Space firms call for revamp of support programs in R&D Review Panel submissions

Several of Canada's space firms have come out swinging to press for sweeping changes to federal programs that support their industry sector. In submissions to the Expert Panel Review of Federal Support for R&D, the companies contend that programs such as the Canadian Space Agency's (CSA) Space Technology Development Program (STDP), the Strategic Aerospace Defence Initiative (SADI) and the Centres of Excellence for Commercialization and Research (CECR) all have funding, operational and/or policy drawbacks that limit their effectiveness.

Recommendations on how the government can improve these and other business support programs were contained in submissions from COM DEV International and a joint submission from MDA Information Systems, ABB Bomem Inc, Bristol Aerospace Ltd and Composites Atlantic Ltd.

The CSA comes under withering criticism from COM DEV International for significant reductions in its support for business, particularly the lack of funding available through its STDP program and support for Canadian firms that wish to access the European Space Agency's Advanced Research in telecommunications program. COM DEV asserts that the situation has become so dire its "R&D activities are suffering as a result and we are losing competitive position and market share in some areas where we were a global leader".

"Over the last five years these programs have all but evaporated as the CSA has not had sufficient funding, due to the delay in the government's consideration of its Long Term Space Plan … Given the sorry state of the CSA budget, the STDP program has completely diminished in the last 3 years and has little hope of recovery any time soon," states the COM DEV submission. "There is a fundamental gap between the strong funding programs supporting universities as outlined in the Panel Consultation Paper, and the very limited or non-existent funding to encourage industry to take the high risk step of taking fundamental research out of the laboratory and down the commercialization path."

where's the CSA's long term space plan?

COM DEV calls for both a national space strategy and the release and implementation of the CSA's Long Term Space Plan, which was submitted by the CSA to Industry Canada in early 2010 but was not accepted. The plan calls for a doubling of the CSA budget to $600 million and outlined input from industry on where investments would have the most impact in terms of jobs and company growth.

"The STDP was a consistent program (but the CSA) changed to large programs that were eating up the budget. It killed everything else," says Tony Stajcer, COM DEV's VP corporate R&D. "I would like to see a return to the roots of the STDP program and have the government put in more money. Canada's space sector sorely needs an increase in its budget to compete world wide because right now we are at a disadvantage. We need a commercial space business or we will be dead."

The joint aerospace submission also notes the recent decline in funding available through STDP, adding that the impact "could prove dramatic" if allowed to endure. In addition, the submission notes that STDP funding is relatively short term (1-2 years) and not suitable for sustained long-term R&D support — a shortcoming compounded by administrative burden which adds "substantial proposal costs to win funding, and the heavy reporting costs to the CSA".

CERC & SADI need re-focusing

The joint submission goes on to critique several programs which are available to space industry firms. The submission states that CERC — a relatively recent addition to the Networks of Centres of Excellence's suite of programs — is biased toward universities and not-for-profit laboratories with industry playing a supporting and subordinate role.

"The mandate of the CECR is centred on "commercialization" and "research", two activities which cannot be juxtaposed, leading to an inevitable conflict," it states. "Between the research and commercialization phases in the developing of almost any product is a period of "development" which can last for many years. This is not properly accounted for in the CECR mandate."

SADI is also given low marks for its treatment of the space sector, which the submission contends is quite different from the larger aerospace sector and not subject to stringent compliance with international regulations. From this perspective, SADI is ranked unfavorably against its predecessor — Technology Partnerships Canada (TPC) — which it contends was "well structured" by linking royalty pay-backs to commercialization success.

"We recommend that the SADI program be allowed to accept space-based activities with conditions identical to the former TPC program," it states. "If this cannot be done within the confines of the current program as it may open the aerospace sector up to trade challenges, a separate funding mechanism, which has similar guidelines to the old TPC program, should be set up."

COM DEV's Stajcer says decisions by other countries like Germany, the US and France to provide high levels of support for their space industries must be matched by a similar Canadian resolve. As a small nation with a relatively small space industry, a national strategy would help to identify and support niche areas where Canada already possesses research expertise and companies with viable, world-leading products and services.

"Canada needs to select areas where we're leaders and invest in them from a position of strength, not sprinkle money around to keep the political landscape happy" he says. "We need to be funding the gap of companies in the market. we need to be in the value chain. Pushing ideas to customers doesn't work."

The CSA's budget is slated to increase 8.7% to $424.6 million in FY11-12, according to the recently released Main Estimates, parts I and II. Details on the funding of the STDP program will not be known until the release of the part III estimates this spring.

make SR&ED fully refundable

The space submissions to the R&D Review panel all support the scientific research and experimental development (SR&ED) tax credit program but argue that it should be made refundable for firms when they are not profitable. The rational for refundability is that it would encourage companies to take more risk and re-invest in development even during tough economic times. The joint submission adds that making the tax credit refundable would provide an incentive for larger firms to invest their R&D dollars in Canada.

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