Innovative Solutions Canada: Grants and Contracts for Technology

Canada is home to some of the world’s most innovative startups and small businesses. These organizations are leaders in the development of new products and services, but many find it difficult to grow and perform cutting-edge research and product development. Fortunately, Canadian government procurement programs are available to help accelerate the process and bring more products and services to market.

Innovative Solutions Canada is an initiative that provides government grants and procurement contracts to stimulate technology research, development, and commercialization. The program helps startups and small/medium-sized businesses (SMEs) overcome technology development hurdles so that they can produce globally-demanded products and services, while also improving government operations.

Through Innovative Solutions Canada, SMEs may receive up to $150,000 for proof of concept projects, up to $1 million for prototype development, and may also be awarded a government contract to support the innovation’s first-purchase.

Innovators can apply for current innovation ‘challenges’ through an online portal. Upon being reviewed, competitive applications are called forward to the proof of concept phase and may receive grants to offset project-related expenses.

How Innovative Solutions Canada Supports Technology Procurement

Innovative Solutions Canada is a federal procurement and grant funding program established to provide a portion of government budgets for the purchase of domestic goods and services. Each of the 20 participating federal departments have allocated 1% of their annual budgets to support the program; this pool of funds will support a call for innovations through departmental ‘challenges’. Challenges are requests for solutions where the Canadian government needs access to technologies not yet commercially-available and must therefore be developed.

Note on Intellectual Property (IP): All IP related to the project is retained by the small business for grant-based awards. Contract negotiations may include the negotiation of IP rights, but companies are never required to surrender IP.

How the Program Works

Innovative Solutions Canada is structured around a graduated, three-phase process:

1. Proof of Concept: Proving scientific and technical feasibility, and commercial potential, of an idea that addresses a public-sector challenge. Eligible applicants may receive up to $150,000 in Canadian government grants to offset up to six months of project expenses.
2. Prototype Development: Developing a prototype based on the proof of concept in Phase 1. Eligible applicants may receive up to $1 million in Canadian government grants to offset up to two years of project expenses.
3. Pathway to Commercialization: Should a Phase 2 prototype suit the needs of a government department, they may procure it from a business and become the innovation’s first purchase. There is no maximum to the amount of funds awarded through these contracts.

Participating Government Departments

There are currently 20 federal departments and agencies participating in the program. This includes:

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• Agriculture and Agri-Food Canada;
• Canada Border Services Agency;
• Canadian Food Inspection Agency;
• Canadian Space Agency;
• Correctional Service Canada;
• Employment and Social Development Canada;
• Environment & Climate Change Canada;
• Fisheries & Oceans Canada;
• Global Affairs Canada;
• Health Canada;

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• Indigenous and Northern Affairs Canada;
• Innovation, Science and Economic Development Canada;
• National Defence and the Canadian Armed Forces;
• National Research Council Canada;
• Natural Resources Canada;
• Public Health Agency of Canada;
• Public Service and Procurement Canada;
• Royal Canadian Mounted Police;
• Shared Services Canada; and
• Transport Canada.

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Eligibility for Innovative Solutions Canada Funding

To participate in the Innovative Solutions Canada program, companies must:

• Be for-profit and privately held;
• Be incorporated in Canada (federally or provincially);
• Have a head office in Canada;
• Have 499 or fewer full time equivalent (FTE) employees;
• Pay at least 50% of annual wages, salaries, and fees to employees and contractors who spend a majority of their time working in Canada;
• Have 50% or more of their full-time employees located as their ordinary place of work in Canada; and
• Have 50% or more of its senior executives (Vice President and above) with their principal residence in Canada.

Project Eligibility: Departmental Innovation Challenges

Projects considered for support through Innovative Solutions Canada program must align with one of the government’s open departmental innovation challenges and have a current technology readiness level (TRL) of 1-4. There are currently two challenges worth exploring:

1. Tracing the Steel Industry Supply Chain
2. Coal Mine Tailings Pond

How to Apply for Innovative Solutions Canada Research Grants

When ready to apply, SMEs can create an online profile and submit a proposal for one of the program’s open innovation challenges. Proposals must demonstrate that businesses have the capacity and capability to complete a project. Challenges change frequently; companies should continuously check open challenges to ensure that they submit a proposal to applicable opportunities.

To discuss whether your organization is a good fit for the Innovative Solutions Canada program and learn how to optimize the application process, please contact Mentor Works.

Posted: January 3, 2018. Updated: February 13, 2019.