Government Operations Committee on Nov. 3rd, 2011

[Dr. Geoff Hayward]

Yes. We have been working with angel investors and venture capital firms and have had significant interest from them. I do think that in western Canada, and particularly in Alberta, there is a challenge that a lot of the capital is naturally directed to the energy sector. There's a shortage of companies like us and the financing for companies like us. In many ways, I think the venture capital industry out here for the information technology sector is in need of a lot of work. There's a real shortage of venture capital out here, I believe. We have a lot easier time looking for capital in Silicon Valley than we do in our own backyard.

[The Chair, NDP, Pat Martin]

Thank you, Mr. Hayward.

Thank you, Mr. Cannan. It's the end of your time.

For the official opposition, Denis Blanchette.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you, Mr. Chair. Thank you also to our two guests today.

My question is for Mr. Hayward.

Where you come from, consolidation of data centres is not something new, basically. But some criteria were linked with the innovative dimension of your solution.

Could you talk about your experience of applying for this program? How did you demonstrate that you had a really innovative solution that was acceptable for the program?

[Dr. Geoff Hayward]

We were fortunate to have received a lot of international recognition for our technology. There were a lot of independent validation points, if you will. We won awards at international technical conferences, and we were selected one of the top 10 ICT companies in Canada a few times in a row. So there were a number of independent validation points. We had also been successful in winning some important grants for our technology development. I think there were some independent benchmarks there that would help the evaluators.

In terms of the capability that makes this special, when you're talking about consolidating data centres, traditional methods are to shut down all the servers in one site, physically move them to another site, or do data transfers, file transfers, which leads to a lot of downtime. Our technology allows those data centres to be moved without any interruption at all in service--and that capability is new.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you very much.

In your presentations, you said you worked with Public Works Canada and Shared Services Canada. Since you worked with both these organizations which are not necessarily linked to one another, strictly speaking, I would like to know what your experience was, working with these two organizations on the same project.

[Dr. Geoff Hayward]

Perhaps I can jump in there, because we were the ones who had the primary interaction with Shared Services Canada.

There's an important transition going on right now from Public Works to Shared Services Canada. We have the sense that there's still a lot of uncertainty in how that will all shake out. But our experience has been pretty good through that transition. The people we worked with before, we're continuing to work with now, and they are directly responsible for service delivery, the cloud services, if you will, for Shared Services Canada. So we have not been directly affected by the transition, although I know its very disruptive to many divisions of government.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Patterson, I would like you to explain your relationship with the government. How did you adapt to the federal government when it was time to roll out your application?

[Capt Anthony Patterson]

In our development cycle we've had an awful lot of interaction with the federal government, including the coast guard and navy, through the prototyping process. So we were all very familiar with how the federal government works, and with the people on the ground there's absolutely no problem.

As I said before, the main issue we run into when we're dealing with the federal government is through the procurement process. It's not because we don't have good technology or we're not an intelligent company; it's just that we're small, with new technologies. That's normally where our only source of friction is with the federal government. Every operational person or research person employed by the federal government has been very good and easy to work with.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Are you satisfied with this relationship?

[Capt Anthony Patterson]

Yes, absolutely. The National Research Council is one of the licence holders for the technology that we exploit.

One thing we have seen, though, is that the ability of the National Research Council to keep the flywheel of innovation going is starting to slow down. That's about the only thing I would note in the day-to-day relationships we have, which is something we're looking at with a little bit of concern.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you very much, Mr. Patterson.

[The Chair, NDP, Pat Martin]

That concludes your time, Mr. Blanchette. Thank you very much.

Next we have Mr. Jacques Gourde for the Conservative side.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you very much, Mr. Chair.

Thank you to our witnesses, Mr. Patterson and Mr. Hayward, who are appearing through modern technologies.

You said earlier that you heard about the Canadian innovation commercialization program through friends or the website. Did you need the help of another federal organization to fill out the forms or could you manage by yourselves?

[Capt Anthony Patterson]

I can speak from the Virtual Marine Technology point of view. We've had experience in working with the federal government before, mostly through its innovation programs. We have a good idea of how to interpret what's being asked for and how to submit a compliant bid. So we were able to do this on our own.

As I said in my opening remarks, I actually view this as one of the strengths of the program. There were no real shortcuts in the application process. I think if a company has aspirations of supplying the federal government, and this is their first time doing it, it's very important that they learn the ins and outs of how it's actually done.

[Dr. Geoff Hayward]

We filed our submission ourselves. We didn't seek any external help.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

I am quite glad to hear that. The very fact that entrepreneurs can submit by themselves applications shows that our programs are accessible and straightforward.

You said this program was a turning point for your companies and that it was filling a gap in financing, whatever the stage your company was in. Could you mention examples showing that this program is vital pour the future of companies like yours?

[Capt Anthony Patterson]

From our perspective, we already service the oil and gas industry, so we have a well-known reputation in oil and gas.

To break into the defence and security market, especially on export...if a Canadian company cannot sell their own products, which the Canadian government helped to develop, back to the Canadian government, this is viewed by foreign buyers that there's something fundamentally wrong with either the company or the technology. Having an example where the Canadian government has actually bought technology that they sponsored the development of helps prove that VMT is actually a well-run and honest company. Without being able to do that, the rest of the world doesn't interpret this non-procurement of Canadian technology by the Canadian government through our eyes; they look at it through their eyes, and in their eyes this would be because there's something wrong with us.

It's crucial. If we can't supply the Canadian government with stuff that they've helped to develop, we don't have much of a hope to sell it to anybody else.

[Dr. Geoff Hayward]

I could provide an example from this week, perhaps going on right now.

Forrester Research is a major industry analyst organization in our sector that has global influence in terms of identifying key technologies that are disruptive. We had a detailed interview with a woman who was part of Forrester Research. She was identifying the top new data protection technologies; she's writing a report on these companies. Normally we have to pay $40,000 or $50,000 to be mentioned in such a report. She was very impressed by our product demonstration, which we gave her through the Internet, and she asked for a customer reference so that we could be included in her report. I gave them the contact name of the individual we've been working with at Shared Services Canada, actually the CTO, Jirka Danek. My belief is that he will provide us with a very good reference, and that will help us be mentioned in the Forrester report and get all the corresponding media attention.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you for these remarks that are quite relevant. I would like to emphasize your leadership that helps your companies differentiate themselves. We are always glad to have witnesses from successful Canadian companies. We are glad to meet you, we congratulate you, and we emphasize your success. Thank you.

[The Chair, NDP, Pat Martin]

Thank you, Mr. Gourde.

They were right on five minutes.

I would now like to welcome a member for the Liberal Party substituting on the committee, Sean Casey, from Charlottetown.

Welcome, Sean.

[Sean Casey, Liberal, Charlottetown, PE]

Thank you, Mr. Chairman.

I am not, have never been, and will never be the chief economist for the Royal Bank, but I'll do my best, and in five minutes or less it will all be over.

I'm going to apologize off the top, Captain Patterson. You mentioned in your opening remarks about being screened out due to risk assessment. I realize you've already answered a question on it, but I'm still not clear. When you answered the question about being screened out due to risk assessment, I think what I heard is that it isn't in relation to the CICP program but to something else?

[Capt Anthony Patterson]

Yes, that's correct.

For the CICP program we were accepted. This was a parallel activity that was going on through CCC, the Canadian Commercial Corporation, to accept us as a supplier. The Canadian government would then do a government-to-government transaction with a foreign government.

[Sean Casey, Liberal, Charlottetown, PE]

Another thing you said in the course of your opening remarks was that if your proposal--and excuse me if my wording is clumsy--is improperly structured, it may preclude you from participating at a later date.

Do I understand you correctly?

[Capt Anthony Patterson]

This came from the briefings that were given to the bidders in round one. It comes from the principle that if a consultant helps the federal government define the performance standards or the specifications for an object, this group then is barred from bidding and supplying the same object. In our case, we already had something that was completely developed and fully defined, but if you had something that was at an earlier stage and you were using this as a prototyping opportunity, and from the prototyping opportunity the federal government was going to define the specifications for something they would ultimately buy, you could end up being viewed as the consultant who developed the spec for them and therefore not be able to supply them.

[Sean Casey, Liberal, Charlottetown, PE]

Okay.

Mr. Hayward, you made reference, and I think I saw it in your deck there as well, to the significant overhead in going through the due diligence process. I'm just trying to find a benchmark here, and perhaps you could help me with that in terms of comparing the due diligence that you would undertake for participation in this program with something you might do with another level of government, with the private sector, or even with another federal government program, like the SR and ED program or something like that. Can you give me some point of reference in terms of the due diligence in this program compared to something else?