Government Operations Committee on Oct. 18th, 2011

[Karna Gupta]

The biggest issue here would be helping these small businesses at the commercialization phase, which really means adoption of a lot of the ICT technologies at an early stage. Most of these young companies, when they come out they struggle to get their first customer. As the applications are done, they get the government and the government agencies as the first buyers and this creates a reference point that's quite critical.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

The period from incubation to procurement is crucial.

[Karna Gupta]

That's right.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you.

[The Chair, NDP, Pat Martin]

Thank you, Ron.

Next, for the NDP, Mathieu Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Mr. Chairman. I thank all the witnesses for being here.

I'd like to come back to the question my colleague Mr. Cannan raised, but from a different angle. Firstly, have you ever done business with the Canadian government? Moreover, if you have never done so, what improvements should be made to the application process so as to help companies who have never done business with the Government of Canada have access to the program?

Those are my first two questions, I will have others later. The questions are addressed more particularly to Ms. Preston and Ms. Ing.

[Monica Preston]

Yes, we've dealt with the Canadian government from the inception of our company. We deal with other governments outside Canada as well. Every government has its way of working. I think that's pretty well known and you have to get to understand it and be able to wade your way through it to do business. It's probably like any other business sector in that regard.

With respect to the application process, I believe that a lot of what's behind the evaluation is the scoring system. I think if companies understand how the scoring and evaluation system is conducted when they put their submission in, that would definitely help them to make sure that they placed themselves in the best possible light in their application.

[Lianne Ing]

We also have done a considerable amount of work with the Government of Canada and other governments around the world, and the application process from our perspective was relatively straightforward in facilitating it.

For enterprises that haven't been involved with government work, I think the outreach that OSME has engaged in—holding training sessions and having resources available to answer questions—is most likely the best way to lower the barrier of entry for other companies.

[Mathieu Ravignat, NDP, Pontiac, QC]

Fine.

I have a few additional questions. Concerning the assessment of your applications, have you found that the evaluation criteria that were used, as well as the information regarding the members of the committee, were well communicated to you? Was the process sufficiently transparent?

[Lianne Ing]

As for the evaluation criteria, I think this was well laid out in the call for proposals. It was documented. So if you read through the call for proposals carefully, you could understand how the proposal would be adjudicated.

With respect to the review members, we understood that many of the technical reviewers would be pulled as subject-matter experts from groups like NRC-IRAP. In our field of work it's common for these sorts of technical proposals to be evaluated by those who are deemed to be experts in the industry across the country. From our perspective, that was straightforward and transparent.

[The Chair, NDP, Pat Martin]

Mathieu.

[Mathieu Ravignat, NDP, Pontiac, QC]

Ms. Preston, you mentioned that you have 50 employees, and Ms. Ing, you stated that you have 85, or was it the reverse? Correct me if I'm mistaken.

How many people worked on the application and on its follow-up? Did this require a lot of energy and resources? How many employees took part in that process?

[Monica Preston]

For AMITA, we would have had a key business development person on this file to do the first draft, someone who knew our innovation quite well. I would definitely always have a lot of input into the assessment and review of what we're putting together. We would probably also have had somebody who could do good-quality editing, because we have word limits, so we want to make sure we're communicating what we need to within the context. We would have had probably one person full-time for a few weeks working on this and part of my time and an editor's time.

[Lianne Ing]

From our perspective, similarly for these sorts of proposals we have typically a technical lead who is responsible for making sure that the technical content is correct. We'll have someone for finance who helps to put together the cost estimates and cost proposals. Then we have someone from business development or the sales side who goes through and helps to create the text that goes into the proposal. So in terms of total effort, it was similar to other efforts that we have for the Canadian government.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you.

[The Chair, NDP, Pat Martin]

That concludes your time, Mathieu. Thank you.

For the Conservatives, Jacques Gourde.

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

Thank you very much, Mr. Chairman. I want to thank the witnesses for being here and congratulate them on their businesses.

Ms. Preston and Ms. Ing, you talked earlier about the development of your businesses. We are happy to welcome you as it is gratifying to see our small and medium Canadian businesses succeed to that extent. You are important economic motors in our country, and that is why we will be listening with particular interest to the comments you are going to be making.

I think that your businesses may have benefited from the Canadian Innovation Commercialization Program, the CICP. What were your reasons for taking part in that government initiative?

[Lianne Ing]

When we saw the opportunity we reviewed the requirements and we reviewed the mandate for the program and we recognized that as an opportunity to accelerate the commercialization of one of the technologies we had developed with in-house funding.

As I mentioned, as a small company you always have to prioritize the use of your resources, so when additional resources become available that you can leverage, it means you can bring new technologies to market more quickly. We looked at that call for proposal and saw that it was a good fit for the technology we had available.

[Monica Preston]

In the same vein, one of the key areas in public safety and security was in the health area, and we do have innovations there, so it was a good fit for us. We also had an innovation that was in the right place in terms of being pre-commercialization. We chose the one that we submitted for our first round for those reasons. We would probably wait if we had to do this on our own and we didn't have a kick-start. We would probably have to wait with this a bit longer before we could tackle it.

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

Could that program be improved even more?

[Lianne Ing]

I believe in continuous improvement for all programs, so I think there's always an opportunity to continue to refine the program. I think the approach that was taken here was a good one. Rather than trying to plan every last detail, in theory, I think it's a good idea to get a pilot program launched and try it, and then refine and tweak that program as you see the results coming back from it.

In terms of specific improvement, as I mentioned, the proposal process for us was quite transparent and straightforward. As Ms. Preston has also mentioned, the focus area, not only for this program but also across the board, would always be to try to streamline and accelerate that contracting process once the program has been accepted.

From our perspective, it is an innovative technology. We'd like to get that technology to market before others have an opportunity to do so, so the more quickly we can get the work started, the better.

[Monica Preston]

Maybe I could add to my comments just from a bit of a different perspective. I don't know all of the details of the program. What I do know are things that would help us, and maybe I could articulate those and then you can determine whether the program can in fact address them or not.

One of the things in the last year that I've seen with program review and the strategic review is that it's more difficult to get departments to engage in innovations when they already have such a full plate of things to do. If there were some incentive for government DGs, directors, to get involved in supporting some of this innovation, it would be very helpful. That goes towards trying to find a testing department, of course, that will test the products and give you feedback because they also have priorities in terms of their work that they have to do day to day. If we can somehow provide some incentives there, that would be very useful.

I would like to see some clarification of intellectual property policies, Treasury Board policies, made to people at the working level in government, because there's a lot of confusion about intellectual property. In the context of CICP this becomes important. I'd like to see government staff more broadly at the director and DG level understand intellectual property, really what it means, and understand the Treasury Board policies around this.

We talked about the procurement processes and trying to streamline those as much as possible. I guess the other thing I could add is if government can understand what capabilities small and medium companies have to offer. You often see large programs involve large companies. The government feels they need to have large companies front and centre because there's a lot of money at stake. I think if government also knew what small and medium companies had in terms of capabilities, perhaps there would be a better way to integrate them in that work.

I can't answer about the program specifically because I don't know all the details about it, but I can offer some of the things we'd like to see fixed, and perhaps the program could address some of those.

[The Chair, NDP, Pat Martin]

That concludes your time.

For the Liberal Party, John McCallum, please.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

And thank you to all three of you for being with us today.

Congratulations to Ms. Preston and Ms. Ing on your entrepreneurship, and also the entrepreneurship of your many members, Mr. Gupta.

Nobody in this room, to my knowledge, thinks that either of these two programs is doing a bad job, but my impression is that they are both tiny in relation to the scale of the challenges that Canada faces.

I remember when one of the officials involved with the Office of Small and Medium Enterprises was here, he or she said that the U.S. equivalent has 40, 50, 100 times more employees, I don't remember the exact number. And Ms. Ing, I think you said there were way more people wanting the financing than could get it and there were a couple of dozen examples. Well, this is nice, but it's really small potatoes compared with the challenges we face, the very low R and D levels that my colleague referred to and the huge financing troubles.

This report from the task force yesterday said, and let me just quote a bit:

Innovative Canadian companies face real challenges in getting start-up funding and late-stage risk capital financing. In many cases, the gap is filled by foreign investors, which means that too many commercial benefits and intellectual property end up leaving the country. Directing the BDC to work with angel investor groups and develop late-stage risk capital/growth equity funds will pay dividends.

My impression from this task force is they were told not to spend any more money in total, but I think they're saying spend less money on SR&ED grants, tax credits, and more focused direct loans or investments through agencies like BDC. The SR&ED thing is too complicated, it's a shotgun approach. Other countries have been more successful with this more direct approach, through BDC in our case.

I'd like to ask each of you whether you agree with this proposal to redirect more of the available funding into direct action through BDC.

Perhaps Mr. Gupta....

[Karna Gupta]

There was an announcement made yesterday about some additional funding for BDC, but your point is correct. There needs to be more money going into early-stage funding of companies, through BDC or other agencies, in large part to support the whole privatization process. For most of the people we talk to, our membership and others in small business, that's the hurdle. It's not the idea stage. We have enough ideas in the country and our education system is providing them sufficiently. Where it falls down is in the commercialization. Funding is needed for making a product and taking it to market. That's where some of the dedicated funding would absolutely help.