Precarn to close its doors despite making pitch to support Digital Economy Strategy

Victim of bad timing?

Precarn Inc is ceasing operations 24 years after being launched to stimulate R&D and commercialization in the areas of robotics and intelligent systems. The program is being killed just one year following its second proposal to expand its scope to information and communications technologies (ICT) and align itself with the much anticipated Digital Economy Strategy (DES).

Months of negotiations with Industry Canada have failed to persuade government to reverse the decision, meaning Precarn will officially be disbanded September 30th. Despite the need for greater ICT R&D to improve Canada's lagging productivity, positive feedback for its realignment effort and numerous reports praising its novel commercialization model, the government was unwilling to extend funding further than March 31/11.

The current Precarn president says the demise of the organization should not be interpreted as a failure to fulfill its mandate and effectively serve its target industrial sectors. Rather, Dr Henri Rothschild says the program fell victim to a confluence of trends and decisions largely out of its control.

"I'm convinced it was bad timing. When we presented Precarn in the context of the Digital Economy Strategy (DES) it was well received within government … The decision was based on whether or not sunsetting programs were going to be continuously extended. A line was drawn in the sand. It was a policy decision even though the department (Industry Canada) supported it," says Rothschild. "It's the loss of an instrument that would have contributed to the ICT sector so it's a setback … I'm hopeful a new mechanism will emerge."

Precarn was established in 1987 by the Progressive Conservative government of prime minister Brian Mulroney following key groundwork by Fraser Mustard, Gordon MacNabb and Ron McCullough. Launched under the original title of PRE Commercial Applied Research Network, the organization's name was changed to Precarn Associates Inc and eventually to Precarn Inc. Since its formation, it has been routinely lauded for its tripartite formula of combining researchers with industrial end users and beta test bed users. Despite positive feedback from government, Precarn has never received more than $5 million annually in core funding and it has struggled in recent years to secure stable financing.

Up until 2005, it also played a key role in establishing industry-university collaboration as the manager of an early Network of Centres of Excellence: the Institute for Robotics and Intelligent Systems (IRIS). Precarn also struck collaborative agreements with CANARIE, the Canadian Space Agency and other federal agencies, departments and provincial governments.

Since then, Precarn has tried to expand or modify its mandate to attract greater and more stable funding from government that would allow it to reach a larger industrial base. In 2004 under the leadership of Anthony Eyton, it proposed a major increase in funding to facilitate a broader mandate to encompass the ICT sector and continue supporting university-based research in anticipation of the sunsetting IRIS. The government of the day chose to reject a request of $150 million over seven years. Instead it renewed Precarn in Budget 2005 at $20 million over five years, and received a one-year extension in the 2010 Budget.

Eyton says Precarn's cancellation is "a great shame" given the organization's record of growing firms and creating jobs, adding that it's indicative of the kind of shortsighted thinking that has hobbled government efforts to stimulate innovation and boost productivity.

"There's a long history in Ottawa of looking for something new and different. Then they fail and up pops another one. Precarn actually produced results and the hope was to expand the model to the whole ICT sector," says Eyton, principal of Trade Commissioner Consulting Services Inc. "The timing isn't the best for anyone looking for a fresh infusion of cash from government (but) scale was always a problem. The central agencies overlook small and the big always gets noticed."

Under Eyton in 2007, Precarn launched yet another bid to diversify its funding base, proposing to offer its services as an R&D manager to other organizations and applying to the then-new Business-Led Networks of Centres of Excellence program, to no avail. One positive development during that time was Precarn's awarding of a management contract for International Science and Technology Partnerships Canada (ISTPCanada). Paul Johnston was Precarn president at that time — a long-time Precarn employee who was tagged to replace Eyton.

"ISTPCanada is a good example of what we were trying to do," says Johnston, now an independent consultant and senior advisor to Hickling Arthurs Low Corp. "ISTP was literally a creation of Precarn and CIIRDF. (Canada-Israel Industrial Research and Development Foundation). CIIRDF had international S&T expertise while Precarn brought Canadian companies and university collaboration."

Rothschild says the forthcoming Expert Review Panel on Research and Development may prompt government to consider an a similar program that provides direct support to ICT firms, which he says is crucial if Canada is serious about addressing lagging productivity.

"The Canadian government does not have a major industrial technology subsidization program. We rely on the taxation system to assist industry but it's not giving us the result we want. We should be doing more of what Precarn is supporting, not less," says Rothschild. "In the last decade and beyond, it has not been government's policy to address innovation, productivity and BERD (business expenditures on R&D) through industrial support mechanisms … It has not been easy for Precarn to secure more robust, long-term funding."

Precarn's demise was precipitated by several other factors, including the government's efforts to eliminate the deficit and the holding pattern in which S&T organizations find themselves awaiting the release of the R&D Review Panel, due in mid October. In addition, several other larger S&T files are currently in play, including the DES, the recasting of the National Research Council and the future direction of the granting councils. As a standalone entity not supported by any strategic policy initiatives, Precarn was vulnerable due to its size and low visibility.

"A lot of things are happening on the government side. It's a matter of digestion as much as commitment," says Rothschild. "Last year when we were renewed for one year, we went to work and committed resources to many wonderful projects. There were economic returns and jobs. Everyone was pleased."

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