ARCHIVED - Inter-Sectoral Partnerships for Non-Regulatory Federal Laboratories

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Appendices

Appendix I – Panel Membership and Terms of Reference

Dr. Arnold Naimark (Chair) – President Emeritus and Dean of Medicine Emeritus, University of Manitoba. Currently Director of the Centre for the Advancement of Medicine, Chair of Health Canada's Ministerial Science Advisory Board and Chairman of Genome Prairie. Founding Chair of the Canadian Biotechnology Advisory Committee and of the Canadian Health Services Research Foundation.

Dr. Kevin Keough – Former President and CEO, Alberta Heritage Foundation for Medical Research and a founder of NovaLipids Incorporated. Former Vice President of Research and International Relations at Memorial University of Newfoundland and former Chief Scientist of Health Canada.

Dr. Kelvin Ogilvie – Past President and Vice-Chancellor of Acadia University. First Chair of the Premier's Council for Innovation (Nova Scotia), member of the Board of Genome Canada, the Advisory Boards for the Atlantic Innovation Fund and Terragon Environmental Technologies Inc., and Chair of the Advisory Board for the NRC-IMB.

Dr. Clive Willis – Former Vice President of the National Research Council; Past Director General, NanoQuébec; currently a consultant in the area of innovation and economic development.

Terms of Reference

Background

Federal laboratories undertake a broad range of scientific activities, including science focused on regulatory functions critical to federal responsibilities in areas such as the environment, health, safety, and public security. They also undertake non-regulatory scientific activities to address broader social and economic objectives, including: earth and planetary science, energy technologies, agriculture and environmental science. Federal science is undertaken for public policy reasons such as supporting regulatory activities, the advancement of knowledge and economic and social development.

Government science and technology (S&T) is one of the three major sectors within the national innovation system, the other two being the private and the academic sectors. Government S&T plays a key role in the innovation system and federal labs and researchers interact with other sectors and organizations, domestically and internationally, to bring the benefits of federal S&T investments to Canadians. Strengthening the effectiveness of the government's investments in S&T to generate wealth and public good benefits is a key element of government policy.

Following a reference in the Economic and Fiscal Update, Advantage Canada, Budget 2007 signalled the Government's desire to explore alternative management arrangements for federal laboratories. Specifically, it stated that "the Government will launch an independent expert panel that will consider options for transferring federal laboratories to universities or the private sector. The panel will report to the President of the Treasury Board in the fall of 2007 on the type of non-regulatory science that should be transferred, which partners should be involved and an appropriate governance framework. The panel will also be asked to identify up to five laboratories that could be early candidates for transfer."

This intention was echoed in Mobilizing Science and Technology to Canada's Advantage, released in May 2007, which stated that the government would focus its activities in areas where government is best able to deliver results, and consider alternative management arrangements for non-regulatory federal laboratories. It also identified the key objectives that will act as drivers for considering alternative management arrangements for federal laboratories:

• Value / Efficiency – increasing the impact of federal investments;
• Quality / Results – fostering research excellence;
• Learning / Knowledge Transfer – creating better learning opportunities for students and the development of knowledge; and,
• Competitive Advantage – levering university and private-sector strengths.

Scope

In the context of these drivers, the Panel is encouraged to consider scientific activities undertaken by federal departments and agencies. Taking into account the diversity of federal science activities, the Panel will consider a broad range of alternative management arrangements including, but not limited to, transfer. Accordingly, the Panel should become familiar with the range of alternative arrangements already used by federal departments and agencies in the management of laboratories, and explore models beyond what is currently in place.

Several principles should guide the work of the Panel in considering alternative management arrangements for non-regulatory activities of federal laboratories:

• Practical Results – advice and supporting analysis from the Panel should result in workable approaches and proposals that have a high probability of implementation success;
• Benefits for Canada – outcomes support the achievement of tangible benefits for Canadians, and reflect linkages to the Canadian innovation system; and,
• Strong Accountability – due consideration should be given to the imperative of providing for strong accountability that demonstrates results for Canadians.

The Panel will engage key stakeholders in accordance with its mandate and mindful of the need to deliver its report to the President in the fall of 2007.

Mandate

The Independent Expert Panel will report to the President of the Treasury Board, in the fall of 2007, providing advice and options on alternative management arrangements, including transfer, for federal non-regulatory laboratories.

Budget

The Panel will operate within a budget of $1 million, including costs of a secretariat to be located within the TBS.

Deliverables

In fulfilling its mandate the Panel will prepare a report that provides a framework for considering alternative management arrangements and increasing the impact of federal investments. This report will include the following:

• Criteria that can be used to identify laboratories conducting non-regulatory science that could be suitable for alternative management by universities and/or the private sector;
• Identification and examination of a range of relevant management and governance and financial models;
• Identification of partners that need to be involved and under which circumstances and models;
• Success factors for implementation, including barriers that need to be addressed, such as financial, human capital and infrastructure implications and performance evaluation considerations; and,
• Identification of up to 5 federal laboratories as early candidates for new management arrangements.

Appendix II – International Case Studies

Introduction

Many members of the Organization for Economic Co-operation and Development (OECD) are, like Canada, working towards more collaborative approaches to S&T among government, academic and private sector organizations. Several OECD countries have implemented changes to their S&T systems ranging from incremental adjustments to comprehensive structural reforms and changes, whether incremental or more comprehensive. The changes have been generally aimed at modifying the role played by government, fostering strategic planning and developing governance and management structures within which research-performing institutions function more efficiently and competitively.

An OECD report suggested that "changes in the balance between institutional and project-based modes of funding of the public research sector need to be considered in the context of a broader strategy to improve the efficiency, performance and adaptability of public research organizations and the linkages between them. A shift to more competitive, project-based modes of funding linked to performance assessment can help improve the responsiveness of public research to socio-economic needs and improve research quality. To be effective, such a shift often needs to be accompanied by more fundamental structural reforms aiming at redefining the respective roles of universities and other public research institutions."^[13]

Foreign policy makers have sought to establish public-private R&D linkages as a means of maximizing benefits from the innovation system, breaking down traditional silos and promoting horizontal S&T. In a number of OECD countries, the strengthening of linkages between the public and private sectors has been effected through changes in management arrangements for public sector S&T.

The patterns of S&T governance and management models in particular countries are influenced by the national context including: the nature of the economy, historical circumstances, the respective roles of national and regional governments, and, the relative S&T strengths of industry, academia and government. In this section, an overview of developments pertaining to inter-sectoral initiatives in S&T in the US, UK, Germany, Finland, New Zealand and Australia is provided to illustrate the diversity of approaches being taken to implementing new governance and management arrangements for government S&T.

United States

The U.S. spends over $300 billion annually on R&D, including expenditures to maintain over 720 laboratories.^{[14] [15]} Although most laboratories are government owned and operated, the US has extensive experience with contracting out the management of federally-funded laboratories.

Private sector and academic R&D were mobilized for defence and security purposes during World War II.^[16] In the ensuing decades the U.S. the mobilization of non-federal resources to meet new pressures (e.g., on nuclear arms, space, health and energy programs) resulted in the development of 36 Federally Funded Research and Development Centers (FFRDCs).

Through the FFRDCs, the government contracts out the management of a facility to post secondary institutions (e.g., California Institute of Technology, Carnegie Mellon University, Massachusetts Institute of Technology), not-for-profit corporations (e.g., Battelle Memorial Institute, RAND Corporation), or for-profit firms (e.g., Westinghouse Savannah River Co., Lockheed Martin Corp.). Sponsoring federal departments and agencies provide 70 per cent or more of a Center's financial support and remain responsible for monitoring the Center's R&D performance. In 2002, FFRDCs accounted for about $7 billion in federally funded R&D, the majority of which was performed by Centers administered by colleges and universities.

Although some of these facilities have a single organization tasked with their management, others are operated by consortia. For example, the National Optical Astronomy Observatory is operated by the Association of Universities for Research in Astronomy (AURA), a consortium of 33 U.S. educational and non-profit institutions and 7 international affiliates. Similarly, the National Center for Atmospheric Research (NCAR) is managed by the University Corporation for Atmospheric Research (UCAR), a not-for-profit organization comprising 70 member universities, 17 U.S. affiliates and 46 international affiliates.

The FFRDCs are seen as having distinct merits. For example, the Department of Energy's contractor-operated National Laboratories are viewed as providing a strong public interest focus arising from the long term, strategic partnerships with sponsoring departments, assurance of relevance through mandatory reviews to determine the appropriateness of the work program, as well as enhanced flexibility to recruit and manage a highly skilled technical workforce.^[17]

The overall role of government-owned, contractor operated (GOCO) National Laboratories in industrial partnering and technology commercialization is reviewed periodically. These reviews provided an opportunity to identify issues that influence performance including maintaining focus, protecting scientific autonomy, establishing efficient procurement practices, managing intellectual property effectively and reconciling cultural differences.

Cooperative Research and Development Agreements (CRADAs) are vehicles for conducting cost-shared research involving government research laboratories and the private sector. Evidence is emerging that such agreements can extend the influence of federal laboratory R&D on industrial research. A 2003 study concluded that industry laboratories with a CRADA produce more patents, spend more on company-financed R&D, and devote more resources to their federal counterparts, than those without such an agreement.^[18]

Both FFRDCs and CRADAs are expected to remain key features of the US laboratory system, and ongoing contributors to public-private sector collaboration.

United Kingdom

British Public Sector Research Establishments (PSREs) represent a broad range of intramural research organisations funded by the UK government. PSREs fall into two categories: 1) those that are part of, or directly funded by, Government departments and hence conduct research as a subsidiary activity to support the sponsoring departments' core objectives; and 2) those that are sponsored by the Research Councils. The Research Council Institutes (RCIs) have a different role; they are predominantly curiosity/science driven institutes and invest in knowledge creation for the public good rather than for specific departmental needs.

In the 1980's and early 1990's, the UK experienced a wave of public sector reform focusing on cost-cutting, efficiency and effectiveness, the devolution of executive functions to various agencies and a commercial orientation to both policy making and management. The UK policy for the advancement of science began to put emphasis on the economic benefits of S&T, including a systematic approach to the commercialization of research conducted in public research establishments. The focus was on developing a closer partnership between the government and its scientific and engineering communities, and industry. Many of the UK's largest national government laboratories were privatised on a case by case basis. There are now three main categories of privatization in the UK context:

1. Trade sales or full privatization: ownership of the research laboratory or establishment is transferred to a private company (e.g., the National Engineering Laboratory; and the Laboratory of the Government Chemist.)

2. Transfers of establishments to companies limited by guarantee: laboratories are transferred to private organisations but with certain constraints on functioning to safeguard a research activity of public interest (e.g., the Transport Research Laboratory).

3. Government – owned / company - operated (GOCO): government retains ownership of the facility but enters into a contract for a fixed period of time with a private sector company for the full or partial operation of the facility (e.g., the National Physical Laboratory).

Most of the departmental laboratories that were not privatized or devolved under contract were turned into Executive Agencies (e.g., the Defence Evaluation and Research Agency) in an attempt to enhance efficiency by exposing the government science to quasi-commercial governance and management mechanisms. Executive Agencies are responsible for performance of the executive functions of that department. They are independently accountable within their departments, but have more autonomy and can pursue efficiency gains by means commonly employed in the private sector.

Overall, the foregoing changes had more profound effects than a simple change of ownership or governance would imply. The creation of executive agencies provided more autonomy for the management of the labs and a simultaneous increase in accountability and control mechanisms. Privatization produced changes in both attitude and behaviour in respect of partnering, development of a clear mission, customer orientation, cost control and efficiency.

Since privatisation, many of the laboratories have expanded and acquired an international reputation. The LGC, (formerly the Laboratory of the Government Chemist), has expanded from 250 scientists at the time of privatisation to more than 1000 in 2006 as a result of acquisitions. The Transport Research Laboratory (TRL) is now an independent world recognized organization providing research, consulting advice and testing for all aspects of transport.

Existing PSREs, including RCIs, are facing pressures as a result of a combination of factors, including ageing scientific staff, complex lines of strategic responsibility, inadequate investment and low cost recovery.^[19] The UK government plans to reinvigorate the PSREs through additional capital funding, a strategic approach to capacity planning and re-location and integration of RCIs with the university sector.

Germany

In Germany there are four large research institutes (the Max Planck Gesellschaft, the Helmholtz-Gemeinschaft Deutscher Forschungszentren, the Wissenschaftsgemeinschaft Wilhelm-Gottfried-Leibniz, and the Fraunhofer Gesellschaft) that are jointly funded by federal and state governments, as well as some private sector funding. While these institutes work closely with the government and receive a significant portion of their funding from government sources, they are formally separate from the government. There are also mission focused federal (and state) research institutes called "Bundesanstalten". These research organizations are closely affiliated with a specific ministry and not only carry out research but also perform regulatory functions. A management organization called Projekttraeger is licensed by government departments to manage sector-based research.

Recently, there has been an effort to bridge the separation between fundamental research and applied research which has long characterized the German system. The effort is aimed at achieving greater efficiency and cost effectiveness, flexibility and greater institutional competition in the management of public sector science, enhanced internal networking, commercialization, flexible funding mechanisms and S&T cluster formation involving government, academia and the private sector.^[20]

Clusters are defined by the OECD as 'networks of interdependent firms, knowledge-producing institutions, bridging institutions and customers, linked in a production chain which creates added value'.^[21] In Germany, the development of clusters in certain fields (e.g., in medicine and biotechnology in Munich) between universities, public research institutes and business, with the support of private foundations such as Stifterverband, has contributed to new forms of cooperation amongst the country's four main research organizations.

Germany has no stated intent to alter long-standing structures in its research system, except to enhance their internal networking, efficiency and performance. To achieve these goals, Germany is creating bridges between institutions of basic and applied science; developing indirect mechanisms to encourage competitive-based allocation of funding and performance criteria for research activities within its four main public research network. Contrary to other OECD countries, Germany has decreased the proportion of funding allocated to projects and increased base funding of institutions in order to achieve "greater responsiveness, flexibility, improved competitiveness, and greater integration across institutional boundaries."^[22]

Finland

As part of the Finland's on-going commitment to enhancing network-based cooperation, they have developed two types of collaborative initiatives of interest: the Strategic Centres of Excellence (SCE) and the Centres of Expertise Programme (CEP).

SCEs are designed to foster long-term R&D cooperation between leading companies, universities and government laboratories in targeted areas: energy and the environment; metal products and mechanical engineering; forestry; health and well-being; the information and communications industry and services. They are established as non-profit limited companies funded by the shareholders, including both private and public organizations. The first Strategic Centre of Excellence was created in spring 2006 when Forest Cluster Ltd. (KCL) was established with shareholders from the forestry sector and others (e.g., chemical companies), amongst others. The government funds projects and programs included in the research agendas of these non-profit companies on a competitive basis.

The second example of Finnish S&T collaboration is the Centres of Expertise Programme which is designed to pool local, regional and national resources. These resources focus on fields requiring high levels of expertise, bringing together regional strengths and specialisation from the research sector, educational institutions, and businesses and industry. The present program is based on 13 thematic clusters which are selected on competitive basis and each of which must include CEPs from at least two regions. The Programme has been effective in supporting specialisation and cooperation between regions and increasing regional competitiveness.

A systematic promotion of cooperation between companies and between different organizations as well as regular evaluation and feedback has been the cornerstone of development in Finland's science system.^[23] According to the Finnish Science and Technology Policy Council 2006 report on Science, Technology, Innovation, there appears to be no further significant reform planned for Finland's S&T structure. The government intends to maintain and reinforce its strong tradition of network-based cooperation through the creation of academic and private sector clusters and centres of excellence.

New Zealand

New Zealand's nine Crown Research Institutes (CRIs) and eight universities form a significant part of New Zealand science and innovation system. The CRIs, launched in 1992, are government owned but are required to operate on a commercial basis.

Each CRI was established around a productive sector of the economy, a grouping of natural resources or a particular public-good task, enabling each to have a clearly defined purpose and customer base. The CRIs undertake both basic and applied research for industry and government as end-users, with most efforts focused on the application of research results over the medium to long-term.^[24]

Public funding of CRIs is primarily provided for under the Public Good Science Fund on a contestable basis. The CRIs compete against universities, private firms and research associations for funding. It is generally recognized that this competitive approach to funding is fostering research excellence. CRIs also receive funding from a non-contestable public source of funds, to build and maintain the research capability required for the provision of public good science. Notwithstanding the revenue generation of the CRIs, government funding ensures that much of the research undertaken by CRIs is strongly aligned with the government's economic, environmental and social S&T priorities.

It is generally believed that CRIs have had a positive impact on New Zealand's economy. However, as part of its current S&T review (2007)^[25], the New Zealand Ministry of Research, Science and Technology observed that:

i) the current system of purchasing research can create excessive competition within New Zealand's small scientific community, thereby limiting opportunities to build collaborative research effort in nationally important areas;

ii) there is a need for greater clarity about the role of CRIs and their management policies and procedures pertaining to, for example, ownership of assets, purchasing rules, intellectual property and audit.

iii) effective mechanisms are needed marshal resources so that universities, CRIs and the private sector work together to meet the strategic research requirements of government and industry;

iv) the need for quality 'public good' research in areas such as health, social services and the environment is more adequately met; and,

v) the devolution of government S&T to private laboratories has increased the gulf between the users of science in government and the performers of science.

Australia

Publicly funded research is conducted through various institutions and organizational structures, most of which are collaborative endeavours. Australia's Cooperative Research Centres and National Flagships program offer two examples of highly successful collaborative efforts.

The Cooperative Research Centres (CRCs) were established in 1990 to link top university, government and industry researchers into a network allowing for "integrated collaborative research teams."^[26] CRCs seek to create linkages that facilitate the turning of Australia's scientific innovations into commercial successes. CRCs are established by a competitive process and must have at least one Australian university and one private sector organization as participants; undertake some research in the natural sciences or engineering; and involve undertaking commercialization/utilization activities, and education and training activities. Once a CRC is formed, it is incorporated and enters into a formal agreement with the Australian government for up to seven years. The government agrees to provide a certain level of funding and the CRC agrees to undertake specific research activities as well as identify in-kind contributions they will make.

A 2006 economic assessment of the CRC program concluded that the CRC program is delivering net economic benefits to Australia.^[27] The same study also concluded that CRCs focused on developing new industries have more difficulty delivering economic benefit than those that produce incremental improvement within existing sectors.

The National Research Flagships program is Australia's newest research initiative. National Research Flagships link Australia's Commonwealth Scientific and Industrial Research Organisation (CSIRO) with organizations across country to conduct research in specific areas of national interest. Individual Research Flagships are not physical structures or laboratories, but rather a collaborative goal-oriented research effort managed by a small staff and performed by the partner organizations. Collaboration within multi-disciplinary teams is a key feature of the Flagship initiatives.

A recent review of the Flagships program recommended the continuation of the program and concluded that it was a powerful mechanism for optimizing the application of science for the benefit of Australia.^[28] The review also urged the articulation of clearly defined goals, the formulation of IP policies that maximize national impact, and the adoption of communication strategies focused on end-users and the community at large.

Appendix III – Typologies of Alternative Management Arrangements

Organizations involved in governing or managing the alternative arrangement:

• Private sector
• Academia
• Federal departments or agencies
• Departments/agencies of other levels of government

Nature of the transformations involved in the alternative arrangement:

• Change in ownership of assets (physical plant, equipment, IP)
• Change in management of assets (physical plant, equipment, personnel, programs)
• Change in orientation (to for-profit enterprise )
• Change in employer-employee status of personnel
• Governance relationship:
• Partnership (bilateral, multilateral)
• Consortium
• Corporation
• Contractual (Lease arrangement; facilities access and use)
• Contractual (government owned-contractor operated)
• Joint management agreement

The time horizon:

• Indeterminate
• Fixed term
• Renewable terms

The role of the federal government in relation to alternative arrangements:

• Active role on management board
• Active role on management board and participant at science level
• No ongoing role (i.e., complete transfer)

Financing:

• Ongoing base funding by sponsors
• Endowment
• Revenues from service contracts
• Proceeds from IP
• Research grants
• In-kind contributions

Location:

• Single site
• Multiple sites
• Existing Facilities
• New or refurbished facilities

Appendix IV – Proposal Submission Template
 

Summary of Proposal: Briefly describe the proposal and which organizations/labs it includes. Proposal Proponent: Provide the name and contact information for the key proponent(s) of this proposal. Key Partners: Who are the key partners who need to be involved?

 

Proposal Description: Describe what is being proposed? How is it different from the existing arrangements? What are the essential components? Describe the role of the partners? What contribution would each make? What is the overall rationale for the proposal? In what ways will it improve upon the status quo? Describe the operational model/governance structure that is being contemplated? Status of Discussions with Partners: How far advanced is the proposal? How extensive have discussions been with those affected, and what are the major issues? Next Steps / Timelines: What are the milestones and timelines for the proposal?

 

Anticipated Benefits and Impacts: Describe the expected benefits? How does each partner benefit?

 

Contribution to the Four Objectives: 1. Value / Efficiency: Describe how this proposal will increase the impact of investments in S&T? 2. Quality / Results: Describe how this proposal will foster excellence and productivity in research and deliver better results for Canadians? 3. Learning / Knowledge Transfer: Describe how this proposal will create better science learning opportunities and facilitate knowledge sharing with other partners in the innovation system. 4. Competitive Advantage: Describe how this proposal will enhance the social and economic benefits of Canada's investment in S&T?

 

Challenges and Risks What are the main challenges to be met in implementing the proposed new arrangement? Are there any significant risks associated with the proposed new arrangement? If so, how might they be avoided or mitigated?

Appendix V – Summary of Input on Inter-Sectoral S&T Integration

Input to the Panel on the issue of transfer of non-regulatory federal laboratories to alternative management arrangements for non-regulatory federal laboratories was obtained in three ways: by informal consultations undertaken by Panellists with a variety of knowledgeable individuals; through a series of invitational roundtable discussions was held in six regions to elicit the views of participants about the structure and content of a framework to evaluate opportunities for transfer of non-regulatory laboratories to new management arrangements and through responses to solicitation of input from a wide variety of stakeholders in government, academia and the private sector.

Part 1 of this appendix summarizes input from the roundtable discussions on the matter of a framework for ISTI. Part 2 summarizes the input received from all three sources (informal consultations, roundtables, and stakeholder solicitation) on the various strategic and tactical issues related to laboratory transfers.

1. On a Framework for ISTI

Roundtable participants were provided a background document describing the Panel's mandate, its working definitions of key terms, an overview of federal S&T, a general typology of transfer arrangements in Canada and abroad, and a preliminary draft of an evaluation framework.

Goals, Objectives and Definitions of Key Terms

Participants were supportive of the goals and objectives of the laboratory transfer initiative and observed that an ISTI strategy should be seen as one element in an overall national S&T strategy. Participants viewed this element as one linked to the full spectrum of activities supporting innovation and its major role in Canadian economic competitiveness.

There was considerable agreement among the three sectors (government, academia and the private sector) on the potential benefits of inter-sectoral S&T integration. The key benefits identified included:

• greater synergy, harmonization and collaboration between sectors;
• increased capacity to tackle major R&D projects by achieving critical mass;
• improved knowledge transfer between sectors;
• revitalization and sustainability of existing laboratories;
• potential to accelerate innovation;
• increased alignment with national priorities; and,
• better base for contributing to harmonizing the national science and economic agendas.

Participants noted that significant opportunities exist for better integration of S&T amongst government, academia and private sectors at the institutional as well as operational levels, and that the number of discreet opportunities for inter-sectoral integration of S&T could far exceed the 5 "early" candidates to be identified by the Panel. Those involved emphasized that implementation of early transfers should include performance measurement to identify and apply lessons learned to the evaluation of later transfer initiatives.

Participants supported the Panel's continuing analysis of existing models of S&T integration in Canada and abroad. Indeed, many participants expressed an interest in this process becoming an ongoing dialogue looking at S&T integration among the government, academic and private sectors to ensure other models, and other opportunities, are presented and discussed in the future.

The roundtable discussions reinforced the Panel's emphasis on careful definitions of terms. It was noted that the use of the term "transfer" in public announcements, without clarification, had created considerable concern about the government's motivation and intentions, in particular when interpreted as the federal government divesting itself of laboratory assets. The working definition of "transfer" developed by the Panel was regarded as clear and useful when seen in the context of the goals and objectives of the lab transfer initiative.

It was further suggested that "development" in the phrase "research and development" should be replaced by "experimental development" and that the term "conveyance" in the definition of transfer should be replaced by a word that does not have the same specific meaning in law as conveyance. It was also suggested that the words "interest in" in the phrase "articulation of the government's interest in" be explained as including the government's ongoing commitment to particular S&T activities.

Criteria for Identifying and Assessing Opportunities

Roundtable participants were asked to comment on the criteria for evaluating opportunities for transfer as proposed by the Panel in the background discussion document. Their comments validated the Panel's draft criteria and included valuable suggestions about the detailed considerations needed to develop a fuller description of the criteria. They also suggested that the mode of application or relevance of the criteria might vary from case to case depending on the nature and scale of a proposed transfer. For example, the "timeliness criterion" might apply differently in selecting candidates for early transfer than it would in evaluating large scale or complex transfers designed to meet long term, strategic objectives.

There was considerable emphasis on including, in the evaluation criteria, elements pertaining to:

• complementarity, synergy and net value gain;
• rigorous accountability and quality assurance mechanisms;
• articulation of a compelling business case and operating plan;
• evidence of significant growth potential;
• readiness and capacity of the partners; and,
• potential to contribute to national and regional priorities.

These suggestions were taken into account by the Panel in revising the draft criteria.

Models of Arrangements for Managing Inter-Sectoral S&T Integration

Roundtable participants considered various examples of management arrangements involving inter-sectoral S&T transfer and integration from Canada and abroad as described in the background discussion document. They highlighted a number of existing models that offered experiences (both positive and negative) that could be applied in the laboratory transfer initiative and in developing new management arrangements for inter-sectoral S&T integration. They also identified, from their own experience and knowledge, other examples of such management arrangements.

They discussed the most salient features of the various operating and management models and agreed on two key points:

• a fundamental feature of models of integration that are most likely to meet the objectives of the transfer strategy would be the development and implementation of a research program that is shared among, and meets the needs and expectations, of all partners, and
• the arrangements for governing and managing the joint research program would need to be tailored to fit particular circumstances, i.e. there is no "one-size-fits-all" model.

They also noted the importance of stable and sustainable resources; HR policies that addressed different cultures, practices, incentives and expertise development; and the need to adapt new arrangements as they mature, lessons are learned, and the environment changes.

The Panel's background discussion document contained a table categorizing the characteristics of various management models. Participants made a variety of useful suggestions for clarifying and enhancing the table, and these have been taken into account by the Panel in revising the table.

Critical Success Factors

Participants discussed critical success factors from two perspectives: those that are particularly relevant to introducing or launching a transfer arrangement, and those that are particularly relevant to the ongoing operation and outcome of the integrated research program. Clearly, there are several factors that are germane to both perspectives. The factors identified by participants include:

• factors inherent in the Panel's criteria for opportunity leadership, e.g., sound governance and management processes and strong managerial and scientific leadership;
• building strong, transparent and trusting relationships between partners in any new arrangement;
• developing and maintaining a strong shared vision statement of purpose and desired outcomes among all parties involved;
• governance of new arrangements that includes effective dispute resolution mechanisms;
• scientific capacities and skills that are truly complementary and not merely duplicative;
• concerted ongoing efforts to build understanding and accommodation of the differing mandates and needs of partners from different sectors; as well as their distinctive cultures and practices;
• provision, by the sponsors of new arrangements, of sufficient funding (or services) to cover both the transaction costs of establishing partnerships and the costs of sustaining the joint research program. In cases where the new arrangements involve multi-site research networks, sufficient funding to cover inter-action costs may be critical;
• perseverance and patience over a development period that is long enough to allow partnerships to mature and allow benefits to be realized;
• building in flexibility to facilitate mid-course corrections to respond to changing circumstances;
• ensuring well-developed communication and outreach initiatives to explain the rationale and benefits to obtain "buy-in";
• equitable sharing of benefits and rewards; and,
• a research program management framework that reconciles differences in operating time frames among the sectoral partners.

2. On the Inter-Sectoral S&T Integration Strategy

Comments on the inter-sectoral S&T integration strategy were received from a wide range of stakeholders in the course of the roundtable discussions and during bilateral discussions between individual Panel members and individuals in government, academia, and in the private sector. Stakeholder submissions were also received from individuals associations and organizations.

In addition, the Panel members conferred with representatives of groups (e.g., the AUCC, the Professional Institute of Public Service of Canada, the federal granting councils and the CFI, university vice-presidents with portfolio responsibilities for research and/or industrial liaison and provincial officials).

On The Value of an ISTI Strategy

Virtually all commentators were in favour of enhanced inter-sectoral S&T collaboration.

Many commentators concurred in the view that: greater S&T integration is needed to fully realize the benefits of synergy and complementarity; current collaborative mechanisms are insufficient and new management arrangements are needed. For example it was noted that while co-location of S&T activities may be essential in particular cases, co-location alone is insufficient to ensure effective integration.

A few contended that current mechanisms for fostering collaboration were qualitatively sufficient and that the government's focus should be on increasing the extent of collaboration by greater investment in federal laboratories and removal of unnecessary barriers to collaboration both within government and with academia. Several cautioned against a false dichotomy between strengthening government laboratories and fostering integration since both are needed.

On Roles and Expectations

Several commentators emphasized the importance of recognizing critical differences in the roles and expectations of science in government, in academia and in the private sector. These differences are sometimes referred to as "cultural" but Panel members agreed most can be categorized as differences in accountability; academic freedom; motivation; degree and nature of mission orientation in determining the subjects of research; time horizon for completion of projects; responsiveness to public policy requirements; and the collateral roles of scientists (e.g., of academic scientists in education and training; of government scientists as confidential advisors to government and representatives of the federal government in international fora).

Recognition of the distinctive and important roles served by S&T in government, academia and the private sector was not seen as precluding greater S&T integration in particular circumstances, but rather as a basis for not pursuing integration to the extent that it weakens the ability of any sector to fulfill its distinctive role. Thus, while industry commentators noted that it may not be helpful to transfer non-regulatory laboratories that currently pursue joint experimental development with industry, or that currently provide pilot scale or incubator facilities to small and medium-sized business, they did see clear opportunities for industry collectives to partner with government and academic institutions in pre-competitive applied research. Others noted that individual companies might wish to enter into contracts with an entity under joint sponsorship of the federal government and academia to undertake specific projects.

Caution was also urged in the interpretation of the term "non-regulatory". Some involved in government laboratories regard the R&D they conduct as subserving regulatory purposes and that to characterize such R&D as "non-regulatory" is inappropriate. By the same token, it was noted that results of R&D of relevance to regulatory functions often originate in non-governmental laboratories.

There were several references to the need to look at the inter-sectoral integration strategy in the context of a national S&T strategy as a whole. In this regard, reference was made to the notion that government should focus on those aspects of S&T that government is "best able" to perform. The implicit premise that government is best able to perform "regulatory" science while others (academia, private sector) are best able to perform non-regulatory science was deemed to be highly questionable. It was noted repeatedly that there are several areas of vital public interest where research of a non-regulatory nature is required that non-government sectors are unable, unwilling or unlikely to carry out. These views were expressed primarily in relation to government divesting itself of involvement in non-regulatory R&D. It was acknowledged that, in selected areas, the government's need for research that it is best able, willing, and likely to perform can be met through its participation in joint sponsorship, governance and management of an inter-sectoral research program.

There were several commentaries received from individuals and organizations in the private sector conveying the important and often critical roles government laboratories play in the support of business and industry – roles that they cannot fulfill on their own on economic grounds and that universities are unable to fill for economic, structural and functional reasons. They called for government to sustain and strengthen the capacities of federal laboratories, including their ability to provide access by the private sector to special facilities and data resources. It was also indicated that participation of federal laboratories in a joint venture with universities was seen as important incentive for industry to participate in, or contribute to, trilateral alternative arrangements. The NRC, in particular, was seen as offering major strength by virtue of its ability to marshal research and expertise that is oriented toward the needs of industry, both regionally and nationally.

Shared Interests and Desired Outcomes and Benefits

The roundtables provided a venue for the identification of shared interests and desired outcomes of an ISTI strategy. An integration strategy was seen as contributing, under appropriate circumstances, to:

• greater synergy and complementarity among sectors, resulting in more and better research and training, and increased knowledge transfer and commercialization opportunities;
• more sustainable scientific enterprises, new opportunities for existing laboratories, and a heightened level of entrepreneurship;
• building capacity (achieving critical mass) to enhance the scope of S&T and to create an environment that is conducive to recruiting new scientists and to providing greater opportunities for career advancement;
• an enhanced international role for Canadian science and technology; and,
• an enhanced ability to participate in innovation clusters.

Achieving the desired outcomes and benefits of integration were seen as depending on attention to the critical success factors described in section 1 above and most notably on a common vision, equality of interest, sustainability, leadership, sound governance and management processes, adaptability to changing circumstances and adequate resources.

General Effects of Launching Inter-Sectoral S&T Initiatives

Commentators from academia and research funding agencies noted that the laboratory transfer initiative may have significant potential impacts on the current agencies supporting extramural S&T and on academic administration. For example, if federal scientists relocated to universities became eligible to apply for operating, equipment and infrastructure grants from the granting councils and CFI, the resources of these agencies would have to be increased to prevent erosion of funding opportunities for existing academic scientists. Pressure on existing resources would also be increased on programs supporting graduate students, post-doctoral fellows and career development awards for scientists; and, on existing programs supporting inter-sectoral collaboration.

Some existing and proposed models of ISTI involve a finite duration (e.g., a 5-year term). While one may anticipate renewals or evolution into more permanent arrangements, the federal government and its co-sponsors should have contingency plans in place for dealing with initiatives that come to the end of their term or are discontinued for other reasons.

The enhanced collaboration resulting from new management arrangements can contribute significantly to achieving the goals and priorities of a national science and innovation strategy.

Appendix VI – A Note on Implementing New Management Arrangements

Implementation of new management arrangements to support inter-sectoral S&T integration involves the formation of new working relationships related to:

• a common purpose, objective, and scope;
• governance mechanisms, roles and responsibilities and accountability;
• management of human and financial resources;
• management of intellectual and real property;
• planning and reporting;
• norms, values, and ethics.

Forming successful new multi-sector working relationships involves recognition of the conditions under which each partner in the relationship must operate, and designing management and accountability arrangements that take these conditions into account.

The Government of Canada, because of its many statutory obligations, regulatory roles and public responsibilities, has a complex array of controls guiding its operations. Some of these apply to departments and agencies generally. Others are matters of departmental or agency policy and regulation. Indeed, even at the most fundamental level, the ability of Departments to engage in partnerships varies. While some federal departments have the legislative framework to rapidly implement such arrangements, others do not.

From an operational standpoint, departments vary with respect to the functional expertise and the practical capacity to support partnerships both within government and with external organizations. The following observations concern certain structural or formal constraints on partnering with external organizations.

Authority and Accountability

Departments and agencies are bound to operate their programs and activities within the scope of both their enabling legislation and mandate. Those involved in a collaborative arrangement will need to ensure that they have the proper legislative spending authorities to implement and maintain the arrangement effectively. Moreover, there will be a need for participating departments and agencies to commit to the collaborative arrangement over the long term. The annual budgetary cycle may pose a challenge to collaborative arrangements in that the authority for spending allocations for programs and activities, including transfer payments, are subject to annual appropriations. A lack of on-going commitment may undermine the collaborative arrangement. There will be a need to address this at the outset of the new working relationship.

Moreover, there will be a need to define clear accountabilities for the new arrangements being contemplated. In many cases, collaborative arrangements may not always mesh with the established machinery of government and associated system of accountabilities, and the federal laboratory may be involved in a broader range of activities than is now the case. Newly defined accountabilities will need to be associated with the appropriate legislative and expenditure authorities.

Procurement Contracts

Government procurement rules have been identified as an issue that may come into play in certain forms of ISTI. To the extent that, during the course of a long term research program, partners in an ISTI initiative enter into contracts in which they obtain services from each other, the federal Government's Contracting Policy may apply. The Policy requires all professional service contracts must be competitively offered to the marketplace, with some exceptions (value under $25,000, security issues etc.). If this requirement were interpreted to mean that discrete phases of work being carried out by the parties in the ISTI initiative would have to be competitively offered to those outside the initiative, a significant disincentive would be created for Canadian companies to become involved in the collaboration. Other countries have policies and interpretations that better support these types of collaborations.

Although procurement policies and regulations (e.g., the Financial Administration Act or the Government Contracts Regulation) may act as a constraint in certain types of ISTI where outsourcing of technical or management services is involved, it is not necessary to follow a procurement approach when forming a partnership involving integration of R&D activities.

Grants and Contributions

Grants and Contributions are subject to the rules and regulations outlined in TBS's Transfer Payment Policy (TPP). The TPP states that:

• A department should not benefit directly from the award of a transfer agreement;
• A core service that departmental staff are mandated to provide directly should not be funded through a transfer payment; and,
• An individual or an organization that receives a transfer payment does not act on the government's behalf.

Grants and Contributions are currently a source of funds to the non-federal parties who are considering joining in an alternative management arrangement. Government researchers, however, cannot compete for or receive funding from granting bodies such as NSERC, SSHRC, and Genome Canada. However, government scientists who hold adjunct professorships in universities may apply through university mechanisms for grants. A systematic approach to addressing this issue is both timely and necessary in view of the focus on inter-sectoral S&T integration.

Intellectual Property (IP)

Some cite IP issues as a constraint on partnering with the federal government because of a belief that the government requires exclusive rights over IP developed within federal laboratories. In fact, current legislation does not prevent the federal government from transferring or assigning IP rights to external entities. Ownership of intellectual property (IP) developed before, during and after the establishment of a partnership is an issue that requires negotiation by the parties and should be addressed in the terms of the partnership agreement, whether the federal government is involved in the partnership or not.

Appendix VII – List of Acronyms
 

AAFC	Agriculture and Agri-Food Canada
AECL	Atomic Energy of Canada Limited
AUCC	Association of Universities and Colleges of Canada
CBSA	Canada Border Services Agency
CFIA	Canadian Food Inspection Agency
CGC	Canadian Grain Commission
CSA	Canadian Space Agency
DFO	Fisheries and Oceans Canada
DND	National Defence Canada
EC	Environment Canada
GSC	Geological Survey of Canada
HC	Health Canada
IC	Industry Canada
INAC	Indian and Northern Affairs Canada
ISTI	Inter-sectoral S&T Integration
NCR	National Capital Region
NRC	National Research Council
NRCan	Natural Resources Canada
PCA	Parks Canada
PCH	Canadian Heritage
PHAC	Public Health Agency of Canada
R&D	Research and Development
RCMP	Royal Canadian Mounted Police
S&T	Science and Technology
STC	Statistics Canada
TC	Transport Canada
TBS	Treasury Board Secretariat
TPP	Transfer Payment Policy

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[1].  The Panel was advised that the term "universities" should be interpreted broadly as including colleges and not-for-profit institutions affiliated with universities and colleges. Accordingly, in the remainder of this report, this sector is referred to as "academia". The term "private sector" is interpreted as referring to for-profit enterprises.

[2]. Non-regulatory federal laboratory: an identifiable organization or capacity within the federal government (i.e., directorate, branch, program, institute, centre, division, survey, bureau, or parts thereof respectively) for performing scientific activities, involving basic research, applied research, and experimental development, for the purpose of expanding scientific knowledge and understanding, promoting innovation and enabling economic and social development.

     Alternative management arrangement: an arrangement for managing non-regulatory federal laboratories or parts thereof other than through sole ownership and management by the federal government. An alternative management arrangement may include a continuing role for government (e.g., in a partnership or consortium) or may not (in cases of divestiture - sometimes referred to as "full transfer"). 

     Transfer:the conveying, in whole or in part, of a non-regulatory federal laboratory to an existing entity in academia or industry, or to a new entity such as a partnership or consortium involving government, academia and/or the private sector. Without limitation, transfer may include one or more of:  transfer of ownership of assets (e.g., building, equipment, personnel, and intellectual property); transfer of management of assets; and transfer of S&T program management.

[3]. The degree of implementation to be expected within 12 months would include: completion of the necessary legal agreements to effect the new governance and management arrangements; the identification of the administrative and scientific leadership of the new entity, and the formulation of an integrated research program and detailed business plan that take into account the relevant elements of the proposed ISTI framework described in Section 5.2. It is understood that full programmatic implementation may require additional time – especially where significant infrastructure development is required.

[4]. The Panel was advised that the term "universities" should be interpreted broadly as including colleges and not-for-profit institutions affiliated with universities and colleges. Accordingly, in the remainder of this report, this sector is referred to as "academia". The term "private sector" is interpreted as referring to for-profit enterprises.

[5]. Statistics Canada, Federal Scientific Activities 2006/2007, April 2007.

[6]. Statistics Canada, Federal Scientific Activities 2006/2007, April 2007.

[7]. Based on information submitted to the Treasury Board Secretariat by Science Based Departments and Agencies.

[8]. Public Service and Human Resource Management Agency of Canada Report: Towards an Identification of the Current and Future Needs in the Science and Technology Community: Key Findings, Analysis and Demographic Projections Research and Analysis Directorate, Human Resource Planning, Accountability and Diversity Branch, October 2005.

[9]. Typology: a classification of things according to their characteristics e.g. a typology of organizations; a typology of governance.

[10]. The fields covered by the proposals included: agriculture; agri-food; horticulture; viticulture; fisheries and aquaculture; environment and ecosystems; ocean systems; health and biological sciences; medical devices; geosciences; space and earth observation; mining; nanotechnology; photonics; forestry; water systems.

[11]. The degree of implementation to be expected within 12 months would include: completion of the necessary legal agreements to effect the new governance and management arrangements; the identification of the administrative and scientific leadership of the new entity, and the formulation of an integrated research program and detailed business plan that take into account the relevant elements of the proposed ISTI framework described in Section 5.2. It is understood that full programmatic implementation may require additional time – especially where significant infrastructure development is required.

[12]. Regulatory and non-regulatory activities may be linked, either because individual federal scientists perform both types of activities or because the non-regulatory activity (e.g. R&D) provides critical input to regulatory functions. Moreover, the definition of non-regulatory as being virtually synonymous with R&D poses some difficulty because there are a variety of activities other than R&D that serve non-regulatory purposes.

[13]. ECD (2003), Governance in Public Research – Toward Better Practices, p. 35.

[14]. Council on Competitiveness (November 2006), Competitiveness Index:  Where America Stands, p. 60.

[15]. National Academy of Engineering (US), Technology Transfer Systems in the United States and Germany: Lessons and Perspectives (1997), p. 124.

[16]. Brown, Marilyn. U.S. National Laboratory Perspective on Energy Technology Innovation and Performance Assessment. Presentation to International Conference on Innovation in Energy Technologies, Washington, DC, Sept 29-30, 2002, p.2. http://www.oecd.org/dataoecd/3/35/15935294.pdf

[17]. Testimony of John P. McTague, Energy Subcommittee of the Committee on Science, U.S. House of Representatives Hearing on Competition for DOE Laboratory Contracts: What is the Impact on Science? July 10, 2003.

[18]. Adams, James, Chiang, Eric and Jensen, Jeffrey. The Influence of Federal Laboratory R&D on Industrial Research, in The Review of Economics and Statistics, Nov 2003. 85(4). 

[19]. See UK Office of Science Technology (2006), PSREs and the Science Base: a Policy for Sustainable Trading and Joint Strategic Investment in PSRE Infrastructure. http://www.dti.gov.uk/files/file14578.pdf.

[20]. OECD, Steering and Funding of Research Institutions, Country Report: Germany (Paris: 2003) pp. 7. See also National Academy of Engineering (US, 1997), Technology Transfer Systems in the United States and Germany:  Lessons and Perspectives, p. 321.

[21]. Ibid, p.12.

[22]. National Academy of Engineering (US, 1997), Technology Transfer Systems in the United States and Germany:  Lessons and Perspectives, p. 321.

[23]. National Academy of Science (USA, 1998):  National Science and Technology Strategies in a Global Context: Report of an International Symposium, p.28.

[24]. New Zealand Ministry of Research, Science and Technology, New Zealand Research Agenda – A Government Strategy for New Zealand Research, Science and Technology, Oct .07, p.34.

[25] Ibid, p.35.

[26]. Council of Science and Technology Advisors (April 1999), An International Perspective. http://www.csta-cest.ca/index.php?ID=312&lang=En

[27]. Insight Economics (2006), Economic Impact Study of the CRC Program. https://www.crc.gov.au/HTMLDocuments/Documents/PDF/CRC_Economic_Impact_Study_Final_121006.pdf

[28].  Australian Government (Accessed Dec. 2007). Review of the National Research Flagships- an initiative of CSIRO. http://www.csiro.au/resources/pflq.html

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