Step 4: Due Diligence Review

Each proposal submitted to the Industrial Technologies Office (ITO) for repayable contributions under the Strategic Aerospace and Defence Initiative (SADI) is subject to a comprehensive due diligence process that examines the feasibility of the proposed project and the company's ability to deliver the project's proposed technological, social and economic benefits.

The purpose of this review is to verify the claims made in the proposal and the findings from the assessment review.

The decision to accept or reject the proposal at this stage is with the Minister of Industry.

The due diligence review focuses on each element of the assessment criteria. As part of this review, ITO conducts detailed discussions with company officials concerning the proposal. ITO may use experts from Industry Canada and other government departments or organizations, as well as external experts, where appropriate.

The due diligence review verifies these aspects of the project proposal:

• company's capability to achieve the stated objectives
  • financial resources
  • management expertise
  • business plan
  • technical capability
• technology benefits
  • technology innovation
  • feasibility of R&D
• social and economic benefits
  • achievement of stated economic benefits
  • technology spill-over and diffusion
  • collaborative partnerships

1. Company's Capability to Achieve the Stated Objectives

• Financial resources: To verify the financial performance of the company, how it compares to others in the same sector of the A&D industries, whether it can raise funds from outside sources, and the manner in which it proposes to fund the R&D project under consideration.
• Management expertise: To confirm that the company has the management capability to complete the proposed project and exploit the results.
• Business plan: To conduct a thorough review of the business plan, which should include a strategic plan, a market analysis, a project financial model and financial statements.
• Technical capability: To verify the company's R&D track record, its current laboratory and equipment capacity, the knowledge and skills of the current technical team and the company's plans to address any gaps in expertise required to complete the project.

2. Technology Benefits

• Technology innovation: To verify the proposed project's expected technological benefits for Canada. ITO determines how much confidence should be placed in these expectations, based on the data and expertise employed in making the projections.
• Feasibility of R&D: To confirm whether the proposed R&D is technologically feasible. Key success factors for the project's completion as well as technological risks are addressed.

3. Social and Economic Benefits

• Achievement of stated economic benefits: To verify that the R&D has potential for successfully achieving the stated social and economic benefits and generating the anticipated gross business revenue.
• Technology spill-over and diffusion: To verify that the completed R&D, as stated in the applicant's proposal, can be used in the development of applications by the applicant or other companies for use in other products and/or services.
• Collaborative partnerships: To confirm statements by the applicant of any partnerships with post-secondary institutions, and/or research institutes belonging to post-secondary institutions, and to verify whether the partnership will help the applicant achieve the project's objectives.

As the due diligence review proceeds, ITO officials will begin to negotiate the terms of the contribution agreement with the company.

Once the review has been completed, ITO officials prepare a recommendation about the application for the consideration of the Deputy Minister and/or Minister of Industry.

Please see the final step, Step 5. Decision.