OTTAWA — The chief executives of some of the country’s biggest firms are calling for the federal government to set up a new branch like the U.S. Defense Advanced Research Projects Agency (DARPA), which created one of the internet’s early predecessors and helped stimulate the development of autonomous-vehicle technology. 

In a letter to Finance Minister Chrystia Freeland ahead of the 2021 budget, the Business Council of Canada (BCC) said adopting a “mission-driven approach to innovation policy” will ensure more research turns into company revenues, and help firms scale up. It also called for a new policy modelled on Germany’s network of applied-science institutes to make better use of intellectual property.

Innovation, Science and Economic Development Canada (ISED) plans to spend nearly $808 million on science and research in the 2021–22 fiscal year, with another $1.47 billion on business innovation support funding. But the BCC—whose members include corporate giants like construction firm EllisDon, pension fund OMERS, financial-services firm Scotiabank and insurer Sun Life Financial—said the federal government should do more to stimulate demand for Canadian inventions and innovative products and services. 

The letter, sent to Freeland Monday, proposes that Ottawa establish an agency modelled on DARPA. Launched in February 1958, the U.S. outfit has about 220 staff running 250 R&D programs, with a US$3.56-billion budget in the 2019–20 fiscal year. The agency funds basic science, but also launches challenges with monetary prizes for which teams drawn from academia and industry compete. 

Canadian innovation policy is too geared towards providing funding for researchers and companies, instead of ensuring there’s demand for their products and service, said Robert Asselin, the BCC’s senior vice-president of policy. The challenge-based approach creates “new markets in trying to solve problems.” 

DARPA puts “industry and academics together” on “very strict timelines” of two to three years, said Asselin. “They come up with a technology or a clear outcome, and then they move on to something else.” Canada’s funding mechanisms, by contrast, put less emphasis on public-private collaboration in applied science.   

A series of three DARPA contests between 2004 and 2007 accelerated the development of sensors and computing technology that enable driverless cars; members of the competing teams went on to lead autonomous-vehicle divisions at Google and Uber and found startups like Aurora and autonomous-aircraft maker Kitty Hawk. The agency is part of the U.S. Defense Department, and typically backs projects that could serve military applications.  

Ottawa does have a challenge-based program for buying technology designed to help startups develop and commercialize their products and services: Innovative Solutions Canada (ISC), which launched in December 2017 and has issued 90 challenges to date. But the program’s budget of just over $100 million is significantly smaller than DARPA’s, or the US$3.52 billion that the U.S. Small Business Innovation Research and Small Business Technology Transfer programs awarded in 2019. 

ISC is “still too small to make a significant difference,” said Asselin, who was previously an advisor to former finance minister Bill Morneau. The BCC recommends that the new agency focus on sectors already showing progress in Canada, including advanced manufacturing, agri-food, biosciences and health, cleantech and energy, and digital services. 

The Liberal government has not yet announced a date for the 2021 budget, its first in two years. Finance Canada’s formal consultations on the document concluded in mid-February.

The group also calls for Ottawa to reshape its intellectual property strategy around another international model. Fraunhofer-Gesellschaft, headquartered in Munich, runs 75 research institutes across Germany focused on specific technologies and applications. The organization generates and licenses a large amount of IP—as of April 2017, it had 60 dedicated staff managing 30,000 active patents. “They help [researchers and partner firms] build [their] IP, license it, make money out of it,” said Asselin, noting that “industry is much more involved at the beginning” than at Canadian institutions. 

Other industry groups have called on Ottawa to emulate the Fraunhofer model. In a September 2018 report, the startup and big-business executives on the Economic Strategy Tables recommended establishing technology-adoption centres across the country to connect inventors with companies and governments. Other countries have also tried to replicate the Fraunhofer. In 2014, the Obama administration proposed a 15-facility network of private-public manufacturing institutes.