Wednesday, 15 August 2012

The NRC Goes To War: Part 2, There Are No Frickin' Free iPhones, OK?

Recap: In Part 1 we reviewed publicly available documents showing Canada's $200 Billion Defence budget supporting the new Harper Government model of R & D in Canada through the enhanced IRB (Industrial and Regional Benefits) program.

Foreign Defence Contractors must spend the equivalent of the contract amount on R & D in Canada. If they partner with the NRC (National Research Council), that requirement drops to 20% of the invoice amount. These R&D 'awards' are not publicly tendered, are largely unmonitored (by normal standards) and do not follow regional guidelines. Nice.

In Part 2 (today), we describe the flow of money, and offer a teeny bit of advise to the ELA (Experimental Lakes) program.

But hey, let's get this out of the way first: Yes, this is real, ok?

Forwarded to me by someone inside an NRC building in Winnipeg. Read it, then we can move forward.

Imagine: You are sitting angry at your little scientist desk at the NRC in Winnipeg. Scared, unsure of your future, saddened by your soon-to-be-ex-co-workers laments, sickened by the apparent Conservative attack on science. You hurt, bad, desperation's hot breath warms your little scientist shoulder.

Suddenly, a ray of hope appears in your inbox....

"Sent: March-27-12 4:56 PM
To: IBD All Tenants; CCBT All Tenants
Subject: Seminar - Friday, March 30, 3:30 p.m.`

As the National Research Council transitions into our new structure as a research technology organization (RTO), we've been hosting a series of RTO-themed workshops and seminars. You may be interested in attending our Friday afternoon seminar, Canada’s Industrial and Regional Benefits (IRB) Policy:  Exploring  Research & Development Partnerships Opportunities.

We're fortunate to welcome Brent DePape, Senior Policy Analyst, Policy, Planning & External Relations with Western Economic Diversification Canada, who will be speaking on March 30,3:30 p.m. in the Herzberg Room. Here's a description of his presentation:

Canada’s IRB Policy was first implemented in 1986 to ensure that Canadian companies maximized opportunities arising from Canadian government procurements. In essence the policy requires that winning bidders of major crown projects (i.e. greater than $100Million) procure goods and services in Canada equivalent to that amount.  Recent changes to the IRB Policy are designed to incentivize business activities that align with government priorities, including increased research and development activity.  An understanding of the Policy and the recently  implemented changes can better position not-for-profit research institutions in refining related strategies and developing potential partnership opportunities with prime contractors.

We look forward to seeing you there."

(Note to Self: Re-jig past funding doc's for Military applications. 


Your Harper Government would never leave you in the cold uncertainty of 'old model' Canadian research. They ensconce you now in the fertile commercial grounds of military innovations. You can commercialize the hell out of your results (for civilian applications, 'natch...) You are now a military entrepreneur, supported by the Government of Canada. Might even get a cool new title with a decoder ring and CSIS clearance, and make James Bond-like gadgets and.. God bless you, Prime Minister.

God Bless you.

The Harper Government just minted a free iPhone program, and the little NRC scientists are the ultimate intended beneficiaries. Well, them and the Politicians, Bureaucrats and Businessmen the NRC Admiral mentions in his interview (see Part 1 Video link.)

We'll get to their part in this later, after a little chat about free iPhones.

Scene: Elected official walking down 'lobbyist row', minding their own business...

(Psst, hey buddy. Yeah, you with the Beaver hat.

Lookin' to buy a new Caddy? I'm your guy, look no further. Name's Sam.

Price? Hey, its a Caddy, who looks at the price, right?

Besides, act now and I'll throw in a free iPhone. That's right, for free!

Oh, you don't need a Caddy, hmm? Well, ok... but how about some Fighter Jets?

Yes, of course you still get the free iPhone!)

Even a funny little anonymous citizen journalist like me knows some of the professional axioms of the journalism trade. "My sources are confidential', 'Follow the Money'...

... 'There is no so thing as a Free Lunch.'

Or free iPhones, right? That new truck promotion you were trying to sell to your spouse, with the 'but honey, we get a free iPhone!' timed just right as the clincher (honey, I know you love iPhones, right?) until honey says 'ummm... who do you think is really paying for that iPhone?'

You stare back at your better half, slack jawed, suddenly noticing the naiveté oozing from your pores, green gills shining like a neon 'Screw Me, I'm a Rube' t-shirt. You are a mark. You just told your significant other that, absolutely for sure, they married a sucker. Great, huh?

There are no free iPhones, folks. Only marks who think there are free iPhones. Marks have money just as green as non-marks, maybe even greener, so the marketing world keeps handing out free iPhones.

With your purchase of a raft of Fighter Jets, that is.

R & D spending is the 'free iPhone' Canadians get when they make a military purchase. And holy hell, what a deal, right? Dollar for dollar matching! Aren't we clever, eh?

But... but what about the Cell Phone Contract, you ask. Who is the carrier providing service to your shiny new iDevice? How much does this thing really cost at the end of the term? I mean, iPhones without data and voice service are called bricks, right? They don't work unless you pour money into the network connection, right? And Canadians pour more money into 'Network Connections' than anyone else in the world, right...?

Right, my little friend. Oh, so right you are.

Ok, enough stalling, lo let's follow the money.

I present 'Hypothetical Scenario 1', below. See if it rings plausible to you.

Scenario 1 - Pad, Multiply, Enhance, Partner Up, 'Buy' it back.

Step 1: All Military Contractors pad quotes at least 15% for IRB considerations (there's your free iPhone.) People of Canada fund the IRB requirements for US Military Contractor (Sam is his name for now) who wins contract. Lets say Pad = $100.00 Canadian, for easy counting.

Step 2: Sam creates new 'Canadian' company (NEWCO) to fund and manage the R & D project. NEWCO qualifies for SRED Tax Credits, garners rebate of 50% on expenditures (Multiply). $100.00 is now $150.00 Canadian.

Step 3: NRC (IRAP, Research Funding, etc.) contributes major dollars to project (Enhance). Largely under-supervised funding on some undisclosed 'matching' basis up to, let's imagine, 75% of total project costs.  $150.00 is now $600.00 Canadian.

Step 4: Find some Canadian Rich Guys (CRG's) to invest (Partner Up), go into production for your 'innovation'. $600.00 is Sam's investment (see above), so let's say CRG's in for $100.00 more, new total $700.00 Canadian.

Step 5: Use future IRB requirements to purchase 'innovation' products from Newco at very, very healthy margins (Buy Back). Reward CRG's.

Step 6: Provide products to Canadian Government under new contract (Whoo-Hoo!!)

Step 7: Figure out what the hell to do with all the profit you just made. Seriously.

My friends, it doesn't take that much imagination to come up with several other scenarios, all quite lucrative, all bought and paid for with Canadian dollars.

These are not tendered, barely supervised, without regard for regional equality, and very much based on friendships and who-you-know. The potential for abuse is monumental.

Abuse, you say? What... what do you mean abuse?

Canadians think they are getting free iPhones. They are not, it seems, under such potential terms as I describe. We think this will benefit the country. Dubious benefits, indeed. We think that Sam is paying the bill, when it appears all the dollars are Canadian. We think that nice Canadian research is going on in the NRC labs, not James Bond stuff (or worse?)

But abuse, you still say? How is it abuse to be screwed when you walk around wearing a 'Screw Me, I'm a Rube' T-shirt...?'

Good point.

COMING IN PART 3: Some 'who's' to attach to those 'what's'.

BONUS SEGMENT: To my friends at the ELA.


You can sit sadly by your desks and wait for the moth ball delivery truck.


You can figure out how your current situation relates to the military IRB money.

Just sayin'.