Awards expected soon from Industry Canada's new aerospace and defence fund

SADI offering up to $225 million a year

The Harper government's showcase business assistance program for the aerospace, defence security and space sectors is finalizing agreements with the first round of successful applicants that will produce announcements in the coming weeks. Industry Canada's recently created Industrial Technologies Office (ITO) is working on at least 10 separate projects with one completed and the others in the final stages of negotiations.

The Strategic Aerospace and Defence Initiative (SADI) was launched in April/07 with $900 million over five years, replacing the much-maligned Technology Partnerships Canada (TPC) program (R$, April 10/07). Since then, several stakeholder sessions have been held across Canada and negotiations have been ongoing between Industry Canada and the Aerospace Industries Association of Canada (AIAC) to clarify SADI's terms and conditions. More recently, founding ITO executive director Jeff Moore (held over from TPC) was replaced by Zenon Woychyshyn, a veteran administrator with several years experience in the Air Force, Canadian Space Agency and Industry Canada's aerospace sector branch.

"Industry Canada is currently processing applications with 10 to 12 applications in various levels of assessment. This will ultimately turn into a good new story for the industry," says Ron Kane, AIAC's VP defence and space. "A change of players in Industry Canada with responsibility for the SADI and a change in ministers have caused delays."

unresolved issues

Issues that remain unresolved include terms of repayment, which will now be based on gross revenues of the company receiving the assistance, as opposed to revenues generated by the pre-competitive R&D project being supported.

Kane says firms prefer off-balance sheet accounting as a condition of repayment and want clarification on whether a company's non-organic growth (acquisitions, mergers) are to be included in the calculations.

"We should have clarity soon," says Kane. "Money should start to flow before the end of this fiscal year."

Like TPC, SADI will support an average of 30% of a project's cost, with some exceptions. Firms may receive up to 50% of the project's value if it is involved in the Joint Strike Fighter Program, can demonstrate environmental sustainability or will lead to increased penetration of the US Department of Defense market. "The 30% average is workable so that we can manage the funds to keep enough around for other companies," says SADI director Roch Chouinard. "There is no minimum of maximum (award size). One has to be reasonable."

Chouinard says the selection process for funding is not competitive but is operated on a first-come, first-served basis. Each application is subjected to a rigorous eligibility and suitability assessment as well as due diligence. SADI's main attraction, like TPC, is the available of an interest-free loan while the project is in the work phase. AIAC's Kane says industry is also attracted to the program's risk sharing nature and terms and conditions that reflect the aerospace R&D cycle.

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