The shift in policy, however, also raises questions about whether R&D dollars meant to boost the sector will limit Canadian companies from becoming global suppliers of arms and other defence technology, a government goal.
During an address May 29 to a roomful of defence company representatives at an annual arms show in Ottawa, Public Works and Government Services Minister Rona Ambrose said most industrialized countries have a strategy for boosting national defence procurement, and that these countries recognize that “it is in the national interest to have a strong domestic defence-related research and development and manufacturing base that produces leading edge equipment and technologies.”
The Canadian government is committed to working with industry to foster innovation, she added, but during meetings held with industry, she heard concerns about accepting federal financial support and the barrier it created when competing for future contracts.
“I want to put an end to that right here and right now,” she said.
“Without question we will ensure that companies that receive federal research and development support or that work with Defence Research and Development Canada will not be prohibited from competing for related government contracts.”
This announcement was met with loud applause and a brief buzz of hushed chatter from the sea of suits seated at round dining tables.
Industry asked for change
“That was one of the things we were voicing [to the Canadian government],” said Ken Walker, president of Ultra Electronics, a British-owned security communications company that has had a Canadian subsidiary since 1947.
Mr. Walker and his colleague, Leo Gaessler, vice president of sales and marketing, called the shift in policy “huge” and “key.”
“A lot of times, the R&D programs with the defence labs are going to influence the way [the government] makes decisions—based on the outcome of that R&D program—on what they’re going to write in the specifications,” said Mr. Walker.
“So, to be squeaky clean, you really couldn’t participate in an R&D program without potentially not being allowed to bid in the major program...a lot of us wouldn’t play in the R&D game because it tainted us from being able to go after the big Canadian program when it came along.”
When asked whether this could create conflict of interest or give certain companies an unfair advantage and reduce competitiveness, Mr. Walker said he wasn’t concerned.
He noted that the process for receiving research dollars is also competitive, and the results of research programs don’t always define what the government is going to procure.
The Canadian government also retains control over some of the intellectual property that comes out of experiments it funds, so another company could also be selected after the fact, and receive some of the knowledge and technology, he added.
“It’s good news,” agreed Mark Halinaty, vice president and managing director of Thales Canada, a Canadian subsidiary of the French-based firm.
“We do work with [Defence Research and Development Canada] all the time, and yes, I would hate for that work to then [result in] ‘okay, you can’t now compete.’ So I completely support that position.”
Mr. Halinaty also said he wasn’t concerned about the potential for conflict of interest or disadvantage to other companies because these subsidized grants typically happen so early in the process that it wouldn’t necessarily match later requirements.
A barrier to global export
But one Canadian defence company representative did raise questions about what this change would mean for Canadian companies that might now begin applying for federal grants, but who also want to export their products on the international market.
Benjamin Boehm, vice president, sales and marketing for Canadian aerospace giant Bombardier said the company does not accept “free R&D dollars”—or, in other words, government grants that aren’t repayable.
Doing so would limit Bombardier from exporting resulting products globally because of World Trade Organization rules that ban merchandise that has received government subsidies because of an unfair advantage, he said.
When asked if he sees a potential problem for conflict of interest, when the Canadian government is investing money into a company and then seeing it as a bidder on a related contract, he said “we’d want to look into that very closely.”
“We’re not just a government-to-government company, we’re also a commercial company. We treat that type of stuff very seriously.”
When asked how the Canadian government plans to approach the balance between investing in a Canadian defence industry that can be competitive on a global market with WTO rules that ban products that have received government funds, International Trade spokesperson, Caitlin Workman, wrote in an email that “Canada abides by its commitments under the World Trade Organization.”
PWGSC did not respond to questions about the policy shift in time for publication.
Original Article
Source: embassynews.ca
Author: Ally Foster
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