Liberals launch latest push to steer more federal contracts to small businesses

Twenty federal departments and agencies will set aside one per cent of their R&D budgets to purchase goods and services from startups, the Liberal government said Thursday.

Navdeep Bains, the federal minister of innovation, science and economic development, and Bardish Chagger, the minister of small business and tourism, announced the federal $100-million Innovative Solutions Canada program at Bayview Yards in Ottawa.

Thursday’s press conference comes some nine months after the program was first announced in the Liberal’s 2017-18 budget, a move that won initial plaudits from tech-sector advocates.

Under Innovative Solutions Canada, small businesses will be invited to develop “novel solutions” to challenges proposed by federal departments and agencies.

The government will then work with the winning business and act as its first customer.

“We are asking entrepreneurs to develop new products and services ... while also enabling these entrepreneurs as they work to expand to new markets, and sell to new customers around the world,” Ms. Chagger said in a statement.

Small and mid-sized tech firms in Ottawa have long said that it’s too difficult to sell to the federal government. This, in turn, hinders their ability to sell internationally, critics say.

Fewer than one in 10 small and medium-sized businesses sell to the federal government, according to University of Ottawa researchers who called their findings “a lost opportunity.” And federal cabinet ministers have conceded that the procurement process is too burdensome.

Successive governments have tried to solve this problem through a variety of programs.

The former Conservative government attempted to give small businesses access to government contracts through the Canadian Innovation Commercialization Program, which allowed companies to pitch goods and services to the federal government.

After taking office, the Liberals brought in the Build in Canada Innovation Program that invited firms to submit proposals to address specific challenges issued by federal departments.

The latest initiative, Innovative Solutions Canada, is modelled on the U.S. Small Business Innovation Research program.