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

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Executive Summary

In 2006-07, approximately 25,000 people were engaged in science and technology (S&T) activities in federal laboratories located in all regions of Canada. These laboratories play a crucial role in the Canadian science and innovation enterprise, and account for more than $4 billion in annual investment by the Government of Canada. The scientific activities they conduct support two essential functions: meeting the government's statutory regulatory responsibilities and providing the scientific underpinning for achievement of broader national scientific, social and economic objectives.

Budget 2007 signalled the government's intention to create an independent panel of experts to consider the "transfer" of non-regulatory federal laboratories to universities and the private sector. Subsequently, Canada's science and technology strategy document, Mobilizing Science and Technology to Canada's Advantage, released in May 2007, 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." Pursuant to the Budget 2007 announcement, and consistent with the federal government's strategy for science and technology, the President of the Treasury Board appointed an Independent Panel of Experts (the Panel) in mid-August 2007 to undertake three main tasks:

1. explore opportunities for achieving greater synergy among the major sectors undertaking science and technology activities through transfer of non-regulatory federal laboratories to universities and/or the private sector^[1];

2. identify up to five non-regulatory federal laboratories as "early candidates" for transfer; and,

3. develop a framework for evaluating opportunities for transfer of non-regulatory federal laboratories.

These tasks were to be undertaken in the context of the federal government's objectives with respect to inter-sectoral S&T integration (ISTI), namely:

• increased value/efficiency of federal investments in S&T;
• enhanced quality of scientific activities through fostering research excellence;
• expanded opportunities for learning and knowledge transfer; and,
• improved Canadian economic competitiveness.

The Panel's work entailed analysis of:

• case studies involving inter-sectoral S&T collaboration in Canada and abroad;
• input received during consultations undertaken by Panellists with knowledgeable individuals from government, academia and the private-sector;
• a series of regional inter-sectoral roundtable discussions sponsored by the Panel;
• commentaries received from stakeholders in response to a general invitation for input; and,
• submissions to the Panel proposing specific S&T integration initiatives.

To facilitate its consultations and analysis, the Panel developed working definitions of key terms.^[2]

Alternative Arrangements for Managing Federal S&T Activities

The vast majority of federal S&T activities are conducted in laboratories under the sole management and control of the federal government. The current interactions between scientists in federal laboratories and their counterparts in academic institutions and the private sector are mainly informal and ad hoc collaborative arrangements. There are, however, instances in which the collaboration takes place under a formal agreement, and others in which management of federal laboratories or specific programs conducted in federal laboratories have been transferred to other entities.

Other developed countries also have a diversity of arrangements governing the interactions of national government laboratories with academia and the private sector. The varying patterns of such arrangements reflect differences in: governance structures and accountabilities; the nature of the jurisdictional relationship between the national government and regional governments; the financing and governance of academic institutions, and the industrial structure. Some governments have embarked on major programs of privatization of government laboratories (both regulatory and non-regulatory), while others have created new agencies within government with special authority to establish new management models.

The experience in Canada and abroad indicates that there are several alternatives to exclusive government ownership and control of federal non-regulatory laboratories. The characteristics of such arrangements can be organized under an array of typologies based on, for example: the sectors and types of organizations involved; governance mechanisms; financing arrangements; and, the extent of ongoing involvement of the federal government.

In Canada, the most common models of alternative arrangements involve informal not-for-profit cooperative arrangements, operating in single locations for indefinite terms; and, without changes in ownership of assets or in the employment status of personnel. These commonly employed models do not, in the Panel's view, result in an optimal level of S&T integration. While they may represent examples of useful collaboration and networking, they do not result in the level of complementarity and synergy that can be achieved through models based on close integration of the work of scientists from the three sectors in a program of R&D under a single management structure. This integration can be achieved in two main ways:

• Full transfer to a non-governmental entity involving academic and/or private sector organizations (divestiture)
• Transfer to an entity jointly sponsored and managed by government, academic and/or private sector organizations (partnering).

Opportunities for Inter-Sectoral Integration of Non-regulatory S&T

The Panel received a large number of submissions identifying particular opportunities for inter-sectoral integration of S&T activities. The Panel also received statements from organizations expressing a strong interest in identifying such opportunities in the future.

General Observations

In submitting proposed ISTI initiatives, proponents and partners were encouraged to consider alternative management arrangements that cover a range of options – from full transfer to an existing or new non-governmental organization – to transfer to a new entity involving government, academia and the private sector in joint governance and management of assets and/or S&T programs. Simple co-location or establishment of a network of existing programs without a unified management structure was not deemed to constitute a "transfer."

Submissions came from organizations in all regions of the country, and included identification of a wide variety of other organizations in the federal government, academia and the private sector as potential partners in new management arrangements. In several cases, provincial government laboratories were also identified as potential partners.

The types of alternative arrangements contemplated in the submissions included:

• Establishing a new entity involving joint sponsorship and management of S&T activities by the federal government, an academic institution, and/or the private sector. In some cases, the entity would be a not-for-profit corporation. In most, the proposed entity would operate under what has been termed a "co-operative research and development agreement." Several proposals included participation by more than one organization;
• Co-location of scientific personnel, involving existing proximities or through new co-location initiatives. Nearly all locations designated are on or near university campuses, in research parks or in other cluster arrangements. In a few instances, the arrangements would involve seconding university S&T personnel to government laboratories; and,
• Full transfer of ownership, governance and/or management from government to non-governmental entities.

Several submissions indicated that the models of ISTI being proposed were seen as the initial arrangement in an evolving relationship that could result in, for example, a move from a joint sponsorship arrangement involving government (partnering) to one in which the federal government is no longer involved in ownership, governance or management.

Selection of Early Candidates for Transfer

The Panel reviewed and rated the submissions on the basis of probability of success in achieving primary objectives, impact, feasibility, governance and management considerations, and timeliness (see Section 5.2.4). The following five (5) laboratories (listed alphabetically by department or agency in which the laboratories are located) were identified for recommendation as early candidates for establishing alternative management arrangements. They represent excellent opportunities for S&T integration, cover a range of fields and federal departments and identify initiatives in which the new arrangements could be implemented within a 12-month period.^[3] In the implementation of these initiatives, concerted attention should be given to governance and accountability, delineation of an integrated research program and designation of strong managerial and scientific leadership.

• Agriculture and Agri-food Canada – Cereal Research Centre
• Environment Canada – Wastewater Technology Centre
• Health Canada – Safe Environments Laboratories
• National Research Council – Aerospace Manufacturing Technology Centre
• Natural Resources Canada – Geoscience Laboratories

Nearly all of the proposals received are potential candidates for future consideration in the implementation of a longer-term federal strategy for inter-sectoral S&T integration.

A Framework for Inter-Sectoral S&T Integration (ISTI)

The Panel developed a framework for guiding the development and evaluation of opportunities for alternative management arrangements for non-regulatory federal laboratories. Such a framework will be useful to the government, should it choose to undertake a systematic move in the direction of a broader ISTI strategy. In the Panel's consultations, such a potential move received wide support, provided the strategy was conceived more broadly than may be inferred from use of the phrase "transfer of non-regulatory federal laboratories." The Panel has therefore formulated its proposed framework as applying to "inter-sectoral S&T integration" involving federal laboratories. The key elements of the proposed framework are grouped under the following headings:

• An overarching goal (broad purpose)
• A general strategy for achieving the goal
• Specific strategies
• Desired outcomes
• Scope of application
• Articulation of federal governance and accountability requirements with respect to ISTI initiatives
• Criteria for evaluating proposed ISTI initiatives
• Implementation
• Performance evaluation

Concluding Observations

The timeliness and importance of the Panel's mandate emerged both through the analysis of the state of S&T investment strategies worldwide and in the expressed stakeholder interest in ISTI as a key component in advancing Canada's science and innovation system.

Seizing the opportunity to integrate the resources and efforts of the various partners in the science and innovation system can enhance federal S&T activities through effective use of combined resources to pursue research agendas that are aligned with core objectives.

There is strong support among stakeholders and knowledgeable individuals for implementing an ongoing systematic process to identify and implement promising ISTI initiatives as an important part of a national S&T strategy. ISTI is seen as a key component of a holistic approach to meeting the science and innovation challenges facing the nation, now and in the future.

Government, academia and the private sector have distinctive but interdependent roles to play in the Canadian science and innovation system. ISTI can contribute to the strength of all three sectors and can be pursued in ways that do not weaken the ability of each sector to perform its distinctive role.

The Panel identified several of the proposals received as involving major strategic and transformative initiatives worthy of future development and consideration. Early adoption of the ISTI framework proposed by the Panel would be helpful in assessing these and other proposals, whether they are initiated by federal departments and agencies or emerge in response to a general call for proposals issued under the aegis of an appropriate central authority.

Section 1 – Introduction

Federal laboratories play a crucial role in the Canadian science and innovation enterprise, and account for more than $4 billion in annual investment by the Government of Canada. They conduct scientific activities related not only to the government's statutory regulatory responsibilities but are also linked to achieving broader scientific, social and economic objectives essential to the national interest.

As part of the national strategy for science and technology (S&T), the President of the Treasury Board, on behalf of the Government of Canada, appointed an Independent Panel of Experts (the Panel) to explore opportunities for achieving greater synergy among the government, academia and private sectors through the potential creation of new management structures for federal S&T activities in non-regulatory areas.

1.1 The Panel's Mandate

The Panel's mandate is addressed in two Government of Canada documents. In the March 2007 Budget, the government announced its intention to "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." (Aspire Canada, Page 202).

This intention was echoed in Mobilizing Science and Technology to Canada's Advantage, released in May 2007. In this document, the government stated that it "would focus its activities in areas where government is best able to deliver results, and consider alternative management arrangements for non-regulatory federal laboratories." The document also signalled the government's intention to "break down the barriers that stand in the way of more strategic S&T collaborations among federal departments and agencies and between the federal S&T community and universities, industry, and the non-profit sector" and "to explore and develop innovative new models for S&T collaboration between federal departments and agencies and other sectors."

In announcing the appointment of the Panel in mid-August 2007, the President of the Treasury Board stated that "the Government of Canada is committed to strengthening the effectiveness of its investments in S&T to ensure Canadians benefit from scientific innovation and that Canada continues to have a competitive advantage."

In short, the Panel's work was to be guided by the overarching goal of more effective exploitation of the scientific capacity of government, academia and industry for the benefit of Canadians; and, by the government's desire to ensure that alternative management arrangements are aimed at achieving one or more of the following objectives:

• increased value/efficiency of federal investments in S&T;
• enhanced quality of scientific activities through fostering research excellence;
• expanded opportunities for learning and knowledge transfer; and,
• improved Canadian economic competitiveness.

In accordance with the Budget 2007 announcement, and consistent with the federal government's strategy for science and technology, the Panel organized its work around three main tasks:

• explore opportunities for achieving greater synergy among the major sectors undertaking science and technology activities through transfer of non-regulatory federal laboratories to universities and/or the private sector^[4];
• identify up to five non-regulatory federal laboratories as "early candidates" for transfer; and,
• develop a framework for evaluating opportunities for transfer of non-regulatory federal laboratories.

1.2 Methodology

1.2.1 Definitions of Key Terms

The Panel adopted the following definitions of key terms to facilitate its deliberations and consultations:

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.

Research: creation of new knowledge or revision of existing knowledge through systematic investigation and inquiry using the scientific method.

Experimental development: experimental work applied to new knowledge gained from research to establish the feasibility of using that knowledge to build prototypes of products and processes with the potential to be introduced into the marketplace; and, the systematic refinement of research methods to solve scientific problems.

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—some times 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.

1.2.2  Topics of Study and Analysis

The Panel focused its study and analysis on:

• current patterns of non-regulatory S&T activities in the federal government;
• current patterns of interaction between government S&T activities and those in academic institutions and the private sector in Canada, and those in other countries;
• alternatives, involving participation by academia and the private sector, to sole ownership and/or management of S&T assets and activities by the federal government;
• specific opportunities for greater synergy among the federal government, academia and the private sector in the conduct of S&T activities; and,
• desirable features of a federal policy framework for inter-sectoral S&T collaboration.

1.2.3  Work Plan

The Panel's work plan included:

• Intensive review of background information and research developed or commissioned on the Panel's behalf by the Treasury Board Secretariat, including:
  • an inventory of non-regulatory S&T laboratories and their geographic distribution;
  • case studies of transfer of government laboratories or activities to alternative arrangements involving academic institutions and/or the private sector in Canada and abroad; and,
  • briefing documents on various policies and procedures related to S&T in, or sponsored by, the federal government.
• A series of six roundtables across Canada (Calgary, Winnipeg, Toronto, Ottawa, Montreal and Halifax) to hear from key stakeholders in government, academia and industry;
• Inviting stakeholders to offer comments directly to the Panel (more than 60 submissions were received);
• Inviting proposal submissions using a template developed by the Panel, (56 proposals were submitted); and, 
• Bilateral meetings or teleconferences of Panel members with a broad variety of stakeholders and other interested parties (more than 150 such interactions took place in the period mid-August to mid-December 2007).

The submissions and consultations provided valuable input to the Panel's extensive deliberations.

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