NRC president sends corrections, explanations

1 May 2012mcdougallNRCofficial.jpg

Mr. Tony Patterson
4-108 Queen Elizabeth Driveway
Ottawa, ON K2P 1E5

Dear Mr. Patterson:

As you are aware, in the summer of 2011, I refused your request for interview. At the time, we were doing very few as I was very pre-occupied with internal matters. You subsequently published a blog painting me in a very poor light. I am more than willing to accept fair and even unfair criticism. However, erroneous and blatantly misleading commentary falls into a different category. Your blog contained errors of fact, some of which we discussed yesterday, and many other statements that were directly or indirectly very misleading.

Yesterday when I pointed those things out, you said you thought "the article would have elucidated an immediate response from me". I told you the tone of your article actually said much more about you than it did about me, so I didn't feel that it was worth my time to respond.

In spite of those issues, when you called again a few days ago for an interview, I agreed to speak with you. When we connected, I immediately expressed my concerns about your prior blog and asked for an apology before proceeding further. You refused. Even so I agreed to provide clarifications regarding some of the errors and misleading statements in your blog. I also told you your subsequent response and actions would form the basis for determining whether there was any point in future discussions.

As committed, a few specific issues related to your July 2011 blog are addressed below by providing your words in italics followed by my clarifications:

1. "It's an image he pushed toward conclusion on his home turf, until he pushed too hard and got himself turfed out." "When four provincial R&D initiatives were merged into one under the name Alberta Innovates in January 2010, he was invited out."

I advised the ARC Board in the fall of 2007 to start looking for a successor. Not long thereafter, Alberta began to redesign its innovation system. The ARC Board and I both agreed to stay on at the request of the Province to provide continuity and input while Alberta completed their design and completed the legal transitions of the system. That ultimately occurred January 1, 2010 at which time I and the Board both departed.

2. "there was a pre-packaged business opportunity just waiting for him on the other side of the ARC exit. A not-for-profit contract research organization was getting underway (I-CAN)." "He has been its founding chair and president and had folded his decades-old consulting company, Dalcor lnnoventures, into /-CAN."

lnnoventures Canada (I-CAN) was founded in 2006 as a federally incorporated not-for-profit member based agency by CRIQ, lTC, SRC and ARC to help research and technology organizations understand common challenges, share business approaches and work together in areas of common interest. At the request of the founding organizations, I was founding Chair. There was no folding in of anything related to Dalcor except for a granting of permission to I-CAN to use the word lnnoventures in its name.

Several other not-for-profit agencies subsequently joined I-CAN. When it became public that I was leaving ARC, the I-CAN board asked if I would help add some energy and initiative to I-CAN on a part-time basis. I agreed to do at a token rate so to help move I-CAN forward.

3. "A project of his Dalcor lnnoventures before it became a project of lnnoventures Canada, the Carbon Algae recycling system is now proposed as one of the "flagship programs". "Leaving apart the propriety of bringing along his pet project, ..."

The carbon algae recycling project was never a Dalcor project and Dalcor never had any involvement with it. The project was developed and undertaken collaboratively by several I-CAN members. Independent of I-CAN. NRC began working on algae at Halifax many years ago. That work has evolved into a proposed flagship program at NRC and NRC is working with some I-CAN members to see how complementary I-CAN expertise might be incorporated to improve the flagship.

4. ''A primary objective of the re-org is to triple revenues from the private sector to $150 million annually. It's well understood that accomplishing this must mean winning contracts for work that is currently done for industry at university labs."

Innovation is not about taking things from one another, it is about being creative and sensitive to market needs, adding value and integrating all the components required. Industry works with universities mainly to access talent and harvest ideas that may be useful and with public infrastructure like NRC primarily for technology development, scale up, demonstration and testing, certification and problem solving.

What is indisputable is the fact that Canada's innovation performance has steadily slipped over the past 15 years, so something isn't working. Clearly the answer isn't more of the same, so NRC is changing. NRC certainly intends to increase the share of costs carried by the private sector, especially in areas close to market such as testing, certification and problem solving. Some people probably do believe that growing private sector revenues at NRC can only occur by winning contracts from university labs. That may happen occasionally but in my experience, industry goes where they get value. Sometimes what they need is available through university labs, sometimes in government labs like NRC and sometimes elsewhere.

5. "Flagship program discriminates against SMEs"

A flagship program doesn't discriminate against SMEs. SMEs end up as participants thereby developing early connections with the supply chains they must be part of to be successful.

6. "Two years ago, IRAP had 8,578 SME clients. More than a third received some form of funding support, to a total of about $200 million. Last year that reached $264 million. This year financial support is plummeting by almost half, to $139 million, a drop attributed to the ending of the government's economic action plan. The new NRC hasn't seen fit to cushion that cutback in any way. Far from it. It plans to slice another $5 million out of IRAP in each of the next two years, yet another warning to SMEs that the salad days at the Council are done."

IRAP funding did return the traditional $139 million pre-stimulus level when that program ended. It was well known that would happen. The additional reductions you criticise were overhead, not grants and contributions, necessary to ensure IRAP would be fiscally responsible and able to operate within its federal funding authorities. You are certainly within your right to draw any conclusions you wish. However in the fall of 2011, shortly after your article, IRAP obtained $70 million over three years for the DTAPP program. And the 2012 Budget increased "base" IRAP funding by $110 million per year. SMEs remain very important to innovation and IRAP will be serving up a pretty good salad to them for many years to come.

These points are just a few examples of absolute errors, misleading statements and highly debatable points made in your 2011 blog. I await your early response and action and will make my decisions accordingly.


John R. McDougall, P.Eng.

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