menu of open challenges in Section #4 that corresponds to the challenge you wish to respond to. See image below.

Image of the Challenge ID drop-down menu in "Section 4 — Challenge Application Questions".
Can a small business skip Phase 1 and move right to Phase 2?

No, small businesses cannot enter at Phase 2. They must first enter at Phase 1. The gated and phased design of Innovative Solutions Canada helps departments manage technology risks associated with early stage research and development.

When are applications for challenges due?

Each challenge has a specific application deadline. Applications are due by the deadline stated with each challenge and on the Challenge Notice.

How will applications from small businesses be assessed?

In partnership with Innovative Solutions Canada Secretariat, the National Research Council's Industrial Research Assistance Program will perform an assessment of all proposals to help inform departments in their decision making process at the start and conclusion of Phases 1 and 2.

How do I apply for a challenge?

From the website, within the challenge page, use the button for "Propose a Solution".

Where can I find descriptions on allowable project costs?

Project cost descriptions can be found in the application guide.

How do I download an application form?

The Challenge Application Form is available in English and French.

How do I upload a completed application form?

At the end of the form, click the button "Ready to Submit". This will check to ensure all fields are completed appropriately, save the file to your local drive, and send you to the page to upload the file. Within that page, click on the Browse button, select your form from where you saved it, and click "Upload and submit application".

How do I login?

Enter your user ID and password for GCKey or your "Sign-in Partner".

How do I get a GC Key?

Consult the GC Key Frequently Asked Questions (FAQs).

What is a Secure Sign-in Partner?

Consult the Secure Key Concierge.

How do I fill out the application?

Read the application guide.

How do I check my status?

Login and check My submissions page.

What if my submission is unsuccessful/upload fails?

Please contact Innovative Solutions Canada.

How long after the challenge closing is a decision made?

This is dependent on a number of factors including complexity of the challenge, number of submissions received, and sponsoring department timelines. Please check the My submissions page for updates to the status of your submission.

Will I be notified of the decision?

Yes, you will be notified of the decision.

How do I cancel or update/replace my submission?

Please contact Innovative Solutions Canada.

Is the online portal secure?

Innovative Solutions Canada (ISC) utilizes the Innovation, Science and Economic Development website portal and server to ensure maximum security of applications. Intake takes place over https for secure communication. The portal is secure for Protected Level B information which ensures protection of applicant information. As a result, the submission portal ensures that information contained within the pdf form is encrypted while in transit and at rest. This is considered more secure than transferring a file by email. Those Bidders whose proposal contains Protected C or classified information should contact the Contracting Authority to arrange delivery of their proposal.

Additional information about security levels can be found on the Industrial Program site: http://ssi-iss.tpsgc-pwgsc.gc.ca/pdf/ns-sl-sheets-eng.pdf

Bidders are requested to submit their proposal using the electronic Application/Bid Submission Form. This is the only form required at bid closing. The form can be found by clicking the “Propose a solution” button on the ISC website under the specific challenge the Bidder is responding to. Challenges can be found at the following link: http://www.ic.gc.ca/eic/site/101.nsf/eng/00001.html

Challenge-related questions

Will there be more challenges posted?

Yes, new challenges will be posted on an ongoing basis. Please consult the specific challenge page and subscribe for updates on upcoming challenges.

Can I participate in more than one challenge?

Yes, innovators can apply to as many challenges as they would like.

Can an eligible small business submit multiple proposals to one challenge?

No. An eligible small business may only submit one proposal to the same challenge and deadline. This requirement is intended to allow applicants to focus on submitting one strong proposal. If a small business submits more than one proposal, the Innovative Solutions Canada Secretariat will only accept the last proposal submitted.

Will Innovative Solutions Canada target specific sectors?

No, the program does not take a sector specific approach. The program is designed to seek novel solutions to departmental challenges. The wide range of the 20 government departments and agencies participating will help ensure pre-commercial innovation procurement opportunities are open across a range of economic sectors and technology fields. Moreover, it is likely that key departmental challenges will reflect government sectoral priorities, such as clean tech/natural resources, health/biosciences, agri-food, digital industries, and advanced manufacturing.

How will I know if a challenge is supported by a grant or a contract?

Go to the "Open challenges" section of the website. Click on the challenge you wish to respond to; it will be identified beside "Funding Mechanism".

What are the eligible costs and stacking limits for a challenge supported by a grant?

Consult Eligible Costs and Stacking Limits for grants

What are the eligible costs for a challenge supported by a contract?

All costs must be in accordance with Contract Cost Principles 1031-2.

Other questions

How will Innovative Solutions Canada support under-represented groups?

The program will support under-represented groups (e.g., women, Indigenous people, disabled Canadians, youth) in at least four concrete ways:

  • Promotion and Outreach – The Innovative Solutions Canada Secretariat housed in ISED will travel across Canada and meet with small business owners to promote all challenges sponsored by participating federal departments and agencies. This outreach will include specific meetings with businesses owned by members of under-represented groups to encourage participation in Innovative Solutions Canada.
  • Challenge Design – The Innovative Solutions Canada Secretariat will help federal departments and agencies design challenges so that problem statements, where possible, factor in best practices associated with gender-based plus analysis. For example, a challenge statement may ask that small businesses as they design and prototype their solutions, factor in how an innovation may affect men, women or various segments of society differently.
  • Proposal Application Assessment – The application forms that small businesses will complete in response to challenges will contain questions that will assess how businesses are including under-represented groups in their innovation activities. Answers to these questions could be the difference makers in whether a small business wins an Innovative Solutions Canada contract or grant.
  • Collection of performance measures – The Innovative Solutions Canada program will collect data and metrics to understand how under-represented groups are participating in the program. This could be, for example, by asking whether members of under-represented groups sit on corporate boards or whether they are part of the ownership structure of participating business.
What is the difference between Innovative Solutions Canada and the Build in Canada Innovation Program (BCIP)?

Innovative Solutions Canada seeks solutions to challenges that can start at the earliest level of technology development. Departments can issue challenges that touch on any topics be they military, economic, environmental or otherwise. Innovative Solutions Canada only accepts applications from Canadian businesses with 499 employees or fewer.

In contrast, the Build in Canada Innovation Program is a research and development procurement program aimed at procuring, testing and evaluating researched and developed pre-commercialized goods and services in late stage development (Technology Readiness Level 7 to 9). Companies of any size can apply.

What is a company's Technology Readiness Level (TRL)?

Technology readiness levels (TRLs) are used to measure and evaluate the maturity of a specific innovation. Innovative Solutions Canada accepts applications from companies to develop novel technologies and services beginning at TRLs, 1-4. Please consult the TRLs definitions.

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