Government Operations Committee on Oct. 18th, 2011

[Karna Gupta]

For the Government of Canada, you mean?

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

No, I'm talking about, for instance, an export market. In the example of Ms. Preston's company, let's say another country's embassy now wants to buy this product.

Maybe I will challenge both of you and ask you to describe for me what is going on in that other customer's mind when they are making their decision about why they should make this investment in this Canadian company now.

[Karna Gupta]

I'll give you a live example. We have a great Canadian company that is developing some 3-D technology on scanning. It's a young, small company out of the Montreal region. If they cannot sell to the Government of Canada, it will be very hard for other governments to buy that product for security purposes.

So if you have your own country supporting the product and supporting the company, it will be much easier for them to go global and go to the broader market.

In that sense, having the Canadian government supporting and buying Canadian product first creates that reference customer--when it's applicable.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Is the agreement finalized now with the Government of Canada, with the Department of Foreign Affairs? And are they signed up as a customer?

[Monica Preston]

They were the initial department we worked on the solution with, and then we commercialized it from that solution. We own the intellectual property.

Talking to another country in that community, and it's small.... When the U.K. were looking at purchasing it, it was very easy for them to find out by asking: “What do you think of this product? Canada, you're using it. It's in Canada House here in London. Can we go take a look at it? We'd like to know what your people think about it.”

Of course it was a good product. We were pretty confident that they would be able to say good things about the use of it. They supported that, so that became important. If they would not have had any reference and were the first user of it, or, even worse, if we had to say that the Government of Canada isn't interested in using this, I think it does say something to that international community that probably isn't all that positive in terms of supporting Canadian business.

Is there a concern here that you're trying to get to, just in your question?

[The Vice-Chair, Conservative, Mike Wallace]

I'm sorry. Thank you very much. We can put you down again, but that's your time. Thank you.

Monsieur Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you Mr. Chairman.

I have two brief questions. I think I will be sharing my five minutes with my colleague Mathieu.

When we considered the presentation you would be making, we wondered what your opinion would be on the Canadian government's position with regard to procurement, especially procurement from Canadian suppliers. Should the government give priority to Canadian businesses, in your opinion, when making its purchases, so as to give them a hand up and support job creation here in our country?

[Monica Preston]

I would say yes.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you for that brief and precise answer.

I am going to ask a more open-ended question than the previous one.

What do you think would be the most appropriate methods and means to better stimulate innovation in our country? I'd like to hear your suggestions.

[Karna Gupta]

I'll answer that question.

I think there are several ways you can promote innovation. It starts at the university level, at the educational level. So the whole notion of bringing the universities and the private sector together, having some program that creates that entrepreneurship, culture within the community, is the ideal scenario.

Most of the time a lot of the ideas would stay at the university laboratory stage and never see the light of day. So there is something to be said where some incentive from a government program point of view reaches out to find a way to bridge that gap from university laboratories to the private sector to create the product and solution that's needed. So that will create a stronger bridge and quicker access to the market as well, and multiple new products and services will come out.

[The Vice-Chair, Conservative, Mike Wallace]

Ms. Ing, do you want to respond to that question?

[Lianne Ing]

Yes.

I think there's wisdom in the saying that necessity is the mother of invention.

One of the things that can help a company focus their research and expertise is to have a better understanding of what capability gaps exist for customers such as the federal government. And that's a process whereby having an ability for companies to work very closely with the potential end-user departments to understand their current concept of operations and then to have an opportunity at that early stage to identify technology development paths that could help fill a capability gap perhaps five years down the road, that degree of transparency and that access to many of these federal end-user departments will help to steer small and medium enterprises in terms of where they want to direct their efforts.

[Mathieu Ravignat, NDP, Pontiac, QC]

When there was talk of increasing investment in this program, you were all in agreement. However, the fact of investing massively in projects that won't necessarily have the expected innovative impact presents a certain risk for the government. It's probably possible to see what the situation is two years after the start of a pilot program.

Stranger yet was what Ms. Shereen Benzvy Miller, the Director General of the Office of Small and Medium Enterprises at Public Works and Government Services, said:

The success of the program should be measured by the interest shown by the businesses as well as the activities and investments made, and not by the innovation created.

Since the purpose of the office is to help businesses fill the gaps, should the success of the program not be measured by the results obtained rather than by activities and investments?

[Lianne Ing]

For your question, it's important when we talk about how to measure success to separate the processes of innovation and commercialization.

In the process of innovation, in which you're conducting research, there has to be a willingness on the part of the government to fund research without necessarily having a guarantee that the research will produce the desired outcome. That is the nature of research; there is technical risk, and understanding what doesn't work has merit in terms of research value.

As for the commercialization aspect of it, at that stage of maturity the technology has an intended end use and intended application. In the CICP, in matching the technology with a test department, one of the measures of success can be whether that test department actually adopts that technology and moves forward with it over the subsequent years after the initial testing activity.

From my perspective, the value of having the CICP funding is in the opportunity to introduce a new technology to an end user. But I don't wish that the end user stop at that point; the intent here, of course, is to use this as a launching point for further product sales. I think the uptake of the technology is a good measure of success.

[The Vice-Chair, Conservative, Mike Wallace]

Mr. Braid.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you, Mr. Chair, and congratulations on ascending to this role, albeit temporarily.

I will be sharing my time with Ms. Block.

Mr. Gupta, the Jenkins report has been referred to a couple of times during this session this afternoon. Tom Jenkins, the head of OpenText, and his panel tabled their report yesterday; I realize it's only been 24 hours or so. This is a general, broad question. What have you seen in the report that you like?

[Karna Gupta]

I think most of the recommendations are sound. The only one we're still talking to our members about concerns the SR&ED impact. When you go to a mostly labour-based model, there is a risk in the case of many of the companies that are highly capital-intensive involving how their SR&ED is impacted.

We haven't really got the full analysis done yet, but that is one of the areas we need to look through further.

Overall, all of the other recommendations seem to be in line with what we've been talking about.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Great. Thank you.

I think you mentioned in your remarks a little earlier that you've done outreach to your members with respect to the CICP. Is that correct, and if so, how did you do that outreach?

[Karna Gupta]

We reach out to our members on a regular basis through various forums as they participate in these programs. We have several staff members who look after each of these smaller accounts. As I mentioned, we have more than 300 accounts. Close to 200 involve small to medium-sized companies in the ICT field. When we come up with a comment, it's based on inputs we get from them.

[Peter Braid, Conservative, Kitchener—Waterloo, ON]

Thank you.

Ms. Ing, you mentioned that your product was matched with the RCMP. Could you describe how that matching process took place? Was it an effective process? Did it work with respect to your particular product?

[Lianne Ing]

As I mentioned, we were quite fortunate. A number of federal test departments expressed an interest in potentially testing the innovation. In our proposal, there was an opportunity to suggest potential end user organizations for which the technology might have a benefit, which we did. Following the pre-qualified selection for the proposal, we were able to engage directly with the CICP office and discuss with them which departments they might wish to contact, the intention of the technology, who it should be used by.

That was a fairly transparent process of making a few phone calls. They found someone in the RCMP who had an interest in the technology, and it went quite quickly from there.

Once we had identified the RCMP as the test department, we had some discussions with them to work out the details of how they would like to test the technology, in order to include that activity in the statement of work. It went quite smoothly.

[The Vice-Chair, Conservative, Mike Wallace]

Ms. Block.

[Kelly Block, Conservative, Saskatoon—Rosetown—Biggar, SK]

Thank you very much, Mr. Chair.

Thank you for being here today.

Any one of you can probably answer this question for me. I think it will be a very straightforward answer.

You've indicated that commercialization takes time, that innovation takes time. We heard from witnesses in previous meetings that products have reached completion, and they may take five to ten years to do so. Are there provisions built into a contract you may have that allow for new research, new technology that might come along in that timeframe, permitting you maybe to change tracks with the product you are working on?

[Lianne Ing]

With regard to our CICP contract, the CICP program is intended, obviously, to take technologies that are quite close to commercialization and just push them over the line so the test departments can see them and use them.

In our particular activity there is an opportunity for the RCMP to conduct some testing on the initial prototypes that are available now. There's a small amount of activity for them to provide feedback and then have us do modest design changes, not drastic design changes, but things that will help customize that technology for their particular application, and then we will upgrade those prototypes and redeploy them with the RCMP for additional testing. So there is an ability to do some minor modification.

By looking further down the road at all these technologies, there's often an opportunity to have a technology insertion, which is much more drastic than just a modification. That again is an area that should be looked at for follow-on funding in these programs.

[Monica Preston]

I think that's an interesting concept. We have a similar situation where we can do some small changes and include them in the timeframe we're talking about. I would be interested in looking at that a bit more as well.