CHAPTER 7: FEDERAL RESEARCH AGENCIES
The government plays an important role in the science and technology field by undertaking R&D and related scientific activities utilizing its in-house capabilities.4 As stated by the Government of Canada:
... the rationale for performing S&T within government needs to be based on a demonstration that the work is relevant to specific needs of government, that it can be done more effectively and/or efficiently in government facilities than it could be done elsewhere, and that, if the government did not do it, it would either not get done, or else would be done in a manner or a time frame that is not suitable for responding to the needs of the government.5
Furthermore, the federal government needs to have some degree of in-house scientific and/or technological capacity in order to effectively exercise the option of outsourcing some types of research projects (i.e. both for competency and competitiveness reasons).
The Committee was unable, in the time available, to pursue or assess the performance and capacities of federal departmental R&D labs, but intends to thoroughly investigate this aspect of the country’s S&T capacity in the fall. For now, the Committee chose to focus on selective and key federal R&D agencies: the National Research Council of Canada (NRC); the Networks of Centres of Excellence (NCE); and the Canadian Space Agency (CSA). The overview provided here, however, does not focus on their effectiveness in meeting their mandates (in most cases, the lack of competition in the field of strategic or long-term research means that there is no consistent way of comparing or benchmarking results) or the accountability of their administrations (this, we leave to the Auditor General of Canada to report on). In its place, the Committee pursued the breadth of the current and proposed mandates of the agencies and the resources available to attain them in order to gauge their role within the national innovation system and their potential contributions to a knowledge-based economy.
National Research Council of Canada (NRC)
As Canada’s foremost R&D agency, the NRC’s vision is to be a leader in the development of the knowledge-based economy through science and technology. The Council operates a network of research laboratories that can collectively boast of a wealth of knowledge, expertise and capability of substantial value to Canadian industry. In fact, the NRC is involved across the innovation continuum from basic research performed mainly in the universities through to developmental research, conducted mostly by private firms.
The primary mission of NRC laboratories is to undertake research that specifically supports the mandates of the agency, i.e. a number of strategic objectives. However, in all cases, there is an explicit aim to transfer technologies developed in-house to Canadian companies with the capacity to develop commercial applications that benefit the Canadian economy as a whole. For this reason, many of the 16 NRC laboratories across the country undertake collaborative research with Canadian companies. Canadian firms are thus able to have access to state-of-the-art facilities that would otherwise be unavailable to them. An NRC official explained its role as follows:
NRC is a departmental corporation … with strong links with partners, clients in industry, both large and small firms, in university, in research hospitals and to the international scientific community as well. Our vision is national, but it’s delivered in large measure by building upon our regional strength and upon R&D opportunities. … NRC plays a unique leadership role … [w]e integrate R&D performers through novel forms of partnership, including collaborative projects, through innovation networks. [Lucie Lapointe, National Research Council of Canada; 20, 9:05-9:10]
On this last point, the NRC claims to have leveraged three times its financial contribution from its partners in their mutual research projects. The end result of this collaboration has been many small incremental investments in innovation.
The business strategy that has generated these results is one where the NRC acts as a bridge between the activities and players at either end of the innovation continuum, which incorporates pure science, mostly conducted by universities, at the one end, and pure application or development of technology, mostly conducted by industry, at the other end (see Exhibit 7.1). According to NRC officials, it is in the middle of this continuum where little activity had been taking place and the consequences of such an "innovation gap" is insufficient capacity available to translate ideas into products for the marketplace, a problem that has been singled out as particularly acute in Canada.
The NRC believes that it has all of the tools to be able to contribute to the solution of this innovation gap. In the past decade, the Council has re-engineered itself and is now positioned in the middle of that continuum. The NRC does carry out basic research and development, but its principal activity today is bridging the gap, which involves working in partnership with other players — large and small enterprises, universities, and other government labs — to not only develop technology but also to translate that technology into products for the marketplace.
Exhibit 7.1
The Committee questioned whether the NRC has sufficient capital to fully implement its mandate and mission, and considered the value of it being made eligible to receive funding from the CFI. The presidents of the three granting councils gave their unconditional approval to this suggestion, arguing that the NRC requires a lot more funds than it presently receives to properly carry out its mandate and that the source of these funds is really immaterial. The Committee concurs with these views and is of the opinion that such a proposal has merit and should, therefore, be considered in more detail when the Committee undertakes its major review of the CFI this fall.
The Committee further recognizes that innovation and industrial growth are often a local phenomenon, driven in communities by clusters of innovative, R&D-active firms and local entrepreneurs. Community-based technology clusters — in which innovative, technology-intensive firms working in related fields co-locate, interact, compete and grow in a supportive environment — have proven to be a successful formula for promoting research that has led to substantial economic growth and increased international competitiveness. In this vein, the Committee equally realizes that many of the economic clusters in Canada have developed around existing federal laboratories and research institutions, most notably those of the NRC, including:
The NRC explained a little about its cluster strategy:
Our strategy is to connect NRC’s core research strength—our knowledge and partnership network—with commercial development and product-oriented achievement of industry That to us provides a winning innovation formula. For a small, incremental investment, we have the opportunity to make a considerable impact. [Lucie Lapointe; 20, 9:15]
However, when pressed to explain the NRC’s reasoning behind a proposal to establish an automotive technology based cluster in London, Ontario, when one is already located in Windsor, Ontario, we were told:
[W]e currently have research institute in London and we are not proposing an additional research institute or any such thing. We have an integrated manufacturing technology institute located in London, Ontario, and I should add that significant investments from those companies … have been made in the institute… [Lucie Lapointe; 20, 10:35]
AUTO 21 has its administrative centre in Windsor and has obviously a lot a research there, it also involves communities from across the country. … I can assure you … that should a new research centre establish itself somewhere it will be linked to AUTO 21. [Jean-Claude Gavrel, Network of Centres of Excellence; 20, 10:30]
The NRC is also working with the federal regional development agencies — the Atlantic Canada Opportunities Agency, Canada Economic Development for Quebec Regions, and Western Economic Diversification Canada — which have identified innovation as priority themes for their activities. The new focus of the NRC has thus produced numerous local success stories; quantitatively, however, the Committee was told that:
Over the past five years, NRC’s partnerships with industry have doubled. We have nearly tripled those with public organizations and those with the universities have grown five-fold. The revenue from R&D service ... and … licensing has reached $100 million a year. We have incubated 83 firms in our industry partnership facilities and more than 1,600 new collaborative agreements have been signed by industry with universities and with international organizations. [Lucie Lapointe; 20, 9:10]
The Committee supports the NRC’s cluster strategy but has concerns on how this strategy is being applied. More precisely, the Committee would like to know more about the current distribution of technology clusters across the country and on just how cluster locations are chosen. The Committee will pursue these concerns in the fall but, in the interim, recommends:
12. That the Government of Canada provide financial support to the National Research Council of Canada to implement an expanded innovation cluster strategy.
Networks of Centres of Excellence (NCE)
The Networks of Centres of Excellence (NCE) program is administered jointly by the three federal granting councils and Industry Canada. In a somewhat similar vein as the cluster strategy of the NRC, the program provides a mechanism for bringing together researchers from universities, the private sector and government — often across a number of disciplines — to address research issues of common concern that have economic potential. As it was put to the Committee:
The program was created in 1989. … The idea is to foster synergies between what we call the creators of the knowledge and the users of that knowledge. That’s where the link of the private sector comes in as an extremely powerful element to it. We focus on areas of critical importance and large problems that will obviously have benefits for Canadians. [Jean-Claude Gavrel, 20, 9:45]
This type of cluster or partnership was described as a virtual organization with the following typical structure:
An NCE is managed by a board of directors, a board that has representation from the sector but not from the people who actually receive the money … The responsibility of that board is to manage … the funds, to determine where the research should be carried out and to basically ensure the accountability of those research dollars. NCE can be broken down usually into about four to six research themes, for a total of maybe 15-20 projects. [Jean-Claude Gavrel; 20, 9:50]
Currently, there are 22 NCE linking more than 900 Canadian organizations that employ more than 5,000 people. NCE have investigated questions in fields as diverse as space research, respiratory health, stem cells, protein engineering, telecommunications, microelectronics, photonics, aquaculture and sustainable forestry. At a cost of $77 million per annum to the federal taxpayer, the program has leveraged private-sector investment in research to a total of $160 million. The NCE program has produced concrete results: 66 patents filed, 31 patents awarded, 71 licences granted and 78 spin-off private ventures formed.
The Committee believes that the NCE program constitutes a vital component of Canada’s innovation system. However, before making a recommendation on the appropriate level of financial support the NCE should receive from the federal government, the Committee would like to review the NCE’s funding requirement in detail.
The Canadian Space Agency (CSA), formed in 1989, has pursued a mission committed to leading the development and application of space knowledge for the benefit of Canadians and humanity. The CSA has five strategic areas of operation: earth and the environment; satellite communications; space technology; human presence in space; and space science. On the occasion of its tenth birthday, the government for the first time made a long-term commitment to space development:
[F]or the first time the budget in 1999 provided for the Canadian Space Agency a stable ongoing level of funding of about $300 million a year starting in 2002 or 2003. This is a major shift on how the government has funded the Canadian space program. Prior to this … our funding was based solely on specifically approved projects. When the project is completed, the funding for the agency would decline. Now like any other government organization, we have the ability to plan on a stable financial basis. [Mac Evans, Canadian Space Agency; 20, 9:25]
The Committee, like most Canadians, is well aware of Canada’s accomplishments in space. The Canadian astronaut program and the development of space robotics, such as the Canadarm, are two very large contributions for which we can be justly proud. However, the CSA has other notable accomplishments that are not as widely known:
Our space technology program is in fact the launch pad for innovation in the whole space program. … Through this program we are able to contract R&D to industry. We are able to develop activities which will allow those industries to take their new technologies and fly them in space and get them space qualified so that they can have an important element of their product commercialization activities looked after. … This program carried out more than 200 projects in the last year. It resulted in 48 patents, 59 licenses and 60 papers having been published. This is the program that works mostly with SMEs across the country to assist them in their research activities. And the focus of this program is in the areas of remote sensing, satellite communications and space robotics. [Mac Evans; 20, 9:35]
The Committee clearly endorses the government’s strategic investment in the CSA and its activities. The frontiers of space research will likely hold great promise for us all in the future. The Committee, therefore, recommends:
13. That the Government of Canada increase its financial support of the Canadian Space Agency to enable Canada to play a more significant role in national and international space science projects as part of its innovation agenda.