Innovation Canada: A Call to Action

Innovation Canada: A Call to ActionGetting ThereTo realize this vision, the government shouldincorporate the following practices in itsprocurement initiatives.3.1 Innovation as an objective — Make theencouragement of innovation in theCanadian economy a stated objective ofprocurement policies and programs.In practice, this broad recommendation requiresthe government to regard any significantacquisitions of goods and services asopportunities to build SME innovativecapabilities and thus to strengthen both thebase of suppliers for future procurement and,more generally, the innovation capacity of theCanadian economy. This will require thegovernment over time to undertake acomprehensive review of procurement policiesand activities to ensure that they are supportinginnovation and that departments have theflexibility to work with private sector solutionproviders and then acquire and deploy theresulting solutions. As first steps for action, thePanel further makes the followingrecommendations.3.2 Scope for innovative proposals —Wherever feasible and appropriate, baseprocurement requests for proposals on adescription of the needs to be met orproblems to be solved, rather than ondetailed technical specifications that leavetoo little opportunity for innovativeproposals.The use of procurement to foster the innovationcapacity of Canadian companies requires arevised approach to value-for-money based onoutcomes-oriented specifications. Procurementon the basis of the outcomes desired sets achallenge for industry and thus motivatesinnovative solutions from potential suppliers.This has the dual benefit of bringing forwardbetter products for the buyer and developing aninnovation-focussed mindset in the suppliercommunities. The use of an outcome-orientedprocurement specification does not need to bean invariable rule, since there will be caseswhere more detailed technical specifications fora particular procurement would be clearlyappropriate and would not be inconsistent withthe intent of this recommendation.3.3 Demand-pull — Establish targets fordepartments and agencies for contractingout R&D expenditures, including asubtarget for SMEs, and evolve the currentpilot phase of the Canadian InnovationCommercialization Program (CICP) into apermanent, larger program that solicitsand funds the development of solutionsto specific departmental needs so that thegovernment stimulates demand for, andbecomes a first-time user of, innovativeproducts and technologies.Federal departments and agencies, includingthose of major industry relevance, such as theDepartment of National Defence, undertakemost non-regulatory R&D internally. According toStatistics Canada (2010a), federal in-house R&Dis projected at $1.9 billion in 2010–11, whileR&D contracted to businesses is projected toamount to $272 million or only about15 percent of the in-house R&D total. More than80 percent of the amount of R&D contracted tobusinesses is accounted for by two agencies —the Canadian Space Agency at $167 millionand the Department of National Defence at$59 million. Setting specific department-bydepartmenttargets for external R&D contractswould promote business innovation whilepotentially improving outcomes for contractingdepartments and strengthening their ability todeliver on their mandates.The current CICP pilot is “supply-push” in thesense that the applicants submit proposals toprovide innovative solutions for trial and testing,though not as responses to explicitly identifiedneeds of a particular department or agency(Box 7.2). A new pilot element is needed that7-4