NRC transformation aided by IRAP and transitional funding in latest Budget

New portfolio structure in place

The National Research Council (NRC) is accelerating its transformation into a portfolio-based research technology organization (RTO), endorsed and abetted by the recent federal Budget which doubled support for the Industrial Research Assistance Program (IRAP). The Budget also provided one-year funding to implement NRC's new strategic plan which includes developing a government-wide concierge service for industry.

The Budget boosted IRAP's funding by $110 million, which will double the $85-90 million it currently spends to support industry R&D as well as launch the concierge service. It also provided NRC with $67 million for FY12-123 to aid in the transition, effectively replacing the annual B-based funding for the sunsetting Technology Clusters Initiative for one year.

In addition to the infusion of new funds, the NRC escaped the worst of the government's austerity cost-cutting measures, experiencing a $16.3-million reduction in its base funding starting in FY13-14. That works out to about a 2.5% cut, far lower than the 6.9% average or the double digit cuts suffered by organizations like the Canadian Space Agency, Communications Research Centre (see page 3), Defence R&D Canada and International Development Research Centre.

"The good news is that we didn't get (a cut of) 10% or anything close, which sends a really strong message … We're actually quite pleased with that overall," says NRC president John McDougall. "We have added to the base so we're up significantly. We are intending to grow external revenues … We're a growing organization — not a shrinking one —and we will continue to do that."

For IRAP, that will almost certainly mean an increase in the number of industrial technology advisors (ITAs) which has slumped to 210 from 236 last year when IRAP was hit with a workforce adjustment that reduced the number of its ITAs, regional directors and support staff.

In order to better focus on ideas that connect R&D efforts and move early-stage technologies towards the marketplace, the NRC has been restructured into 13 portfolios, down from the "37 or 38 different agendas" contained within its previous incarnation (see chart). Work is progressing to determine exactly what those portfolios will do to align the NRC's collective capacity and expertise to realize its objective of becoming a world class RTO. McDougall acknowledges that much of the work will be cultural.

"In order to have a meaningful collaboration you have to have a value exchange and that means both sides benefit from it. That's a new skill for our people — I'll be quite frank about that," says McDougall. "That's why we've begun (the transformation) by really focusing on the value proposition so you know what that value represents to a particular sector or particular agenda … It's all about confidence."

"One of the things we're expecting going forward is that there will be more participation by industry than there has been ... It's a very big change and if you do it well, companies will come back regularly."

— John McDougall, NRC president

external revenues climbing

Even at such an early stage in NRC's transformation, initial results are encouraging. Despite the lingering impact of the economic downturn and the disruption involving its evolution to a new model of industry- government interaction, external revenues are up significantly. Revenue from industry and other government departments was close to $165.2 million in FY11-12, with industry alone providing approximately $102.7 million, up more 3.2% from $99.5 million in FY10-11. That indicates that NRC's goal of doubling industry revenues to $200 million by FY15-16 is going to require an acceleration of industry-focused effort .

"(It's) a real credit to staff and to some extent to what (management is) doing," he says. "I have no doubt that's going to continue. One of our objectives is to make it continue."

NRC is forecasting total funding for FY11-12 of $790.6 million based on the assumption of no increase in funds from other government departments and a steady state in A-base funding of $535.5 million. B-based funding is also forecast to remain steady at about $100 million. And as industry revenues increase, total funding is expected to rise to $880.6 million by FY15-16.

austerity measures

To deal with the $16.3 million in austerity cuts, NRC is finding the bulk of the reductions in so-called efficiencies or overhead. Last week, nearly a quarter of its 65-strong communications staff in Ottawa were given their walking papers — an area that will have minimal impact on the ability to deliver services to clients. The previous week, the magnetic resonance imaging (MRI) division of the Winnipeg-based Institute for Biodiagnostics was closed down, affecting 47 employees and an additional seven employees in Calgary were also declared redundant. IBD's long-time DG, Dr Ian Smith, exited the organization in January, leaving the remaining medical devices program in the hands of GM Paul Wiebe.

flagship concern

NRC's central role in "developing and deploying value-added technology" in key S&T priority areas while assisting businesses through IRAP will be assisted by its initial slate of flagship programs (see chart). But some question the value of the flagship program, asserting that the selected technologies are too broad or focused on areas where other countries have a technological headstart.

For example, NRC's decision to focus on printable or flexible electronics has raised some concerns. Several US organizations are investing heavily in flexible electronics as is Taiwan through its prestigious Industrial Technology Research Institute, placing those nations at the leading edge.

And NRC may be seeing its collaborative role in key technology areas usurped by academia. A case in point is the Helmholtz Alberta Initiative, a collaboration on oil sands technologies between the Univ of Alberta and the Helmholtz Association of German Research Centres. The U of A is a global leader in oilsands-related research with dozens of principal researchers, 14 research chairs, and one-third of worldwide scholarly publications.

The massive Helmholtz Association is devoting research expertise and resources from four of its 16 institutes, pushing the annual budget of the initiative to more than $20 million.

At Western Univ, the Fraunhofer Project Centre for Composites Research @ Western has been established to pursue research on fibre composites aimed at the automotive and other sectors — a $10-million undertaking that one observer describes as a "shot across the NRC bow".

Another area of concern is the replacement of experienced DGs with GMs under the new portfolio structure, as NRC implements a program-based management structure. In addition to Smith at Winnipeg's IBD, other recent DG departures include Maja Veljkovic, Institute for Fuel Cells Innovation, Nils Petersen, National Institute for Nanotechnology, Jerome Koenescni, Plant Biotechnology Institute and Christian Couturier, Institute for Information Technology.

Regardless of the loss of expert personnel, NRC is clearly intent on distinguishing itself with a clear and differentiated role as an integrated partner with government and industry within its existing fiscal framework.

"What we want is to get an organization that is less introverted and more extroverted," says McDougall. "The Budget documents (have) lots of commentary about industry-facing and market-oriented. It's all of the things we've been talking about and working toward."

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