OTTAWA — The lobby group representing domestic scale-ups is calling for Canadian governments to buy more from innovative businesses by overhauling what it says are rigid and cumbersome procurement processes. Here’s what you need to know:

The specs: In a report to be published Wednesday, the Council of Canadian Innovators recommends that the federal government set a target for the share of overall purchasing it’ll do with small and medium-sized firms. It wants Ottawa to launch a concierge service that would help startups work through the bidding and contracting process and develop fixes for common hurdles companies face.

The council also drew up a new procurement role for the Industrial Research Assistance Program (IRAP), the National Research Council of Canada’s innovation grant program. Under the proposal, IRAP or a new agency would work with federal and provincial departments to develop faster purchasing processes, assess what their technology needs are and train their staff to be better technology buyers.  

The backstory: “The government is an enormous buyer,” said co-author Laurent Carbonneau, the council’s director of policy and research; the OECD estimates Canadian public-sector procurement totalled 14.6 per cent of GDP in 2020.

But Canadian startups and other small firms have long complained that governments make themselves tough to sell to, and that the process favours large, often foreign, companies. (Public-service executives have occasionally reached similar conclusions.) 

Scale-up founders say departments aren’t set up to buy in ways that make sense for their businesses. Calgary-based VizworX has tried to sell its data visualization and insights via two federal challenge programs, but found itself cut off from the officials who would ultimately be working with the technology. “We need to be able to talk to the end users to get the nuances of what they’re trying to accomplish,” said president Jeff LaFrenz. He added that small firms face cash flow issues when departments take months to decide whether to make a purchase.

(In February, Ottawa revealed plans to significantly scale back Innovative Solutions Canada, one of the challenge programs.)

Toronto-based FutureFit AI has signed up Colorado, Connecticut and Michigan to use its career-guidance technology as part of workforce- and skills-development programs. But CEO Hamoon Ekhtiari said it’s been a harder sell in Canada, where governments have sometimes bought from large U.S. online training providers instead.

“When we compete globally, other governments actually do meaningfully consider their local solutions,” he said. “So it’s important that ours does as well.”

The government sell: The Liberal government has allocated billions for innovation programs and funds. But most of that money and existing tax credits underwrite R&D, with relatively little spent on initiatives to gin up demand for startups’ products and services, said Carbonneau. Private-sector tech adoption in Canada is also notoriously sluggish. “We have lots of great researchers, ideas [and] companies,” Carbonneau said. “But we don’t have a lot of uptake in Canada for what they’re selling.”

Government can help fill the gap, while solving some of its own problems. And Carbonneau said targeted small-firm procurement allows policymakers to support innovation without spending more, at a time when they’re looking to tighten budgets. But that will require a culture shift.

The economic sell: “Do we want the companies that are built here to stay here and grow here?” said Ekhtiari. Firms that can’t sell into their home market are more likely to move, taking their innovations with them. The council recommends government procurement support commercialization of ideas and intellectual property that firms generate while fulfilling public-sector contracts.