TORONTO — Ottawa has signed an agreement with Coveo that the Montreal-based AI firm hopes could see its technology used to help deliver government services.

The move comes as the federal government looks to use AI to make the public service more productive while also buying more products and services from Canadian firms. The agreement will let Ottawa and Coveo jointly explore “opportunities on how to deploy AI across government,” AI Minister Evan Solomon told The Logic.

Coveo’s AI already powers the search and question-answering features on the websites of the tax departments of Australia and New Zealand. The firm has not, however, worked with Canadian governments. 

The company’s technology is sandwiched between commercially available large language models and its clients’ databases, shaping the flow of information both ways to ensure chatbots and other generative tools give users the right answers and don’t tell them anything they’re not supposed to know.

Coveo wants to do the same for federal departments. “The low-hanging fruit and probably the broadest use case is self-service to Canadians, and intelligence to government workers answering Canadians,” said Coveo executive chair Louis Têtu, claiming that could lead to significant savings.

The non-binding memorandum doesn’t contain any spending commitments or contract guarantees, and Coveo will have to compete for business like other firms. But by signing the agreement, the federal cabinet “indicates a preference or an interest for the government machine” to work with the firm, Têtu said.

Tax information could be the first example. “As a Canadian, I don’t wake up in the morning with a burning desire to talk to a contact centre,” Têtu said. A recent report by the federal auditor general found only 18 per cent of callers get through to the Canada Revenue Agency’s helpline in under 15 minutes, and that agents answer questions about individual taxes accurately just 17 per cent of the time. 

Coveo claims its technology could help some callers find answers themselves via AI tools, while serving up the correct information to workers so they get things right. “The science is in being able to answer the tough questions—that’s where 90 per cent of the cost is,” Têtu said.  

Solomon said details of how federal departments might use Coveo’s technology are still being negotiated. “What they will do in terms of helping transform government remains to be seen,” he said, citing the firm’s AI search and recommendation capabilities as areas Ottawa could explore.  

Lots of AI firms are pitching their products to Ottawa in hopes of securing contracts. “There’s a lot of hype right now,” Têtu said, adding that Coveo doesn’t “need subsidies.” Ottawa will test the firm’s cost-savings claims and only buy its technology if it works well, he said. Têtu was a member of a 28-person task force that Solomon recently named to advise on the overhaul of Ottawa’s AI strategy. 

The 850-person company is the second Canadian AI firm to sign a memorandum with the federal government, following Cohere in August. The Toronto-based company has already landed a contract with the Communications Security Establishment, and has demonstrated its AI systems to staff in other departments.

Solomon said Ottawa had already championed Cohere, a firm building foundation models in Canada, and wanted a firm developing applied AI tools for its second agreement. “The MoUs are a signal that we’re going to help develop the ecosystem,” he said, adding that the deals with other firms “are leading toward contracts.”

Coveo’s customers include large brands like Rolex and Nespresso, which use its technology to personalize recommendations for shoppers, and tech firms like Zoom and SAP, which use it for customer service. The publicly-traded firm made US$72.9 million in revenue in the first half of its fiscal year, up 12 per cent on an annual basis. It posted a net loss of US$19.4 million, but accounting for stock options and other non-operating items, reported a US$1.4 million loss in adjusted earnings, which it considers approximately breakeven. The firm had US$108.2 million in cash on hand at the end of September. 

The vast majority of Coveo’s sales come from outside its home country. “We’ve never been successful domestically, because for some reason, Canadians don’t believe in themselves,” said Têtu. “Now, for the first time, it sounds like we do.”

Update: This story has been updated with more financial figures from Coveo.