Archived — Interim Evaluation of FedDev Ontario Programs

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October 2012

Prepared by:
Evaluation Group
Federal Economic Development Agency for Southern Ontario


List of Acronyms

ARC
Applied Research and Commercialization Initiative
BCF—CC
Building Canada Fund — Communities Component
BGMRP
Brantford Greenwich — Mohawk Remediation Project
BICD
Business Innovation & Community Development
CA
Contribution Agreement
CAF
Community Adjustment Fund
CED
Community Economic Development
CFDC
Community Futures Development Corporation
CFP
Community Futures Program
CME
Alliance of Canadian Manufacturers & Exporters
COIP
Canada — Ontario Infrastructure Program
COMRIF
Canada — Ontario Municipal Rural Infrastructure Fund
CSIF
Canada Strategic Infrastructure Fund
EDI
Economic Development Initiative
EODP
Eastern Ontario Development Program
FBI
Food & Beverage Initiative
FedDev Ontario
Federal Economic Development Agency of Southern Ontario
G&Cs
Grants and Contributions
GDP
Gross Domestic Product
GEI
Graduate Enterprise Internship
GoC
Federal Government/Government of Canada
IBI
Investing in Business Innovation
IC
Industry Canada
ICT
Information and Communications Technology
IRAP
National Research Canada — Industrial Research Assistance Program
MRIF
Municipal Rural Infrastructure Fund
NFP
Not-for-Profit
NPV
Net Present Value
NRC
National Research Council
OLMCs
Official Language Minority Communities
OPWP
Ontario Potable Water Program
PAA
Program Activity Architecture
PI
Prosperity Initiative
PI—PE
Prosperity Initiative — Productivity Enhancement
PI—RD
Prosperity Initiative — Regional Diversification
PI–BCA
Prosperity Initiative — Building a Competitive Advantage
PMM
Performance Measurement Matrix
PMS
Performance Measurement Strategy
PSI
Post-Secondary Institution
R&D
Research and Development
RDA
Regional Development Agency
RInC
Recreational Infrastructure Canada Program
SEB
Scientists and Engineers in Business
SME
Small- and Medium-sized Enterprises
SOA
Southern Ontario Advantage
SOAI
Southern Ontario Advantage Initiatives
SODP
Southern Ontario Development Program
TDP
Technology Development Program
Y-STEM
Youth-STEM (Science, Technology, Engineering and Mathematics)
YLF
Yves Landry Foundation

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1.0 Introduction

This Interim Evaluation of the programs of the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) was undertaken to determine to what extent FedDev Ontario's programs continue to be relevant, are on track to achieve their expected program outcomes, and demonstrate efficiency and economy. The evaluation was undertaken during the spring and early summer of 2012, following the first three years of FedDev Ontario five-year mandate (2009–10 to 2013–14).

FedDev Ontario is the federal government's regional development agency (RDA) responsible for southern Ontario, which geographically includes 37 Statistics Canada census divisions and a population of 12.4 million. FedDev Ontario is headquartered in Kitchener and has offices in Stratford, Peterborough, Toronto and Ottawa.

FedDev Ontario is a young Agency, launched on August 13, 2009, to help address the economic challenges being experienced in southern Ontario. It has a five-year mandate until March 31, 2014 to "support economic and community development, innovation, and economic diversification, with contributions to communities, businesses and non-profit organizations." FedDev Ontario was created through Budget 2009 (Canada's Economic Action Plan) which provided $1.0 billion over five years (2009–10 through 2013–14) for a new southern Ontario regional development agency.

1.1 The Start-Up Period

Following Budget 2009, Industry Canada (IC) was tasked with creating FedDev Ontario. This involved transferring certain grants and contribution (Gs&Cs) programs to the new Agency, as well as developing and implementing new programs. FedDev Ontario's program responsibilities were as follows:

1.2 Objectives and Scope of Evaluation

As noted above, this interim evaluation was undertaken to determine to what extent FedDev Ontario's programs continue to be relevant, are on track to achieve their expected program outcomes, and demonstrate efficiency and economy.

The evaluation was undertaken following the completion of three of the five years in FedDev Ontario's five-year mandate. At this point, FedDev Ontario is well along in developing, launching and managing its programs. An evaluation at this time is intended to provide useful input to managing programs during the remaining two years of FedDev Ontario's current mandate.

The scope of the interim evaluation focussed on specific programs, as indicated below.

The evaluation:

The interim evaluation was based on the Treasury Board (TB) Directive on the Evaluation FunctionFootnote 3, with a focus on the five core evaluation issues relating to Relevance and Performance (effectiveness, efficiency and economy). Section 3.0 provides details on the evaluation methodology.

1.3 This Report

This report summarizes the results of the interim evaluation. In particular, it contains a description of FedDev Ontario programming, including a profile and financial summary of its program in Sections 2.0, an overview of the evaluation methodology in Section 3.0, the evaluation findings on relevance in Section 4.0 and on performance in Sections 5.0 and 6.0, and conclusions and recommendations in Section 7.0.

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2.0 FedDev Ontario Programming


This section provides a description and a financial summary of each of the programs included in this interim evaluation, as well as describes FedDev Ontario's Program Activity Architecture (PAA), including its program activities and sub-activities, and the relationship of FedDev Ontario's programs with the PAA.

2.1 Program Activity Architecture

FedDev Ontario's Program Activity Architecture (PAA) describes the alignment of its program activities and sub-activities with its Strategic Outcome: A Competitive Southern Ontario Economy. FedDev Ontario has three program activities and nine sub-activities, supported by Internal Services, as shown below in Exhibit 2.1. FedDev Ontario's program activities contribute to overall Government of Canada (GoC) strategic outcomes.

Exhibit 2.1: FedDev Ontario's 2012–13 Program Activity Architecture (PAA)

FedDev Ontario's 2012-13 Program Activity Architecture (the long description is located below the image)
Description of Figure

A series of coloured boxes are interconnected. The top box is dark blue and says, "Strategic Outcome: A Competitive Southern Ontario Economy." This box connects to three other light blue boxes, running left to right in a row beneath it. They read, "Technological Innovation," "Business Development" and "Community Economic Development." Within the Technological Innovation box and under the heading, there are three medium blue boxes. They read, "Science, Technology, Engineering and Mathematics Awareness," "Skills Development" and "Technology Development and Commercialization." In the next box, under the heading Business Development, there are two medium blue boxes. They read, "Business Investment" and "Business Productivity and Innovation." The Community Economic Development box contains four medium blue boxes. They read, "Community Futures Program," "Eastern Ontario Development Program," "Official Language Minority Communities" and "Infrastructure Delivery." There is a separate light blue box that sits beneath the entire table that reads, "Internal Services." There is a legend below the table, which indicates that the text in the dark blue box represents "Strategic Outcome," the text in the light blue boxes represent "Program Activity" and the text in the medium blue boxes represents "Sub-Activity."

A summary description of the three program activities is given below, while the alignment of FedDev Ontario programs with the PAA sub-activities is provided below in Exhibit 2.2.

2.1.1 Technological Innovation

This program activity is intended to support the southern Ontario economy to be more innovative by creating new products, services, processes and/or markets so as to contribute to the region's competitiveness. This is being achieved by: encouraging the region's labour force to be more innovative; focusing on key emerging sectors; and by strengthening linkages between the region's businesses (especially small- and medium-sized enterprises [SMEs]) and its post-secondary institutions. These are the elements necessary to improve the region's productivity, accelerate growth and maintain and enhance the region's living standards in the context of a global knowledge-based economy. Transfer payments in support of this program are made through the initiatives of SODP. The GoC outcome supported by this Program Activity is: An Innovative and Knowledge-Based Economy.

2.1.2 Business Development

This program activity supports the 360,000 businesses (especially SMEs) in southern Ontario in their efforts to drive competitiveness by providing funding to encourage the creation of start-up companies, helping existing businesses to expand and helping companies improve their productivity. Transfer payments in support of this program are made through the SODP initiatives. The GoC outcome supported by this Program Activity is: Strong Economic Growth.

2.1.3 Community Economic Development

This program activity supports the 288 communities (small and large, rural and urban, Francophone and Aboriginal) in southern Ontario that are home to 12.4 million residents. These communities are key to enhancing southern Ontario's economic competitiveness and the long-term prosperity of the region. Southern Ontario depends on communities that can attract the best talent and compete for investment as dynamic centres of commerce and learning. Strong communities contribute to a prosperous southern Ontario.

Through this program activity, the Agency is continuing to support communities and regions throughout southern Ontario to identify local solutions to local challenges and opportunities. Strong, safe and modern communities are essential building blocks for the region's competitiveness and long-term prosperity. FedDev Ontario works with others, including Infrastructure Canada, the Province and communities, to support the infrastructure needs within southern Ontario. Transfer payments in support of this program are made through a variety of initiatives under CFP, EODP, and EDI, as well as a number of infrastructure programs. The GoC outcome supported by this Program Activity is Strong Economic Growth.

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2.2 Alignment of Programs with PAA

Exhibit 2.2 below shows the alignment between FedDev Ontario's programs and its PAA — i.e., how programs contribute to the program sub-activities and in turn, to the program activities and to FedDev Ontario's strategic outcome and GoC outcomes.

The FedDev Ontario programs are described in Section 2.3, including the seven initiatives of SODP/SOA shown in brackets in Exhibit 2.2.

Exhibit 2.2: Alignment of FedDev Ontario Programs with its PAA
PAA (Program Activity & Program Sub-Activity) Program
Technology Innovation
Science, Technology, Engineering and Mathematics (STEM) Awareness SODP/SOA SODP/SOA (Y-STEM)
Skills Development SODP/SOA (GEI, SEB)
Technology Development and Commercialization SODP/SOA (ARC, TDP)
Business Development
Business Investment SODP/SOA (IBI)
Business Productivity and Innovation SODP/SOA (PI) & SODP pre-SOA
Community Economic Development
Community Futures Program CFP
Eastern Ontario Development Program EODP
Official Language Minority Communications EDI
Infrastructure Delivery Footnote a CAF, RInC, OPWP, COIP, CSIF, COMRIF, MRIF Top-Up, BCF—CC & BCF—CC Top-Up

Footnotes

Footnote a

As previously noted OPWP, COIP, CSIF, COMRIF, MRIF Top-Up, BCF—CC & BCF—CC Top-Up are not included in this interim evaluation.

Return to footnote a referrer

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2.3 Profile of FedDev Ontario Programs

This section describes the FedDev Ontario programs included within the interim evaluation, — i.e., SODP, CFP, EODP, EDI, CAF and RInC. Summary financial information on these programs is provided below in Section 2.4. FedDev Ontario programs that have not been included in this interim evaluation are summarized in Appendix A.

2.3.1 Southern Ontario Development Program

FedDev Ontario developed and established the Southern Ontario Development Program (SODP) in 2009–10 as a core program to support economic growth over the long-term, by promoting economic development and diversification, job creation, and sustainable self-reliant communities in southern Ontario. SODP is the sole supporter of two of three FedDev Ontario program activities, as shown above in Exhibit 2.2.

SODP contributions are focussed on competitiveness and productivity, innovation and commercialization, and community development and economic diversification. Six areas of activity were identified in the SODP Terms and Conditions: community economic development, innovations, information and communications technology (ICT), trade and tourism, human capital, and business financing.

Initial SODP Program

With a priority to introduce new funding into the region during a time of need, the initial program was designed to accomplish the goal of supporting projects quickly. In addition, given this need to act quickly coupled with limited capacity within FedDev Ontario, partnerships were formed with third parties to help deliver the program on FedDev Ontario's behalf.

The first intake of SODP (General Intake) was launched in October 2009, followed by the Food & Beverage Initiative (FBI) intake in November 2009, with both closing in late December 2009. In addition, three strategic partnerships were established with the Alliance of Canadian Manufacturers & Exporters (CME) SMART Program, the Ontario Chamber of Commerce's (OCC) Export Market Access Program, and the Yves Landry Foundation (YLF) to help deliver the program.

The projects approved under this initial SODP program are referred to, in this report, as the pre-SOA projects. In total, 897 projects have been undertaken, as shown below in Exhibit 2.3. These included projects that were delivered directly to 87 private sector firms and not-for-profit (NFP) organizations, and indirect delivery to 810 organizations through the three NFP strategic partnerships. In total, $134.3 million has been expended to date, or 89% out of an approved budget of $150.9 million.

Exhibit 2.3: Overview of the Initial SODP (pre-SOA) Program
(As of June 21, 2012)
Initial SODP (pre-SOA) Program Projects Budget
($ millions)
Expended
($ millions)
Expended as
a % of
Budget
General Intake 50 103.5 91.0 87.9%
Food & Beverage Initiative (FBI) 37 18.0 16.9 93.9%
Strategic Partnerships 810 (3)
Footnote b
29.3 26.4 90.1%
Alliance of Canadian Manufacturers & Exporters (CME) 349 15.7 15.7 100.0%
Ontario Chamber of Commerce (OCC) 186 1.6 1.4 87.5%
Yves Landry Foundation (YLF) 275 12.0 9.3 77.5%
Total 897 Footnote c 150.9 134.3 89.0%
Source: Summarized from FedDev Ontario Weekly BICD Report (As of June 21, 2012)
Footnotes
Footnote b

810 projects delivered through three strategic partnerships.

Return to footnote b referrer

Footnote c

Total for projects does not include three strategic partnerships.

Return to footnote c referrer

In addition, funds were transferred to the Business Development Bank of Canada (BDC) and the National Research Council's Industrial Research Assistance Program (IRAP). BDC received $50 million dollars in 2009–10, including $35 million in capital to invest in early-stage firms in southern Ontario and $15.0 million to invest in Ontario-based venture capital funds focussed on Ontario-based opportunities, and IRAP received a total of $44.5 million ($27.5 million in 2009–10, and $17.0 million in 2010–11) to support SMEs in research and development (R&D) intensive sectors in southern Ontario.

Southern Ontario Advantage

Once the priority of quickly delivering SODP stimulus funding was addressed, FedDev Ontario developed a more focussed program aligned with its mandate to promote the development of a strong and diversified (i.e., competitive) southern Ontario economy. With input from stakeholders and industry, the following regional economic challenges were identified:

The Southern Ontario Advantage (SOA), consisting of seven initiatives, was developed to address these challenges under the SODP Terms and Conditions. The seven initiatives with their launch dates are given below in Exhibit 2.4:

Exhibit 2.4: SOA Initiatives
SOA Initiative Objective Launch Date
People Advantage
Y-STEM Youth STEM (Science, Technology, Engineering & Mathematics) Encourage youth to pursue education and careers in STEM; improve youth's understanding of the business of science November 29, 2010
GEI Graduate Enterprise Internship Develop business and management skills in graduate students / recent graduates of STEM programs to complement their technical skills September 24, 2010
SEB Scientists & Engineers in Business
Develop improved business and management skills of STEM entrepreneurs in Southern Ontario
Improve access to financing and/or business support services needed to successfully launch and manage start-up SMEs in Southern Ontario
October 13, 2010
Knowledge Advantage
ARC Applied Research & Commercialization Initiative
Encourage greater collaboration between SMEs and PSIs
Accelerate innovation, improve productivity and competitiveness of SMEs
Pilot April 19, 2010
Extension launched
December 12, 2011
TDP Technology Development Program Increased investment to bridge the gap between R&D and commercialization of market-driven "game-changing" technologies September 14, 2010
Entrepreneurial Advantage
IBI Investing in Business Innovation
Accelerate the commercialization of new products, processes, and practices
Increase, stimulate & leverage private sector investment
Encourage growth of angel investment funds
October 15, 2010
Prosperity Advantage
PI Prosperity Initiative
Increased economic diversification, improved productivity and enhanced competitiveness of southern Ontario regions
Consists of three distinct components:
  • PE — Productivity Enhancement
  • RD — Regional Diversification
  • BCA — Building a Competitive Advantage
November 26, 2010

A description of these seven SOA initiatives, including the eligible applicant(s), beneficiaries, funding type and funding per applicant is provided below in Exhibit 2.5. Some of the initiatives have several streams. SEB has two (2), IBI has three (3) and PI has three (3). In total, there are 12 distinct initiatives/streams in the SOA program.

Exhibit 2.5: Description of the SOA Initiatives
Southern Ontario Advantage Objective Eligible Applicant(s) Beneficiaries Funding Type Funding per Applicant
People Advantage
Youth STEM (Science, Technology, Engineering, & Math) Encourage youth to pursue education & careers in STEM; improve youth's understanding of the business of science Not-for-Profits (NFPs) Youth from Kindergarten to Grade 12 Non-repayable
  • Up to $2M
  • Up to 100% of direct eligible costs
Graduate Enterprise Internship Develop business & management skills in graduate students / recent graduates of STEM programs to complement their technical skills NFPs and Post-Secondary Institutions (PSIs) Small- & medium-sized enterprises (SMEs), recent STEM graduates with at min. advanced level diplomas & students at a graduate or above level Non-repayable
  • Up to $5M
  • Up to 100% of direct eligible costs
  • Up to $10K undergrad/
    college level grads
  • Up to $15K graduate level students/
    grads
  • Up to 50% of student salaries & benefits
Scientists and Engineers in Business

Develop improved business & management skills of STEM entrepreneurs in southern Ontario

Improve access to financing and/or business support services needed to successfully launch & manage start-up SMEs in southern Ontario

NFP Science and Engineers in Business
NFP, Community Futures Development Corporations Recent STEM graduates/
graduate student entrepreneurs
Non-repayable
  • Up to $5M (Max 35K per entrepreneur)
  • Up to 50% of direct eligible costs
PSI Commercialization Fellowships
PSIs Recent STEM graduate/
graduate student entrepreneurs & post-doc entrepreneurs
Non-repayable
  • Up to $5M (Max 30K per fellowship)
  • Up to 50% of the cost of the fellowships
Knowledge Advantage
Applied Research and Commercialization Initiative

Encourage greater collaboration between SMEs & PSIs

Accelerate innovation, improve productivity and competitiveness of SMEs

PSIs SMEs Non-repayable
  • Up to $750K
  • Up to 100% of direct eligible project costs (PSIs) consisting of up to 66.6% of total project costs SME must contribute 33.3%
Technology Development Program Increased investment to bridge the gap between research & development & commercialization of market-driven "game-changing" technologies NFPs, PSIs Private sector Normally Non-repayable
  • Up to $20M
  • Up to 50% of direct eligible costs must be matched by private sector
Exhibit 2.5: Description of the SOA Initiatives (continued)
Southern Ontario Advantage Objective Eligible Applicant(s) Beneficiaries Funding Type Funding per Applicant
Entrepreneurial Advantage
Investing in Business Innovation

Accelerate the commercialization of new products, processes, and practices

Increase, stimulate & leverage private sector investment

Encourage growth of angel investment funds

Start-up business (less than 50 employees) Start-up businesses Repayable
  • Start up businesses: up to $1M
  • 1/3 of eligible costs, leveraging 2/3 angel/
    venture capital (VC) funds
NFP angel investor networks located in southern Ontario NFP angel investor networks Non-repayable
  • NFP angel investor networks: Up to $50K (One-time)
  • Up to 100% of direct eligible project costs
NFP organizations representing angel investor networks NFP organizations representing angel investor networks, angel investors Non-repayable
  • NFP organizations, representing angel investor networks:  Up to $2M
  • Up to 100% of direct eligible project costs
Prosperity Advantage
Prosperity Initiative Increased economic diversification, improved productivity and enhanced competitiveness of southern Ontario regions Productivity Enhancements
NFPs representing a sector or industry SMEs, industry sectors Non-repayable
  • Up to $20M
  • Up to 90% of direct eligible costs
Regional Diversification
SMEs, regional or community-based NFPs Communities, industries, SMEs Non-repayable & Repayable
  • Up to $20M for profit & NFP

For Profit:

  • Up to 50% of direct eligible capital costs
  • Up to 75% of direct eligible non-capital costs

NFP:

  • Up to 90% of direct eligible costs
Building A Competitive Advantage
NFPs, PSIs, SMEs or an existing or newly created economic cluster SMEs, industries, regions Non-repayable & Repayable

An overview of the status of each of these SOA initiatives is given below in Exhibit 2.6. The exhibit shows that, as of July 20, 2012, $383.9 million or 89% of the total SOA budget of $432.0 million for the seven initiatives has been committed, and close to 20% of the budget has been expended.

Exhibit 2.6: Overview of Current Status of SOA Initiatives
(As of July 20, 2012)
SOA Initiative Approved Agreements Budget Committed
($
millions)
Expended
($
millions)
Expended as a % of Budget
($
millions)
(Percent)
People Advantage
Y-STEM Youth STEM (Science, Technology, Engineering & Mathematics) 14 12.7 2.9% 12.7 3.5 27.5%
GEI Graduate Enterprise Internship 9 18.5 4.3% 17.6 0.5 2.7%
SEB Scientists & Engineers in Business 7 9.8 2.3% 9.1 2.9 31.5%
Sub-total People Advantage 30 41.0 9.5% 39.4 6.8 17.4%
Knowledge Advantage
ARC Applied Research & Commercialization Initiative 24 28.6 6.6% 28.6 9.8 34.2%
TDP Technology Development Program 6 63.8 14.8% 63.8 5.1 8.0%
Sub-total Knowledge Advantage 30 92.4 21.4% 92.4 14.9 16.1%
Entrepreneurial Advantage
IBI Investing in Business Innovation 80 48.1 11.1% 46.2 13.1 28.3%
Prosperity Advantage
PI Prosperity Initiative 50 250.5 58.0% 205.9 51.1 24.8%
All SOA Initiatives
Total 190 432.0 100.0% 383.9 85.9 19.9%
Source: FedDev Ontario Key Program Delivery Indicators Report — Summary (As of July 20, 2012)

In terms of the total budget of $432.0 million, the Prosperity Iinitiative accounts for more than half (58%), followed by the Technology Development Program (TDP) with close to 15% and Investing in Business Innovation (IBI) with 11%. The other four initiatives account for the remaining 16%.

2.3.2 Community Futures Program (CFP)

The Community Futures Program (CFP) is a national contribution program that supports community economic development (CED) and builds the capacity of communities to be more competitive, innovative and diversified. CFP was established in 1985 and has been administered in southern Ontario by FedDev Ontario since 2009. The objectives of CFP are:

FedDev Ontario delivers CFP through a network of 37 Community Futures Development Corporations (CFDCs) that provide complete geographic coverage of rural southern Ontario. CFP provides CFDCs with financial resources so they can build the capacity necessary to develop and implement strategic and viable responses to their community's economic challenges and opportunities. The program provides financial support to CFDCs so that they, in collaboration with other partners and stakeholders, can assess their situation and develop strategies to meet their needs, provide support to business and social enterprises, and undertake appropriate Community Economic Development (CED) initiatives. The CFP helps communities develop and implement local solutions to local problems, with the ultimate beneficiaries being rural businesses and communities.

The CFDCs are independent, community-based, legally incorporated not-for-profit community development organizations that have been established for the purpose of delivering the CFP in a designated service area. All CFDCs have corporate bylaws and have developed policies and procedures for administration of their general operations, personnel, and investment fund, as well as conflict of interest guidelines. While there is no application review process, each of the 37 CFDCs must submit a business plan to FedDev Ontario for the period of their contribution agreement (CA).

The CFDCs offer a wide variety of programs and services supporting community economic development and small business growth. In particular, they provide:

  1. Strategic community planning and socio-economic development;
  2. Support for community-based projects;
  3. Business advisory services; and
  4. Access to capital for small, rural businesses.

CFDC clients include SMEs, entrepreneurs, social enterprises, local economic and business development organizations, municipalities, and Aboriginal organizations.

2.3.3 Eastern Ontario Development Program

The Eastern Ontario Development Program (EODP) promotes socio-economic development in eastern Ontario by creating, building and developing the necessary conditions to increase business and employment opportunities in the area. In particular, EODP has provided support for the implementation of community economic development projects; improved access to enhanced technology for communities and businesses; and the provision of loans to businesses to stimulate job creation/ maintenance.

EODP was established in 2004 in response to economic concerns and funding gaps identified by local and regional community stakeholders in eastern Ontario. The program provides support for projects in rural eastern Ontario, which is delivered through the 15 CFDC's in eastern Ontario, and the Eastern Ontario CFDC Network Inc. The EODP received two-year program renewal as part of Canada's Economic Action Plan in 2009, and has been subsequently approved for a further three-year period until March 31, 2014.

2.3.4 Economic Development Initiative Program

The Economic Development Initiative (EDI) is part of the Roadmap for Canada's Linguistic Duality 2008–2013: Acting for the Future, the GoC's strategy for official languages, for which Heritage Canada is responsible. The EDI supports business and economic development activities that encourage sustainable growth in Ontario's Francophone communities (the Official Language Minority Communities in Ontario [OLMCs]), in two priority areas: Community Strategic Planning, and Business and Economic Development.

EDI is designed to meet the needs of Ontario's Francophone communities and is delivered by funding projects proposed by Francophone or bilingual organizations located in southern Ontario. IC coordinates the national EDI program; however, the RDAs, including FedDev Ontario, are responsible for the delivery, monitoring, and evaluation of EDI in their respective regions. Projects supported by EDI help create jobs and economic growth in southern Ontario by providing funding to promote the development of new expertise through innovation, diversification of economic activities, partnerships and increased support of SMEs in southern Ontario Francophone communities.

2.3.5 Community Adjustment Fund Program

The Community Adjustment Fund (CAF) was a two-year $1.0 billion economic stimulus measure announced as part of Canada's Economic Action Plan in 2009. CAF was designed to act quickly to help minimize the impacts of the global economic downturn by creating employment opportunities. The fund invested in projects that created immediate job opportunities for communities. It focused on economic development, innovation and diversification.

FedDev Ontario has been responsible for delivering CAF in southern Ontario, with a budget of $298.6 million over two years. Eligible applicants included municipalities, not-for-profit organizations, post-secondary institutions, Aboriginal organizations, SMEs and organizations. In addition, $28.0 million of FedDev Ontario's budget was allocated to the NRC's IRAP in 2010–11.

Projects supported by CAF funding were required to be located in communities with a population of less than 250,000, and priority was given to those with less than 100,000. Projects were assessed based on the degree to which they contributed to the expected outcomes of job creation or preservation; the creation, expansion or strengthening of a business; and the enhancement of competitiveness and sustainability of communities and businesses. Projects had to be incremental and completed by March 31, 2011; however, extensions were given to a small number of projects which were then delivered under SODP.

Examples of eligible activities included the revitalization and development of downtown core and waterfront areas, improvements to community-owned tourism facilities, development of business incubators, expansion of SME production capacity, production technology, access to markets, and other SME projects that improved a business's competitiveness.

2.3.6 Recreational Infrastructure Canada Program

The Recreational Infrastructure Canada Program (RInC) provided timely, targeted stimulus to the economy through investments that spurred construction activity related to existing recreational infrastructure. RInC was a national two-year $500 million economic stimulus measure announced as part of Canada's Economic Action Plan that was launched in May 2009. The federal Ontario allocation for RInC was $191 million.

FedDev Ontario delivered the RInC program across Ontario in partnership with the Province of Ontario. The Governments of Canada and Ontario each funded up to one third of a project's total eligible cost up to a maximum of $1 million each per project, with recipients providing the remaining balance. Projects were to be substantially completed no later than March 31, 2011. On December 2, 2010, Canada announced an extension to the economic stimulus programs, including RInC. Construction extensions to October 31, 2011 were approved for those projects that fulfilled extension requirements.

Eligible applicants under RInC included municipalities, public sector bodies, not-for-profit entities, provincial or territorial entities and First Nations. Projects were assessed based on the degree to which they met the program eligibility requirements and selection criteria, as outlined in the program's guidelines. Local hockey rinks, swimming pools, parks, playgrounds, trails and other recreational community sites throughout Ontario were upgraded and repaired with investments made through RInC.

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2.4 Financial Summary of FedDev Ontario Programs

This section provides a financial summary of the FedDev Ontario programs included within this interim evaluation. The financial summary as of July 20, 2012, is shown of below in Exhibit 2.7.

SODP is the largest program at $641.6 million with more than half of the total budget for the programs being evaluated. In turn, SOA accounts for about two-thirds of SODP budget. The smallest program is EDI with a budget of $2.6 million.

In addition, the exhibit shows the extent to which program funding has been expended. The lowest percentages are SOA and EODP, while the largest percentages are CAF and RInC which are essentially complete. Overall, for the programs included in the interim evaluation, 62% of the total budget has been expended to date.

Exhibit 2.7: FedDev Ontario Programming — 2009–10 to 2013–14 Footnote d
(As of July 20, 2012)
Program End Date
Footnote e (Mar 31)
Budget (2009–10 to 2013–14)
($ millions)
Committed
($ millions)
Expended
($ millions)
Expended as a % of Budget
Programs included in the Interim Evaluation
Southern Ontario Development Program (SODP) Footnote f 2014 641.5 591.5 276.0 43.0%
Initial SODP Program Footnote f 209.6 207.6 190.1 90.7%
Southern Ontario Advantage (SOA) Program Footnote g 431.9 383.9 85.9 19.9%
Community Futures Program (CFP) Footnote h 2014 60.2 60.0 41.5 68.9%
Eastern Ontario Development Program (EODP) 2014 28.8 28.8 7.2 25.0%
Economic Development Initiative (EDI) 2013 2.6 2.6 2.0 76.9%
Community Adjustment Fund (CAF) Footnote i 2011 284.7 277.4 248.2 87.2%
Recreational Infrastructure Canada (RInC) Footnote j 2012 191.1 180.2 174.6 91.4%
Total of Programs Included in Evaluation
Footnote k
  1,208.9 1,140.6 749.5 62.0%
Source: FedDev Ontario Key Program Delivery Indicators Report — Summary (As of July 20, 2012), and CFP program management.

Footnotes

Footnote d

Covers the 5-year period since the inception of FedDev Ontario.

Return to footnote d referrer

Footnote e

Date shown is the end date of the program (2014 corresponds to the end of FedDev Ontario's five-year mandate).

Return to footnote e referrer

Footnote f

Includes pre-SOA, IRAP and transfer of extended CAF projects. For CAF, $7.5 million was included in the budget and $14.8 million in the commitments for 2011–12. Figures for pre-SOA are provided above in Exhibit 2.3.

Return to footnote f referrer

Footnote g

A breakdown by SOA initiative is provided above in Exhibit 2.6.

Return to footnote g referrer

Footnote h

CFP budget is provided annually — $12.54 annually for 2009–10 to 2011–12, $11.28 for 2012–13 and $11.28 expected for 2013–14. To date in 2012–13, $11.1 million has been committed and $3.9 million has been expended.

Return to footnote h referrer

Footnote i

Excludes transfer to SODP for 18 extended CAF projects in budget and commitments in 2011–12 — see Note f above. Includes $28.0 million transferred to NRC/IRAP in 2010–11.

Return to footnote i referrer

Footnote j

Program essentially complete with a small amount of funding remaining to be expended.

Return to footnote j referrer

Footnote k

The total budget does not include the $50 million dollars transferred to BDC in 2009–10

Return to footnote k referrer

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3.0 Overview of Evaluation Methodology

This section provides an overview of the evaluation methodology, including the evaluation issues covered in this interim evaluation, the data collection methods employed, and the limitations of the evaluation.

3.1 Evaluation Issues

The interim evaluation was based on the Treasury Board (TB) Directive on the Evaluation FunctionFootnote 4, with a focus on the five core evaluation issues relating to Relevance and Performance (effectiveness, efficiency and economy). These five core issues are given below in Exhibit 3.1.

Exhibit 3.1: Core Evaluation Issues
(from TB Directive on the Evaluation Function)
Relevance
Issue #1: Continued Need for program Assessment of the extent to which the program continues to address a demonstrable need and is responsive to the needs of Canadians
Issue #2: Alignment with Government Priorities Assessment of the linkages between program objectives and (i) federal government priorities and (ii) departmental strategic outcomes
Issue #3: Alignment with Federal Roles and Responsibilities Assessment of the role and responsibilities for the federal government in delivering the program
Performance (effectiveness, efficiency and economy)
Issue #4: Achievement of Expected Outcomes Assessment of progress toward expected outcomes (including immediate, intermediate and ultimate outcomes) with reference to performance targets and program reach, program design, including the linkage and contribution of outputs to outcomes
Issue #5: Demonstration of Efficiency and Economy Assessment of resource utilization in relation to the production of outputs and progress toward expected outcomes

The TB Directive requires evaluations to assess all five core issues in order to address value for money. However, departments and agencies have the flexibility to determine the evaluation approach and level of evaluation effort in accordance with the program's risks and characteristics, and the quality of performance information available for each individual program.

In assessing the two core performance issues, FedDev Ontario has identified the following key questions for this interim evaluation:

3.2 Data Collection Methods

The interim evaluation benefitted from previous program evaluations carried out on EODP, EDI and CAF, and implementation reviews undertaken for SODP, CFP and RInC, to obtain performance information on the programs. In addition, because SODP is a key FedDev Ontario program and is still being implemented, surveys, case studies and project file reviews were used to collect information. The SODP surveys of beneficiaries were undertaken for the older pre-SOA projects and for the SOA ARC initiative, which started as a pilot six months ahead of the other SOA initiatives.

In addition to the previous program evaluation and implementation reviews, the following were undertaken in support of this interim evaluation:

In addition, the survey included file reviews of 51 additional indirect recipients. For the 63 indirect recipients (including the 12 interviews and 51 file reviews), 7.3% of the total amount funded was included in the sample.

The sources of data available to the interim evaluation are summarized below in Exhibit 3.2.

Exhibit 3.2: Evaluation Data Sources by Program
Programs Data Sources Fiscal Year
SODP — Southern Ontario Development Program
Overall (pre-SOA and SOA) Implementation Review 2011–12
pre-SOA Survey of Recipients 2012–13
Case Studies 2012–13
Economic Analysis 2012–13
SOA Initiatives Inventory & Forecast of Performance Indicators 2012–13
Survey of ARC Recipients 2012–13
Performance Indicator Data 2012–13
Internal Delivery Cost Comparison (Preliminary) 2012–13
CFP — Community Futures Program Implementation Review 2011–12
Final Evaluation 2008–09
EODP — Eastern Ontario Development Program Evaluation 2010–11
EDI — Economic Development Initiative Final Evaluation 2011–12
CAF — Community Adjustment Fund Final Evaluation 2011–12
Economic Analysis 2012–13
RInC — Recreational Infrastructure Canada Implementation Review 2011–12
Economic Analysis 2012–13
All FedDev Ontario Programs External Program Delivery Cost Comparison 2012–13

3.3 Evaluation Limitations

As this interim evaluation built on previous reviews and evaluations noted above, the findings in this evaluation are subject to their limitations. Where applicable, these limitations are noted in the findings. In relation to SODP SOA and pre-SOA, a number of limitations are noted:

In terms of assessing the impact of the various programs on the southern Ontario economy, FedDev Ontario's program contributions, while substantial, are relatively small compared to the economy in the region. Moreover, given that other investment programs are also active in the region, it is difficult to isolate the longer-term impacts of FedDev Ontario's programs in contributing to, A Competitive Southern Ontario Economy.

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4.0 Findings on Relevance

This Section provides the evaluation findings for Relevance, which have been structured based on the three core relevance issues described in Section 3.1.

4.1 Issue #1: Continued Need for FedDev Ontario Programs

The findings in this section are based on research undertaken by FedDev Ontario's Strategic Policy Branch to establish the need and continued relevance of FedDev Ontario's programming. This research included tracking government speeches, announcements and budgets, as well as both in-house analyses and contracted research. In particular, a study was undertaken by Deloitte entitled: Growth and Adjustment in Southern Ontario: Opportunities, Challenges and Recommendations, and several internal projects have been completed: Southern Ontario's Economy — Trends, Structure and Adjustment, that covers regional performance and the need for ongoing support, and the Southern Ontario and the Knowledge Economy, which analyzes southern Ontario's performance in the global knowledge economy.

Background: Ontario, which traditionally has been a key driver for Canadian prosperity, was hit harder by the 2008 global recession than other provinces, which put pressure on governments to rebuild Ontario's economic capacity and position the region to compete globally. The vulnerabilities of southern Ontario's economy were exposed and resulted in forced plant closures, restructuring, and significant job losses, particularly in well-paying manufacturing jobs. The region lost almost 210,000 jobs — more than half of all the jobs lost in Canada — and two of the region's major automobile manufacturers (General Motors and Chrysler) declared bankruptcy in 2009, leading to a $14 billion bailout from the provincial and federal governments.

Since then, GDP and employment are now above their pre-recession levelsFootnote 5, but Ontario continues to lag the rest of Canada in terms of growth. The effects of the structural change from a manufacturing- to service-oriented economy have been challenging. Ontario's reliance on a relatively small number of export products and markets may have come at the cost of taking advantage of emerging global markets.

Ontario has a highly-skilled and able workforce; however, an innovation gap exists posing a risk to Ontario's competitiveness in a global knowledge economy. Moreover, Canada's Science and Technology Strategy (2007) noted that Canadian businesses and other organizations are underutilizing the skills, talents, and knowledge of current graduates.

The structural changes and recessionary impacts have varied across different parts of southern Ontario. Important pockets of disadvantage remain and may become long-term weaknesses as the economy continues to evolve.

Until the establishment of FedDev Ontario in 2009, southern Ontario did not have an RDA presence similar to most regions in Canada. Since its establishment, FedDev Ontario's efforts have been targeted at addressing barriers to economic recovery and to fuel growth to help southern Ontario continue to be a regional and economic global leader.

Current Situation: Notwithstanding FedDev Ontario's efforts to date, the southern Ontario economy remains under significant pressure as local communities, workers and businesses continue to make necessary structural adjustments to compete in global markets and recover from the deep impacts of the global economic recession. As a manufacturing and export intensive region, many southern Ontario's businesses and communities have faced enduring hardship of more than a decade as the region undergoes a complex economic transformation. Relatively high unemployment rates and challenges with transitioning businesses and displaced workers persist across many communities in southern Ontario, including those that have traditionally relied on the manufacturing sector.

Overall, regional economic performance remains fragile, as uncertainty in the U.S., European and global markets threatens the pace of southern Ontario's economic recovery. Uncertainty in the exchange rate and energy prices, underinvestment in productivity enhancing equipment, a sagging U.S. economy, growing and more sophisticated international competition from emerging markets, the global economic recession, and ongoing uncertainty in global markets, have created troubling, if not systemic, challenges for many communities and sectors and are moderating the pace of economic recovery.

Across the region, pockets of disadvantaged communities and sectors are characterized by deteriorating economic and social conditions, including high unemployment and incidence of displaced workers, low labour force participation rates and out-migration. As global economies mobilize to compete in higher value-added production, southern Ontario's competitive challenges will intensify. Enabling southern Ontario's ongoing prosperity will require regional players to improve their productivity and global opportunities by investing in new machinery and equipment, diversifying their markets, integrating into global value chains, and commercializing new ideas.

From the above, FedDev Ontario remains relevant as an organization and there is a continuing need for its programs and initiatives to foster innovation, promote regional competitiveness in a global economy, invest in infrastructure, and mitigate the risk of generating pockets of disadvantage in southern Ontario.

4.2 Issue #2: Alignment with Government Priorities

With the introduction of the 2012 Economic Action Plan, the GoC has clearly set out its priorities in support of a prosperous future for Canadians. The Economic Action Plan focuses on the drivers of growth and job creation — innovation, investment, education, skills and communities. In addition to priorities of delivering high-quality jobs and economic growth, the GoC has set out its intention to promote innovation among Canadian business and entrepreneurs.

FedDev Ontario's Strategic Outcome to achieve A Competitive Southern Ontario Economy is aligned with these GoC priorities through its PAA Program Activities and Sub-Activities, and its programs and initiatives, as described in Section 2.1. Exhibit 4.1 shows the alignment of FedDev Ontario's Program Activities with GoC outcomes:

Exhibit 4.1: Alignment of FedDev Ontario Program Activities with Federal Government Outcomes
FedDev Ontario Program Activities (PAA) Federal Government Outcomes
Technological Innovation An Innovative and Knowledge-Based Economy
Business Development Strong Economic Growth
Community Economic Development Strong Economic Growth

4.3 Issue #3: Alignment with Federal Roles and Responsibilities

FedDev Ontario, as the federal government's representative in southern Ontario, is aligned with GoC priorities through its programs designed to create a southern Ontario advantage, by focussing on: promoting economic growth and job creation; fostering innovation; enhancing productivity and competitiveness; supporting regional diversification; investing in infrastructure; encouraging commercialization of research; and, positioning southern Ontario as a strong force on the global stage.

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5.0 Findings on Performance — Achievement of Expected Outcomes of FedDev Ontario Programs


This Section provides the evaluation findings for Performance Issue #4: Achievement of Expected Outcomes of FedDev Ontario Programs. The findings have been structured around the two key questions provided in Section 3.1.

5.1 Achievement of the Immediate, Intermediate and Ultimate Outcomes

This subsection addresses the question: To what extent have the immediate, intermediate and ultimate outcomes of the Agency programs been achieved?

The evidence presented below is organized by FedDev Ontario's PAA, and in particular around the three program activities and nine sub-activities. The program activities, sub-activities, programs/initiatives and applicable sections are provided below in Exhibit 5.1:

Exhibit 5.1: Alignment of FedDev Ontario Programs/Initiatives with its Program Activities/Sub-Activities
PAA (Program Activity & Program Sub-Activity) Program Applicable Section
Technology Innovation 5.1.1
Science, Technology, Engineering and Mathematics (STEM) Awareness SODP/SOA (Y-STEM) 5.1.1.1
Skills Development SODP/SOA (GEI, SEB) 5.1.1.2
Technology Development and Commercialization SODP/SOA (ARC, TDP) 5.1.1.3
Business Development 5.1.2
Business Investment SODP/SOA (IBI) 5.1.2.1
Business Productivity and Innovation SODP/SOA (PI) & SODP pre-SOA 5.1.2.2
Community Economic Development 5.1.3
Community Futures Program CFP 5.1.3.1
Eastern Ontario Development Program EODP 5.1.3.2
Official Language Minority Communications EDI 5.1.3.3
Infrastructure Delivery CAF, RInC 5.1.3.4

FedDev Ontario's programs included in this interim evaluation are described in Section 2.3 & 2.4, and key information on the SODP initiatives is provided in Exhibit 2.5. It is noted that due to the recent implementation of the SODP/SOA initiatives, very little outcome information is currently available on most of the initiatives; however, where available, information on current status and planned outcomes is provided.

5.1.1 Technological Innovation

The programs/initiatives under this program activity were designed to contribute to the region's competitiveness, by supporting the southern Ontario economy to be more innovative in creating new products, services, processes and/or markets. Programs/initiatives are focussed on: encouraging the region's labour force to be more innovative; focusing on key emerging sectors; and by strengthening linkages between the region's businesses (especially SMEs) and its postsecondary institutions. These elements are necessary for the improvement of the region's productivity, accelerate growth and maintain and enhance the region's living standards in the context of a global knowledge-based economy. It includes the three SOA People Advantage and two Knowledge Advantage initiatives:

5.1.1.1 STEM Awareness — SODP/SOA (Y-STEM)

This sub-activity encourages youth to pursue education and careers in Science, Technology, Engineering and Mathematics (STEM), as well as improve youth's understanding of the business of science. In terms of context, only 37 percent of Canadian teens enrolled in high school science are interested in taking a science course at the post-secondary levelFootnote 6; employers in STEM-related industries are reporting current or anticipated skill shortages; STEM graduates are a prerequisite for a more innovative and productive economy; and, encouraging young people early in their education can inspire them to pursue STEM education and careers.

The SODP/SOA Youth STEM (Y-STEM) initiative is supported by contributions from the SODP/SOA program. Since its launch in November 2010, FedDev Ontario requested and evaluated applications from NFPs for the delivery of the program. Y-STEM is being delivered through 12 NFPs, and FedDev Ontario's $12.7 million contribution budget is fully committed. To date, $3.5 million has been expended.

The FedDev Ontario contributions assist the NFPs in developing and expanding the delivery of programming to youth. Y-STEM targets youth in southern Ontario, and includes aboriginal and francophone youth, and youth living in distressed areas. In terms of programming, some NFPs are targeting large number of youth across southern Ontario (e.g., Let's Talk Science, Earth Rangers Foundation, and Perimeter Institute), while other NFPs are focusing on small, more intensive deliveries (e.g., Shad Valley International, and the Canadian Association of Girls in Science). In total, it is estimated that FedDev Ontario's Y-STEM contributions will result in STEM programming reaching an additional 1.15 million youth.

At this point, comprehensive data on the number and type of delivery is not yet available, as progress reports are just starting to be received. To provide some insight on the initiative, a case study was carried out with one of the not-for-profit organizations, Let's Talk Science.

Case Study (Let's Talk Science) — FedDev Ontario funding is currently being used by Let's Talk Science to expand program activities to increase participation of children and youth, educators and volunteers in its STEM outreach programs across southern Ontario. This is being achieved by increasing the accessibility of the STEM program (i.e., more outreach sites) and providing new educators and volunteers with the training and tools to facilitate and engage children and youth. Outreach sites are located at various universities and colleges and are managed locally by student coordinators who provide volunteers with the support and tools necessary to implement Let's Talk Science programs in the communities. In addition, Let's Talk Science has developed a group question and answer and design challenge competition for grades 6, 7 and 8 students to acquire science knowledge, and CurioCity, an interactive, web-based meeting place where teens can connect with post-secondary students and science professionals to explore and discover the science, technology, engineering and mathematics behind everyday life. It is estimated that FedDev Ontario support will allow Let's Talk Science to develop an additional 3,900 post-secondary volunteers and 700 professional volunteers, and reach to an additional 223,000 youth. To date, FedDev Ontario funding has resulted in over 80,000 additional youth being reached in southern Ontario.

5.1.1.2 Skills Development — SODP/SOA (GEI, SEB)

This sub-activity was designed to expose STEM students to research opportunities and careers in the private sector; provide skill training to graduates and graduate students in business skills or financing related to commercializing innovations or start successful businesses in STEM fields; and to address future skills shortages in management in STEM fields, including engineering, architecture, science and information systems. It includes the two SODP/SOA initiatives: Graduate Enterprise Internship (GEI) and Scientists and Engineers in Business (SEB), discussed below:

Graduate Enterprise Internship (GEI)

The SODP/SOA GEI initiative has the objectives of: developing business/management skills in STEM graduate students; providing career networking opportunities; building the next generation of potential managers; and enabling SMEs to benefit from the technical knowledge of STEM graduate students and recent graduates. In terms of context, Canadian STEM graduate students and recent graduates are not exposed to skills they need to succeed in business and lead innovationFootnote 7; and Canadian businesses and other organizations are under-utilizing the skills, talent, and knowledge of STEM graduates.

Since its launch in September 2010, FedDev Ontario requested and evaluated applications from PSIs and NFP for the delivery of the program. At this point, GEI is being delivered through six (6) PSIs and one (1) NFP, and $17.6 million out of the budget of $18.5 million is committed. To date, only $0.5 million has been expended.

The FedDev Ontario contributions assist the PSIs/NFP in arranging internships with structured mentoring opportunities in southern Ontario with SMEs for graduate students and recent graduates of STEM programs. FedDev Ontario pays up to $15,000 per six-month internship, with the host SME being required to pay a minimum of 50% of the intern's salary and benefits.

Due to the lead time involved in establishing partner relationships and placing interns with SMEs, uptake has been slower than with some of the other SOA initiatives. FedDev Ontario is considering modifying the parameters of the program to make it more attractive to the SMEs and/or interns, such as increasing the percentage contribution and/or the length of the internship.

As of mid-June 2012, the PSIs/NFP had placed a total of 38 interns with SMEs. It is expected that the initiative will place 188 interns with SMEs by March 2014. The extent to which these internships will lead to permanent employment is unknown at this time. However, the NFP issued a press release with an SME comment that GEI enabled it to add a PhD graduate: During the start-up Phase when funding is scarce, having access to a PhD graduate with specialized skills is invaluable.Footnote 8

Scientists and Engineers in Business (SEB)

The SODP/SOA SEB initiative has the objectives of: improving business and management skills of STEM entrepreneurs; and, improving access to financing and/or business support services needed to successfully launch and manage SMEs in southern Ontario. In terms of context, STEM graduates are not equipped with the business skills/financing required to commercialize innovations or start successful STEM businesses; and STEM talent engaged in founding enterprises becomes less and less important over time, with management talent taking a more important role.Footnote 9

Since its launch in October 2010, FedDev Ontario requested and evaluated applications from PSIs and NFPs for the delivery of the program. At this point, SEB is being delivered through four (4) NFPs and three (3) PSIs. To date, $9.1 million out of the SEB budget of $9.8 million is committed, and $2.9 million has been expended.

As of the end of June 2012, program management reported that a total of 53 STEM graduates had enrolled in entrepreneurship/business skill training, and 98 STEM graduates had qualified for seed funding or commercialization fellowships. In total, 106 start-up enterprises are being mentored and 256 start-up employees are being supported and/or mentored. The start-up enterprises are located in the following technology sectors: 61% in gaming & mobile technologies, 22% in ICT/software, 8% in manufacturing & clean technologies, and 9% in health & medical technologies.

While SEB has had some moderate success to date, the level of uptake has been less than originally anticipated, and program management is currently examining the initiative funding criteria and level of assistance to more effectively address the objectives being targeted.

5.1.1.3 Technology Development & Commercialization — SODP/SOA (ARC, TDP)

This sub-activity was intended to develop stronger linkages between SMEs and PSIs and support them in working together to enhance competitiveness and productivity by creating new products and processes, by taking advantage of the 35 PSIs in southern Ontario that are actively involved in undertaking research. It includes the following two SOA Knowledge Advantage initiatives:

Applied Research & Commercialization (ARC)

The SODP/SOA ARC initiative has the objective of supporting innovation in SMEs by encouraging greater collaboration and partnerships with PSIs to link applied R&D expertise with pre-commercialization needs. In terms of context, 54% of R&D in Canada is performed by business, well below the OECD average of 68%Footnote 10; and SMEs often lack R&D capacity, working capital and a critical mass to allow production lines to be taken off-line for product and process development.

ARC was launched in April 2010 as a two-year pilot initiative, roughly six months ahead of the other SOA initiatives. In the pilot initiative, 24 PSIs were supported with a budget of $14.5 million. With the success of the initiative, ARC was extended in December 2011 and the budget increased to $28.6 million.

ARC supports the 24 PSIs to partner with SMEs in southern Ontario that are seeking to improve their innovation and productivity, and address pre-commercialization needs to help move innovative products, practices to market. Applicants are eligible to receive up to $750,000 in non-repayable contributions; however, the SME must contribute one third of the total eligible costs in the form of cash and/or in-kind contribution and the PSI the remaining two-thirds.

In the original ARC initiative, as of the end of June 2012, the 24 PSIs had collaborated with 309 SMEs, involving total FedDev Ontario funding of $13.5 million. With leveraging of $9.8 million from SMEs, $23.3 million in projects was undertaken. Then, with the ARC Extension announced in December 2011, and due to be completed by March 31, 2013, 240 additional projects are being undertaken, involving a further $13.5 million in FedDev Ontario funding. These additional projects are leveraging $14.3 million from SMEs, resulting in $27.8 million in projects being undertaken. Interest in the program is high, as 530 applications from SMEs were received by PSIs under the ARC Extension.

A survey of ARC was carried out in the spring of 2012 to assess the collaborations formed between the SMEs and PSIs, and to gain an understanding of the benefits and impacts achieved.

ARC Survey — The survey involved face-to-face interviews with all 24 PSIs and 62 SMEs (20% statistical sample of the 309 SMEs supported by the initiative). The survey methodology and results obtained are documented in: The Applied Research and Commercialization Initiative: Survey of PSI and SME's Experiences (June 2012) by FedDev Ontario's Evaluation Group.

The overall conclusion from the survey was that the ARC initiative was found to be successful in meeting a critical need for PSI collaboration with SMEs; enabling PSIs to reach out to, work with, and be relevant to, the community; and, resulting in a noticeable expansion in applied research capacity.

The survey highlights of outputs and outcomes are as follows; however, it is noted that since most of the projects finished at the end of March 2012, the survey was conducted too early to measure many of the outcomes:

Technology Development Program (TDP)

The SODP/SOA TDP initiative has the objectives of: bridging the gap between R&D and the commercialization of market-driven "game changing" technologies; increasing collaborations involving private sector, academic and innovation organizations; and, leveraging private sector investment in "game-changing" technologies. In terms of context, Canada ranks 16th in the OECD for creating high-quality patents per million populationFootnote 11, and 14th out of 17 advanced economies on innovationFootnote 12.

Since its launch in September 2010, FedDev Ontario requested and evaluated applications from PSIs and NFP (e.g., innovation and commercialization organizations). TDP provides up to $20 million to established NFPs or PSIs in southern Ontario. At this point, TDP has approved six (6) applications for its total budget allocation of $63.8 million, of which $5.1 million has been expended to date.

TDP recipient organizations are lead organizations which must be working with at least one private-sector collaborator, and the project must have a minimum of 50% financing from non-governmental sources. Projects need to contribute to the development of a globally competitive market-ready technology that has the potential to develop opportunities for businesses and/or an industry sector.

The five project lead organizations where a CA has been signed are given below in Exhibit 5.2, together with a description of the projects:

Exhibit 5.2: Descriptions of TDP Projects
Project Lead Project Description
York University Create the "Connected Wellness Platform": a cloud-based software system that will enable patients, their family, friends and professional care teams to collaboratively manage their health and wellness through the use of innovative applications.
GreenCentre Canada Commercialize new solvent technology to process or sanitize previously unrecyclable materials such as styrofoam, contaminated plastic; oil sands tailings, and offshore drilling cuttings.
University of Waterloo The Southern Ontario Water Consortium will build a watershed-level research and development platform to accelerate the commercialization of new "game-changing" technologies.
SunnyBrook Research Institute (SRI) SRI will collaborate with 19 organizations to accelerate the commercialization of four image-guided therapy product systems, to establish a world-class image-guided therapy sector in southern Ontario.
Ontario Brain Institute Accelerate the development of Ontario's neuroscience sector, and contribute to the development of southern Ontario's growing neurotechnology cluster: "NeuroTech Ontario" focusing on the commercialization of brain-related technologies.

This initiative is at an early stage as projects tend to be large and technically complex, and take some time to evaluate and approve. Moreover, it will take a number of years for the outcomes to occur. No performance information is available at this time, although proposals for the six projects indicate that: on average, projects involve approximately 20 partners (PSIs, NFPs & private sector companies); the leverage from other funding sources is 1.1 compared to FedDev Ontario's contribution; and projects result in the creation of innovative products, and substantial numbers of permanent jobs and sales 3–5 years after project completion (e.g., three of the projects each predict approximately 500 permanent jobs and annual sales in the range of $75–100 million).

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5.1.2 Business Development

The programs/initiatives under this program activity were designed to support the 360,000 businesses (especially SMEs) in southern Ontario in their efforts to drive competitiveness, by providing funding to encourage the creation of start-up companies, helping existing businesses to expand, and assisting companies improve their productivity. It includes the SOA Entrepreneurial Advantage (IBI) and the Property Advantage (PI) initiatives, as well as the pre-SOA projects.

5.1.2.1 Business Investment — SODP/SOA (IBI)

The SODP/SOA Investing in Business Innovation (IBI) initiative has the objectives of accelerating the commercialization of new products, processes and practices; increasing, stimulating and leveraging private sector investment; and, encouraging the growth of angel investment funds. In terms of context, a weak R&D and commercialization record, and the lack of investment capital being made available to companies, have been identified as major factors in the lack of new and innovative products getting to markets from this region. Ontario has 39% of the Canadian population and contributes 37% to the national GDPFootnote 13; Ontario venture capital deal activity has dropped from a peak of $3.5 billion in 2000 to $424 million in 2010; lack of investment capital is a factor preventing new and innovative products from getting to market; and, angel/venture capital investment funds have untapped potential to increase access to capital.

IBI has two main streams of support: repayable contributions for start-ups of SMEs with less than 50 employees to accelerate commercialization; and non-repayable contributions to NFP angel investor networks and NFP organizations representing angel investors in southern Ontario. For the start-ups, the contribution is for one-third of eligible costs up to $1.0 million, with the other two-thirds provided by angel and/or venture capital funds.

Since its launch in October 2010, FedDev Ontario has supported 51 SMEs to date, and expects to support at least 80 through the program. In addition, FedDev Ontario has supported 11 angel organizations, including two national/Ontario organizations and nine angel networks. To date, $46.2 million has been committed out of a budget of $48.1 million, with $2.3 million being allocated to angel organizations. To date, $13.1 million has been expended.

At this time, the initiative is still considering applications for the remaining funding available. While it is too early to be able to assess the success of the initiative, indications are positive. To date, angel organizations have attracted 363 new investors to support new investment, and SMEs have so far reported increased sales and jobs created/retained associated with new products, services, processes and/or practices developed.

An illustration of a project that has been supported by IBI is given in the following case study.

Case Study (Chango Inc.) — FedDev Ontario funding is currently being used to support Chango Inc., a Toronto-based technology company with 50 employees that specializes in Search Retargeting. The supported project had the objective of being the first to market with a specialized technology that is centered on search retargeting to meet the needs of on-line advertisers. The FedDev Ontario funding contribution of $978K was used to fund a portion of the R&D project costing $2.9 million. The technology developed has created a potentially game-changing application for the on-line advertising industry, and puts the company in a position to aggressively capture market share as seen by the recent rapid growth in sales. Revenue opportunities are seen as open ended given that this is an emerging technology. Fourteen (14) full time positions were created during the project, and company grew from 26 to 50 persons in anticipation of the successful completion of the project.

5.1.2.2 Business Productivity & Innovation — SODP/SOA (PI) & SODP/pre-SOA

This program sub-activity is delivered through the SODP Program, and in particular, the SODP/SOA Prosperity Initiative (PI), which is the largest of the SOA initiatives with a budget of $250.5 million. In measuring program results for SODP, it would be expected that the biggest impacts would result from the largest initiative.

Prior to the SOA, SODP funded a number of projects which are known as the pre-SOA projects. These pre-SOA projects are almost all complete, as they started in early 2010, and some will have had an opportunity to achieve their immediate outcomes and possible some intermediate outcomes by this time. A survey of the pre-SOA projects was undertaken in the spring of 2012.

Prosperity Initiative (PI)

The SODP/SOA PI initiative objectives are enhancing productivity, diversifying the regional economy, and building competitiveness in southern Ontario. PI has three funding streams:

Since its launch in November 2010, FedDev Ontario Prosperity Initiative has supported 48 projects with a total contribution of $202.0 million, as shown below in Exhibit 5.3:

Exhibit 5.3: SODP/SOA Prosperity Initiative — Approved ProjectsFootnote l
PI Stream Number of
Projects
FedDev Ontario
Contribution
($ millions)
Total Project
Cost
($ million)
Leverage
(Other Funding
Sources / FedDev Ontario
Contribution)
PE 5 29.9 35.7 0.19
RD 18 53.9 438.0 7.13
BCA 23 98.2 258.6 1.63
N/AFootnote m 2 20.0 20.0 0.00
Total 48 202.0 752.2 2.72
Footnotes
Footnote l

Figures are slightly different from the FedDev Ontario Key Program Delivery Indicators Report — Summary (As of July 20, 2012), which showed 50 approved projects for a total contribution of $205.9 million.

Return to footnote l referrer

Footnote m

Innovation funds to be delivered through regional Community Futures Development Corporations (CFDCs)

Return to footnote m referrer

Most of the projects have started recently and are progressing, and almost all have yet to achieve their planned outcomes. One project that is completed involves the Alliance of Canadian Manufacturers & Exporters (CME) SMART Program which received $4.2 million of PI funding. This project is described below as part of the CME-SMART case study, which also includes pre-SOA funding of $15.75 million and subsequent PI support following the $4.2 million of $18.9 million.

Case Study (CME-SMART) — FedDev Ontario funding is currently being used to support the SMART Program of the CMEFootnote 16, which assists eligible applicants with funding to carry-out projects that will improve their productivity and competitiveness. The CME-SMART Program started in 2008 with funding from the Ontario provincial government. In 2009, FedDev Ontario provided a $15.75 million contribution (Phase I) from the SODP pre-SOA program, which provided funding for 349 SMEs to facilitate lean implementation, energy conservation and management, quality improvements and IT process improvements. Then, under SOA PI, CME received $4.2 million contribution in 2010 (Phase II) for the same purpose, and in 2012, received an additional $18.9 million (Phase III) to deliver a new productivity enhancement program called SMART Prosperity Now. This most recent funding will allow southern Ontario manufacturers that are exporting, planning to export, or selling into an export supply chain, to support productivity assessments and undertake a variety of projects to improve productivity, such as integrating new and innovative technologies to products and/or processes that include alternative energy and clean technology.

Total FedDev Ontario funding to date is $38.85 million. Under the CME-SMART program, productivity assessments projects can receive up to 50% of eligible costs to a maximum contribution of $50,000, while productivity enhancement projects can receive funding of up to 33.3% of eligible costs to a maximum contribution of $75,000. CME receives 5% of the funding to offset CME's administrative costs (i.e., $1.9 million to date), but believes an increase to 8–9% would allow for a higher quality of delivery. In terms of leverage, CME estimates that Phase I resulted in $45.0 million being invested and Phase II in $10.76 million. Further, CME's estimated impacts of the projects supported by FedDev Ontario funding are shown below, which includes 5,000 jobs created and almost another 11,000 jobs maintained. Additional impacts, such as innovation and productivity, of the Phase I funding are described below under pre-SOA Survey.

CME Case Study — Job Impacts of Projects Supported by FedDev Ontario Funding
Phase FedDev Ontario
Contribution
($ millions)
Jobs
Created
Jobs
Maintained
Phase I — SODP pre-SOA 15.75 1,856 5,058
Phase II — SODP/SOA PI 4.2 656 902
Phase III — SODP/SOA PI 18.9 2,500 5,000
Total 38.85 5,012 10,960

An additional illustration of a project that has been supported by PI is given in the following case study.

Case Study (Ivaco) — FedDev Ontario funding is currently being used to expand the Ivaco Rolling Mills steel plant in L'Orignal, Ontario, a francophone community located approximately 100 km from Montreal and Ottawa and 90 km from the US border, to increase its billet capacity from 400,000 to 625,000 tons annually. The project is an $80 million investment and FedDev Ontario will be providing a repayable contribution in the amount of $10.0 million (equal to 12.5% of eligible and supported costs of the $80 million). Other costs will be funded by the company, the Ontario Government (possibly another $10 million) and commercial borrowing. Upgrading the steel plant would allow Ivaco to become nearly self-sufficient in terms of billets required, which are the main input into the manufacture of steel rods. The ability to produce additional billets will reduce operating costs and will allow the company to manufacture grades of steel not currently produced. Ivaco is the single largest employer in L'Orignal and the surrounding area. It is expected that the project will help provide a more stable and sustainable economy in eastern Ontario by retaining the company's existing employees (over 400) and creating an estimated additional 51 direct full time skilled jobs. It is expected that the project will create many more indirect jobs during the project implementation and following its completion.

SODP/Pre-SOA Projects

The initial SODP program was designed to introduce new funding into the region during a time of need, with the goal of supporting projects quickly. The initial program supported economic and community development, innovation, and economic diversification, with contributions to communities, businesses and non-profit organizations within Southern Ontario. Given the need to act quickly coupled with limited capacity within FedDev Ontario, partnerships were formed with third parties to help deliver the program on FedDev Ontario's behalf.

The first intake of SODP (General Intake) was launched in October 2009, followed by the Food & Beverage Initiative (FBI) intake in November 2009, with both closing in late December 2009. In addition, three (3) Strategic partnerships were established with the Alliance of Canadian Manufacturers & Exporters (CME) SMART Program, the Ontario Chamber of Commerce's (OCC) Export Market Access Program, and the Yves Landry Foundation (YLF) to help deliver the program.

The recipients of $135.0 million in funding assistanceFootnote 17 were:

As these projects were further along than the majority of the more recent SOA projects, and may have had an opportunity to achieve their outcomes, a survey was designed and carried out to assess the impacts of the pre-SOA projects.

pre-SOA Survey — A survey of pre-SOA projects was undertaken in the spring 2012 to evaluate the impacts of pre-SOA program funding on the southern Ontario economy. The survey methodology and results are documented in the Southern Ontario Development Project: Survey of Funding Recipients' Experiences (June 2012), by FedDev Ontario's Evaluation Group.

The survey involved interviews with 45 organizations, as follows:

In addition, the survey included file reviews of 51 additional indirect recipients. For the 63 indirect recipients (including 12 interviews and 51 file reviews), 7.3% of the total amount funded was included in the sample.

Overall conclusions from the survey report were:

The survey found the following impacts, based on results from the SMEs sampled:

Alliance of Canadian Manufacturers & Exporters (CME)
Ontario Chamber of Commerce (OCC)
Yves Landry Foundation (YLF)

In addition, the survey noted several areas for improvement such as controls around NFP projects, and process efficiencies in executing the Direct Recipients (Private Sector) projects. The survey also noted that the distribution of funding between Direct Recipient NFP and private sector projects should be reviewed in light of the benefits obtained.

Economic Modelling (pre-SOA) — the economic modelling examined the impact on the Ontario economy of the pre-SOA projects. The impacts were based on total project costs of $327.7 million which included pre-SOA projects that were essentially completed — i.e., $88.4 million in contributions out of FedDev Ontario's pre-SOA budget of $150.9 million. The short-term employment impact of these projects was estimated to be 2,947 direct, 892 indirect and 3,195 induced jobs, totalling 7,034 jobs. The short-term GDP taking into account direct, indirect and induced impacts was estimated to be $504.3 million. The Net Present Value (NPV) of the short and long-term increase in Gross Domestic Product (GDP) at a 2.5% discount rate over 30 years provided a benefit/cost ratio of 2.51. Comparing the 2,947 direct job figures from the modelling with the survey results above is difficult given the differences in projects included and the methodology employed; however, both show a substantial increase in direct employment resulting from the pre-SOA projects.

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5.1.3 Community Economic Development

This program activity supports the 288 communities (small and large, rural and urban, Francophone and Aboriginal) in southern Ontario that are home to 12.4 million residents. These communities are key to enhancing southern Ontario's economic competitiveness and the long-term prosperity of the region. Southern Ontario depends on communities that can attract the best talent and compete for investment as dynamic centres of commerce and learning. Strong communities contribute to a prosperous southern Ontario.

Through this program activity, FedDev Ontario is continuing to support communities and regions throughout southern Ontario to identify local solutions to local challenges and opportunities. Strong, safe and modern communities are essential building blocks for the region's competitiveness and long-term prosperity. FedDev Ontario works with others, including Infrastructure Canada, the Province and communities, to support the infrastructure needs within southern Ontario.

5.1.3.1 Community Futures Program — CFP

The Community Futures Program (CFP) is a national contribution program that supports community economic development (CED) and builds the capacity of communities to be more competitive, innovative and diversified. CFP was established in 1985 and has been administered in southern Ontario by FedDev Ontario since 2009. The objectives of CFP are:

FedDev Ontario delivers CFP through a network of 37 Community Futures Development Corporations (CFDCs) that provide complete geographic coverage of rural southern Ontario. CFP provides the CFDCs with financial resources so they can build the capacity necessary to develop and implement strategic and viable responses to their community's economic challenges and opportunities. The CFDCs are independent, community-based, legally incorporated not-for-profit community development organizations that have been established for the purpose of delivering the CFP in a designated service area.

The CFDCs offer a wide variety of programs and services supporting community economic development and small business growth. In particular, they provide:

CFDC clients include small- to medium-sized businesses and entrepreneurs, social enterprises, local economic and business development organizations, municipalities, and aboriginal organizations.

The Evaluation of the Community Futures Program (2008), which was the most recent evaluation of CFP and covered a period prior to FedDev Ontario assuming responsibility for the program, found that "CFDCs have provided a consistent level of business information, counselling and referral services to clients over a four-year period. The services provided by CFDCs have been deemed necessary by clients and there is a very high level of satisfaction with the services provided by CFDCs. The CF Program is also meeting the needs of OLMCs [Official Language Minority Communities] by providing advice, support and services in both official languages where required. There are however, on-going challenges related to maintaining skilled, bilingual staff and costs associated with providing bilingual information materials. Through its loan portfolio, business services, and CED [Community Economic Development] activities, the CF Program has been successful in improving clients' business skills and knowledge, creating new business start-ups, maintaining and strengthening existing businesses, increasing community capacity, and assisting communities to diversify their economies. The impacts of some of these activities, particularly CED work and the longer-term impacts of the program are more difficult to measure as indicators to measure these impacts have yet to be established."

CFDCs provide quarterly performance information on a number of key indicators, which are consolidated and reviewed by FedDev Ontario CFP management. The CF Quarterly Report includes an investment activity report with client groups and impacts identified, a summary of the status of the investment fund, business services activities by client group and impacts, number of business assisted, leverage, and jobs created/maintained. In the first quarter of 2012, 213 businesses were assisted through the investment fund with 1,397 jobs created/maintained, and 625 businesses were assisted with business services with job impacts of 602 jobs created/maintained. Leverage on investment activity was 2.58, and the average cost per job was just under $8,000Footnote 18.

Also, performance information on a number of impacts, including employment growth variance (CF Organization versus comparable firms), % of businesses funded by industry, % of employed persons working in various industry sectors, survival rate variance, and growth in sales (CF Organization clients versus comparable firms), are based on Statistics Canada analysis, which is being undertaken nationally for all RDAs. This information is not available at this time.

5.1.3.2 Eastern Ontario Development Program — EODP

EODP was launched in 2004 to promote socio-economic development, and respond to economic concerns identified by local and regional community stakeholders, in rural eastern Ontario. EODP promotes economic development by creating, building and developing the necessary conditions to increase business and employment opportunities in the area, contributing to sustainable self-reliant communities. EODP contributions are focused on business development; community development; skills development; youth retention and attraction; access to capital; and innovation and information and communications technology (ICT). During FedDev Ontario's mandate, EODP received two-year program renewal as part of Canada's Economic Action Plan in 2009, and has been subsequently approved for a further three-year period until March 31, 2014. EODP is receiving $28.8 million in funding over the five-year period from 2009–10 to 2013–14.

The program is delivered through the 15 Community Futures Development Corporations (CFDCs) in eastern Ontario, and the Eastern Ontario CFDC Network Inc. The CFDCs solicit applications from eligible applicants within their geographic boundaries. These eligible applicants include: non-profit organizations including municipalities and municipal organizations, corporations, community economic development organizations; commercial enterprises including individuals, corporations, partnerships, cooperatives, or trusts; and aboriginal organizations.

Finding on performance from the Evaluation of Eastern Ontario Development Program (December 2010), by Government Consulting Services, were as follows:

5.1.3.3 Official Languages Minority Communications — EDI

The Economic Development Initiative (EDI) is a national initiative, which was allocated $30.5 million by the GoC over five years (2008–2013). EDI supports Francophone communities across Canada and is being delivered by the RDAs, with FedDev Ontario being responsible in southern Ontario. While FedDev Ontario originally had a budget of up to $4.0 million, difficulty was experienced in attracting appropriate applications and funding was reprofiled. The current FedDev Ontario EDI budget of $2.6 million is fully committed, and $2.0 million has been expended to date.

Through FedDev Ontario, EDI supports southern Ontario's Francophone communities (the official language minority community in Ontario) by encouraging sustainable growth in two priority areas:

  1. Community Strategic Planning activities that enhance the economic base and competitiveness of Francophone communities and SMEs; and,
  2. Business and Economic Development activities that respond to the needs, and foster economic growth, of Francophone communities in sectors such as Francophone tourism, cultural, knowledge-based and manufacturing industries, as well as support Youth Internships.

In terms of funding, EDI normally provides up to $100,000 for Community Strategic Planning and Business and Economic Development projects (usually to a maximum of 50% of eligible costs), and up to 90% (to a maximum of $27,500) of eligible costs for NFP Youth internships for a period of up to 12 months or 52 weeks. Specific census divisions were identified for program implementation, referred to as Official Language Minority Communities (OLMCs).

A summative evaluation of the national EDI program was undertaken in the spring of 2012, which found that EDI-funded projects were achieving EDI's intended immediate result of the development of new expertise through innovation, diversification of activities, partnerships and increased support for small businesses. Further, EDI's intermediate results were strong, and demonstrate significant capacities built, enterprises developed, and communities developed. The program had some positive unintended impacts, primarily in enabling RDAs more generally to develop closer relationships with OLMCs. In addition, leveraging ratios achieved were considerably above target. However, EDI is not presently leading to Economic Policy Frameworks, and EDI-funded research has had limited impact to date.

5.1.3.4 Infrastructure Delivery — Short-Term Stimulus Economic Action Plan Initiatives — CAF and RInC

The two short-term stimulus Economic Action Plan initiatives, Community Adjustment Fund (CAF) and the Recreational Infrastructure Canada (RInC) Program, included in this interim evaluation, are described below. Both programs were initiated before the launch of FedDev Ontario in 2009, and are now essentially complete. Other infrastructure programs, not included in the evaluation, are described in Appendix A.

Community Adjustment Fund (CAF) — CAF funding supported projects starting in 2009 that presented opportunities for affected/eligible communities to ensure the future viability and economic sustainability of their economies. The program made funding available through repayable and non-repayable contribution agreements to businesses and not-for-profit entities. The delivery of the funds involved partnerships and/or agreements with other federal government departments and agencies, various ministries of the Government of Ontario, communities (including First Nations communities), and NFPs, as well as for profit corporations. Funding available for CAF totalled $298.6 million over two years. To date, FedDev Ontario has expended $248.2 million of the $292.2 million budget currently allocated to this program.

The expected outcomes of the delivery of CAF included:

In addition, priority was given to projects generating immediate employment (beginning as early as summer, 2009); creating the most jobs per dollar invested; leveraging funds from the province and other funding partners; building on collaboration agreements already in place (e.g. federal-provincial agreements and existing programs); and providing a legacy of longer-term ecological and/or economic benefits.

An Evaluation of the Community Adjustment Fund (CAF) Program was carried out in 2010–11. The evaluation had the following findings:

These three components together generated an estimated employment of just under 5,500 FTEs. However, the evaluation noted in its limitations section, that job creation data was not consistently collected and that there may be inaccuracies in the above figures.

Economic Modelling (CAF) — the economic modelling examined the impact on the Ontario economy of the three sets of CAF projects administered by FedDev Ontario. The impacts were based on total project costs of $348.0 million, which included $250.0 million in FedDev Ontario contributions. The short-term employment impact of these projects was estimated to be 2,337 direct, 971 indirect and 3,161 induced jobs, totalling 6,469 jobs. The short-term GDP taking into account direct, indirect and induced impacts was estimated to be $503.6 million. The Net Present Value (NPV) of the short and long-term increase in Gross Domestic Product (GDP) at a 2.5% discount rate over 30 years provided a benefit/cost ratio of 2.75. The 2,337 direct jobs from the modelling are considerably lower than the 5,500 jobs created/maintained from the evaluation. Some of the difference may be attributed to the inconsistencies in data collection as noted by the evaluation; however, both figures show a substantial increase in direct employment resulting from the CAF projects.

The Recreational Infrastructure Canada (RInC) Program provided timely, targeted stimulus to the economy through investments that spurred construction activity related to existing recreational infrastructure. RInC was a national two-year $500 million economic stimulus measure announced as part of Canada's Economic Action Plan that was launched in May 2009. The federal Ontario allocation for RInC was $191 million.

FedDev Ontario delivered the RInC program across Ontario in partnership with the Province of Ontario. The Governments of Canada and Ontario each funded up to one third of a project's total eligible cost up to a maximum of $1 million each per project, with recipients providing the remaining balance. Projects were to be substantially completed no later than March 31, 2011. On December 2, 2010, Canada announced an extension to the economic stimulus programs, including the RInC program. Construction extensions to October 31, 2011 were approved for those projects that fulfilled extension requirements.

Eligible applicants under the RInC program included municipalities, public sector bodies, not-for-profit entities, provincial or territorial entities and First Nations. Projects were assessed based on the degree to which they met the program eligibility requirements and selection criteria, as outlined in the program's guidelines. Local hockey rinks, swimming pools, parks, playgrounds, trails and other recreational community sites throughout Ontario were upgraded and repaired with investments made through the RInC program.

As of June 15, 2012, the program is essentially complete, with nearly all the projects having completed construction. In total, federal assistance that will be paid out by FedDev Ontario is estimated to be $180.2 million, for projects with a total project cost of $635.1 million, providing leverage of GoC funding of 2.52.

Economic Modelling (RInC) — the economic modelling examined the impact on the Ontario economy of FedDev Ontario's RInC projects. The impacts were based on total project costs of $652.9 million, which included $185.4 million in FedDev Ontario contributions. The short-term employment impact of these projects was 4,564 direct, 1930 indirect and 6,555 induced jobs, totalling 13,049 jobs. The short-term GDP taking into account direct, indirect and inducted impacts was estimated to be $1,034.5 million. The Net Present Value (NPV) of the short and long-term increase in Gross Domestic Product (GDP) at a 2.5% discount rate over 30 years provided a benefit/cost ratio of 3.35.

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5.2 Barriers to the Achievement of Outcomes

This sub-section addresses the question: What are the barriers to achieving the immediate, intermediate and ultimate outcomes of Agency programs, and to what extent are these being mitigated?

There are a number of barriers that influence the achievement and measurement of outcomes, which are described below. Most of these barriers relate to SODP which, as FedDev Ontario's core program, is critical to the Agency's success because its seven initiatives address two of the three program activities in its PAA. The other programs that relate to FedDev Ontario's third program activity are either essentially complete (i.e., CAF and RInC) or have been in existence for some time (i.e., CFP, EODP & EDI) where experience and review/evaluation recommendations have helped shape and improve program delivery and performance reporting.

5.2.1 Size of the Ontario Economy

While the benefits of FedDev Ontario's program and initiatives are substantial and can be measured, they are relatively small in comparison to the size of the Ontario economy, making it difficult to assess the extent to which the programs and initiatives are contributing to A Competitive Southern Ontario Economy (FedDev Ontario's Strategic Outcome).

In 2010, the Ontario GDP was $612.5 billion, which is very large compared to the impacts of FedDev Ontario's programs. The economic modelling for SODP/pre-SOA, CAF and RInC contributions (see Section 5.1) found that the short-term GDP impacts were in total $2.04 billion for direct, indirect and induced impacts combined. If the short and long term impacts are taken into account, the NPV of the benefits over 30 years at a 2.5% discount rate was estimated to be $3.87 billion, which is also small in comparison to the overall annual GDP.

5.2.2 SODP Outcomes

The following areas apply to outcomes for SODP:

To address performance shortcomings, surveys of the ARC pilot projects and the pre-SOA were undertaken by the FedDev Ontario Evaluation Group in the spring of 2012, and program management was canvassed for information on planned and actual results on the other SOA initiatives.

5.2.3 Beneficiary Information

There is a need to collect beneficiary information in order to have the capability to measure performance information (primarily intermediate outcomes) following completion of the projects. Follow-up with the program beneficiaries through a survey would be required to collect this information. In addition, there is a need to contact beneficiaries for evaluation purposes.

FedDev Ontario does not currently have contact information for all beneficiaries. There will be a need to either request the beneficiary information from FedDev Ontario's delivery partners, or possibly ask the delivery partners to undertake the data collection on FedDev Ontario's behalf. In either case, these present some risk to FedDev Ontario. It is expected that the delivery partners can provide contact information if requested, given sufficient time. Further, if the delivery partners are requested to survey the beneficiaries on FedDev Ontario's behalf, there would likely be a need to provided additional resources for this purpose; however, it would be very difficult to assure the quality of the collected data.

Further for economic modelling, the correct location and industry codeFootnote 22 are critical inputs to the analysis. The economic modelling in the pilot application described earlier in Section 5.0 found that there were varied interpretations in assigning a code to identify the industry of the beneficiary. In some cases, the code identified the industry that received the funding, and in other cases, the entry identified the type of spending that was supported by the project.

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6.0 Findings on Performance — Demonstration of Efficiency & Economy

This Section provides the evaluation findings for Performance Issue #5: Demonstration of Efficiency and Economy. The findings have been structured around the two key questions provided in Section 3.1

6.1 Efficiency of the Agency Programs in Achieving Results

This sub-section addresses the question: To what extent are Agency programs efficient in the context of the results achieved?

To address this question, an external comparison of FedDev Ontario's program delivery costs with other RDAs and NRC/IRAP was carried out to obtain an indication of FedDev Ontario's efficiency and economy in comparison to organizations with similar business missions. Further, an examination of total cost of delivering repayable contributions was undertaken.

6.1.1 External Comparison of Program Delivery Costs

A "high-level" comparison of FedDev Ontario's costs of delivering its programs was undertaken with other federal government organizations that deliver similar programs. The organizations selected for comparison were other RDAs and NRC/IRAP, which was included because the IRAP program is delivered to similar clients to those of FedDev OntarioFootnote 23.

The source of information for the comparison was the 2012–13 Government Expenditure Plan and Main EstimatesFootnote 24 (Estimates), prepared by Treasury Board for ParliamentFootnote 25. The Estimates, which are produced on an annual basis, contain expenditure plans for federal government departments and agencies. In particular, the Estimates provide figures for Transfer Payments (Vote 5) Grants & Contributions (G&Cs), and for Operating (Vote 1) Expenditures. This information is provided in Exhibit 6.1 below.

In addition to showing the G&Cs and Operating Expenditures, Exhibit 6.1 shows the cost of delivering a "G&C program dollar" for each organization, as well as the delivery cost of other organizations as a percentage of FedDev Ontario's cost.

The Operating Expenditures for three of the agencies (ACOA, WED & CanNor) include Policy, Advocacy & Coordination as a Program Activity. To facilitate comparison, these agencies are shown with and without this Program Activity. Also, the actual total value of G&Cs for these other RDAs is somewhat larger than shown, as the other RDAs access part of their repayments for reinvestments, which is not included in the Estimates. Further, the Operating Expenditures for NRC/IRAP do not contain an allocation of NRC internal services, which is noted in the Exhibit.

It should be recognized that the figures in Exhibit 6.1 are estimates for 2012–13 (i.e., not actuals); however, they should provide a fairly accurate picture of what the organizations will expend in 2012–13, excluding any reinvestment of loan repayments. The figures therefore give a high level indication of the relative cost of delivering G&Cs programs for each of these organizations.

Exhibit 6.1: Comparison of Program Delivery Costs of Selected Federal Government Organizations
(Based on 2012–13 Government Expenditure Plan and Main Estimates)
Organization Grants &
Contributions
(G&Cs)
Footnote n
Operating Expenses Footnote o Cost of
Delivering a
G&C Program
Dollar

Footnote n / Footnote o
Other
Organizations'
Delivery Cost
as a % of
FedDev Ontario's
($ millions) ($ millions) ($) (%)
FedDev Ontario — Federal Economic Development Agency for Southern Ontario 188.9 29.9 0.16 N.A.
CEDQ — Economic Development Agency for the Regions of Quebec 252.1 48.7 0.19 122%
ACOA — Atlantic Canada Opportunities Agency 225.2 82.2 0.37 231%
Without Policy, Advocacy & Coordination 224.0 72.1 0.32 203%
WED — Western Economic Diversification 128.0 48.3 0.38 238%
Without Policy, Advocacy & Coordination 127.0 41.1 0.32 204%
CanNor — Canadian Northern Economic Development Agency 36.7 14.5 0.40 250%
Without Policy, Advocacy & Coordination 36.7 12.7 0.35 219%
NRC / IRAP — Industrial Research Assistance Program 114.3 48.32 0.42 267%
Footnotes
Footnote n

The actual total value of G&Cs for other RDAs is somewhat larger than shown, as the other RDAs access part of their repayments for reinvestments.

Return to footnote n referrer

Footnote o

Does not include (a portion of) National Research Council (NRC) Internal Services.

Return to footnote o referrer

Of the organizations shown in Exhibit 6.1, FedDev Ontario's delivery cost of $0.16 per dollar of program G&Cs are well below the delivery costs of the other RDAs and NRC/IRAP. Other organizations' delivery costs, as a percentage of FedDev Ontario's delivery costs, range from a low of 122% for CEDQ to a high of 267% for NRC/IRAP.

From the information presented, it can be concluded that FedDev Ontario's delivery costs of G&C programs are considerably lower than other organizations delivering similar G&C programs; however, it is cautioned that there may be other factors that might help explain some of the cost differences. For example, NRC/IRAP is a national program with regional delivery, while ACOA and WD have to deliver within multiple provinces in their jurisdiction. In addition, other factors could include: the type or complexity of programs delivered (e.g. scale of programs, amount of reinvestment of loan repayments, size of individual grants/contributions, level of involvement of program staff with recipients, etc.); programs have been in existence for some time (e.g., need to collect repayable contributions); availability of delivery partners for smaller projects; and other non-G&Cs workload. The extent to which the above differences, if present, impact delivery cost would need to be ascertained.

6.1.2 Cost of Repayable Contributions

An analysis of the total cost of delivering repayable contributions to SODP pre-SOA private sector beneficiaries was undertaken, allowing for repayment losses, cost of money and administration. The analysis assumed that repayable contributions would be paid over a five year period, starting one year after project completion. It was further assumed that a project would take two years to complete and the loan would be made at the start of the project. In total, it would take eight years from project start until the loan repayment was completed. The loss rate was assumed to be 3% (based on ACOA's experience) and administrative costs were assumed to be 0.16% of the loan amount (see Exhibit 6.1 above). The discount rate was 1.49% corresponding to the eight year amortized loan rateFootnote 26 from the Department of Finance, which matched the period of the loan.Footnote 27

Analysis indicates that the effective cost of repayable contributions was 27.2% (→ 3% loan loss + 8.2% related to the present value of the money repaid, using the cost of the government borrowing + 16% administration). By comparison, non-repayable contribution cost is 116% (→ 100% of contribution + 16% administrationFootnote 28). Therefore, the cost of making repayable contributions is substantially lower due to the repayment requirement, as compared to non-repayable contributions. This suggests that repayable contributions should be used where appropriate/feasible. Further, for example, on a cost per job created/ maintained basis, using the sample of 24 companies in the pre-SOA survey, the cost per job would have been $2,028 as compared to $8,643 ($7,451 + 16%) if the full repayable contribution figure was used.

6.2 Cost-Effectiveness

This sub-section addresses the question: Is there a more cost-effective way of achieving expected results, taking into consideration alternative delivery mechanisms, best practices and lesson learned?

To address this question, the external comparison of FedDev Ontario's program delivery costs with other RDAs and NRC/IRAP is referenced, an internal comparison of direct program delivery costs of selected SOA initiatives was undertaken, and the use of delivery partners is discussed.

6.2.1 External Comparison of Program Delivery Costs

As discussed in Section 6.1.1 above, it was concluded that FedDev Ontario's delivery costs of G&C programs are considerably lower than other organizations delivering similar G&C programs, although it was cautioned that further investigation was warranted in case there were other factors that might be contributing to the cost differences.

6.2.2 Internal Comparison of Direct Program Delivery Costs of Selected SOA Initiatives

A preliminary comparison of direct program delivery costs for selected SOA initiatives was undertaken to assess the viability of comparing internal initiatives/programs, and to determine whether the methodology used should be refined further and/or expanded to include other SOA initiatives and other FedDev Ontario programs.

The SOA initiatives considered were Y-STEM, GEI, SEB, IBI and PI. The three People initiatives (Y-STEM, GEI & SEB) were grouped together due to their relatively small size and number of program staff. The combined People initiatives currently have a budget of $41.0 millionFootnote 29, as compared to IBI with a budget of $48.1 million and PI with $250.5 million. In the case of PI, program staff also manages the pre-SOA projects which have a total budget of $150.9 million, which with PI totals $401.4 million.

The comparison was based on the salary cost of direct program staff involved in delivering the initiative(s), which was divided by the cost of the program delivered, to establish the direct cost of delivering a dollar of program over the life of the program (within the Agency's mandate).

Approach

To estimate the cost of direct program staff, each of the three program areas at the request of the Evaluation Group provided a list of current positions involved in delivering their programs. A number of assumptions were made in order to undertake the analysis:

These positions were then converted into a direct cost through the use of salary costs for each position.

Results

The results of the analysisFootnote 30 are shown in the exhibit below:

Exhibit 6.2: Preliminary Comparison of Direct Delivery Costs
Initiative(s) Total Budget
($ millions)
Salary Cost Footnote p
($ millions)
Annual Salary
Cost / Dollar of
Program
Percentage Over
PI & pre-SOA
Footnote q
Unit Delivery Cost
People $41.0 $0.95 $0.023 175%
IBI $48.1 $2.21 $0.046 349%
PI & pre-SOA $401.4 $5.28 $0.013 100%
Including 5% NFP / PSI Admin. Cost:
People $41.0 $3.00 $0.073 556%
PI & pre-SOA $401.4 $8.15 $0.020 154%

Footnotes

Footnote p

People and IBI are 4 years; PI + pre-SOA is 5 years

Return to footnote p referrer

Footnote q

Percentages calculated without inclusion of the 5% NFP/PSI administrative cost

Return to footnote q referrer

On the basis of direct salary cost, the cost of delivering PI & pre-SOA was found to be considerably lower than either the People initiatives or IBI. If the 5% administration costs paid to NSFs and PSIs for program delivery are included, PI & pre-SOA is still lower than either the People initiatives or IBI.

Further analysis of a broader group of programs/initiatives would be helpful. Moreover, a number of refinements can be made to the above analysis, such as including other direct and indirect costs, and/or considering the total project amounts (i.e., FedDev Ontario contributions plus leverage).

The above analysis does indicate that the cost of delivery differs by program/initiative. However, while the comparison of delivery costs is insightful, it is important to consider that the purpose of incurring the delivery costs is to obtain benefits from the program/initiative. As such, the reasonableness of delivery costs should be considered in terms of program benefits to be achieved.

A further aspect of delivery costs is the option of using delivery partners (e.g., NSFs and PSIs). Use of delivery partners is discussed below in Section 6.2.3.

6.2.3 Use of Delivery Partners

FedDev Ontario has made effective use of delivery partners (e.g., NSFs and PSIs) for smaller projects, where they have the reach and knowledge of the target organizations/individuals, and manage the projects with minimal monitoring for 5% of the total contribution amount. For example, FedDev Ontario used the CME, OCC and YLF to administer 349, 186 and 275 small projects, respectively, as part of SODP pre-SOA. Based on its experience, FedDev Ontario has partnered further with CME and YLF in the delivery of SOA PI.

In CFP, FedDev Ontario works with CFDCs to deliver the program, which provide a program presence in rural areas of southern Ontario. Further, EODP uses the eastern Ontario CFDCs to deliver its regional economic development program. In both cases, the programs benefit from the local presence of the CFDCs.

For FedDev Ontario to manage larger numbers of smaller projectsFootnote 31 directly in-house would involve a requirement to directly interface with beneficiaries to obtain project applications, evaluate and approve the submissions, negotiate and execute contribution agreements, and manage the projects while they are in process. In some cases, this would demand a local presence. This would require considerable effort, and in some cases, FedDev Ontario's reach and knowledge of the target organizations/individuals may not be sufficient to successfully deliver the program/initiative. For larger projects, however, where increased due diligence is required in assessing the application and monitoring the project, in-house management is required.

From the above, it would be useful to monitor the various programs/initiatives to determine where it is cost-effective to use delivery partners and where in-house delivery is required. For example, if a program/initiative consisted of a number of projects with a maximum project cost below a certain level (e.g., $50K), then the most cost-effective delivery approach would be to seek partners to help deliver the program/initiative.

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7.0 Conclusions and Recommendations

This Interim Evaluation of FedDev Ontario programs was undertaken to determine to what extent the programs continue to be relevant, are on track to achieve their expected program outcomes, and demonstrate efficiency and economy. Conclusions and recommendations for the evaluation are provided below:

7.1 Conclusions

The following conclusions are provided for this interim evaluation:

7.1.1 Relevance

Based on research undertaken by FedDev Ontario's Strategic Policy Branch, FedDev Ontario remains relevant as an organization and there is a continuing need for its programs and initiatives to foster innovation, promote regional competitiveness in a global economy, and mitigate the risk of generating pockets of disadvantage in southern Ontario. Moreover, FedDev Ontario's programs continue to be relevant given its mandate and alignment with federal government priorities, roles and responsibilities.

7.1.2 Achievement of Program Outcomes

The evaluation found that based on previous reviews and program evaluations, and the information available to date on SODP, the programs included in the evaluation are meeting demand and are on track to deliver their intended benefits. However, it is cautioned that for SODP, most of the SOA initiatives are still being rolled out, and that the majority of approved projects are just getting underway. As a result, at this time, most SOA projects have not had an opportunity to achieve their planned outputs and outcomes.

For SODP outcomes, information will become available at varying times after project completion, which means that it is currently too early to obtain this information, with the possible exception of the ARC pilot, pre-SOA projects and a few other early finishing projects where outputs and some immediate outcome data is available. Surveys of the ARC pilot and pre-SOA projects were carried out in support of this evaluation and provided the following conclusions:

SODP program management is continuing to make adjustments to the dollar amounts for SOA initiatives/streams to meet greater demand and increase benefit, as well as, in some cases, to modify the initiative parameters to better meet the needs of the target audience.

In terms of measuring the economic impact of programs/initiatives, the size of the Ontario economy makes it difficult to measure their contribution to FedDev Ontario's Strategic Outcome: A Competitive Southern Ontario Economy. However, this may be addressed in part by the economic modelling of the short-term and long-term effects of programs. The pilot application of economic modelling of three stimulus programs: SODP pre-SOA, CAF and RInC, undertaken as part of the interim evaluation, provided outcome information on jobs created/maintained and GDP impacts.

7.1.3 Efficiency & Economy

In an external comparison, FedDev Ontario's delivery costs of G&C programs were found to be considerably lower than other organizations (i.e., other RDAs and NRC/IRAP) delivering similar G&C programs; however, it is cautioned that further investigation is warranted in case there are other factors that might be contributing to the cost differences.

Further, a preliminary comparison of direct program delivery costs for selected SOA initiatives was undertaken to assess the viability of comparing internal initiatives/programs. Initiatives were found to vary considerably in their direct delivery cost; however, while the approach seems viable, a more in-depth analysis of a broader group of programs/initiatives, and possibly including additional cost information, would lead to more robust conclusions. While the above comparison of delivery costs is insightful, it is important to consider that the purpose of incurring the delivery costs is to obtain benefits from the program/initiative. As such, the reasonableness of delivery costs should be considered in terms of the program benefits to be achieved.

FedDev Ontario has made effective use of delivery partners (e.g., NSFs and PSIs) for smaller projects, where they have the reach and knowledge of the target organizations/individuals, and manage the projects with minimal monitoring for 5% of the total contribution amount. For larger projects with an increased need for due diligence in assessing the application and monitoring the project, in-house management is required. From the above, it would be useful to determine where it is cost-effective to use delivery partners and where in-house delivery is required.

7.2 Recommendations

In planning ahead for the future program evaluations, there are a number of areas that should be addressed to augment the information already collected:

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Appendix A: Profile of Programs Not Included in Evaluation

In addition to the programs included in the scope of this interim evaluation, FedDev Ontario has been responsible for delivering the following programs transferred from Industry Canada and Infrastructure Canada:

  1. Building Canada Fund — Communities Component (BCF—CC)
  2. Building Canada Fund — Communities Component Top-Up (BCF—CC Top-Up)
  3. Canada-Ontario Municipal Rural Infrastructure Fund (COMRIF) Program
  4. Municipal Rural Infrastructure Fund Top-Up (MRIF Top-Up)
  5. Canada Strategic Infrastructure Fund (CSIF) Program
  6. Canada-Ontario Infrastructure Program (COIP)
  7. Ontario Potable Water Program (OPWP)
  8. Brantford Greenwich—Mohawk Remediation Project (BGMRP)

A brief description of these programs is given below:

A.1 Building Canada Fund — Communities Component (BCF—CC) & BCF—CC Top-Up

The Building Canada Fund — Communities Component (BCF—CC) focuses on funding infrastructure projects in communities with a total population of less than 100,000. These projects were intended to foster economic growth, support a cleaner environment, and promote stronger and safer communities.

In 2008, through its $33 billion Building Canada infrastructure plan, the Government of Canada committed to working with its partners to provide long-term, stable and predictable funding to help meet infrastructure needs across Canada.

The BCF in Ontario is a result of the Building Canada Infrastructure Framework Agreement signed between the Governments of Canada and Ontario on July 24, 2008. This agreement represented more than $6 billion in joint federal and provincial funding to help address infrastructure needs and priorities across the province.

As the federal delivery partner in Ontario, FedDev Ontario is responsible for the delivery of the BCF—CC program throughout all of Ontario on behalf of Infrastructure Canada. Projects in Ontario were selected through an application-based process and were evaluated based on the criteria outlined in the two different intakes. In February 2009, both levels of government announced joint funding of more than $685 million for 291 projects under BCF—CC. Subsequently, both levels of government announced additional joint funding of more than $408 million for 187 projects under the BCF—CC Top-Up intake, an infrastructure stimulus measure. Federal funding for the Top-Up was provided through Canada's Economic Action Plan.

Eligible applicants included:

The program, which was scheduled to expire on March 31, 2011, was extended to October 31, 2011 to allow all projects to be completed.

A.2 Canada-Ontario Municipal Rural Infrastructure Fund (COMRIF) Program

The Canada-Ontario Municipal Rural Infrastructure Fund's (COMRIF) overall aim is to support "green" projects that meet Canada's and Ontario's environmental objectives while improving the health and safety of Ontario residents in communities with a population of less than 250,000.

The COMRIF, launched in 2004, represents the Ontario portion of the national Municipal Rural Infrastructure Fund (MRIF), and is jointly delivered with the Province of Ontario's Ministry of Agriculture, Food and Rural Affairs (OMAFRA). The Ontario allocation of federal funds for this program was $296 million.

COMRIF funding for Ontario communities focuses on the health and safety priority categories of water, wastewater, solid waste management, and local roads and bridges. All Ontario municipalities with a population of 250,000 or less were eligible for COMRIF funding. All project applications were assessed against published criteria within a standardized format. The applications underwent a rigorous evaluation process that involved consultation with technical ministries and departments. As such, projects were assessed using three criteria: health and safety, public policy priorities, and value for money. Projects that best met these criteria, including support for federal and provincial policy directions (such as greenhouse gas reduction, sustainable water and sewage systems, economic development, and increased waste diversion) were selected for funding.

Of a total of 1,426 applications received, 708 projects were approved. The program expires on March 31, 2014, although Ontario project construction must be completed by March 31, 2013.

A.3 Municipal Rural Infrastructure Fund Top-Up (MRIF Top-Up)

The Municipal Rural Infrastructure Fund Top-Up (MRIF Top-Up) delivers funding directly to Ontario municipalities to support municipal infrastructure such as water and wastewater treatment, or cultural and recreation projects, for communities with populations of less than 250,000. MRIF Top-Up funding was allocated to community water-related projects that had been submitted under Intake Three of the Canada-Ontario Municipal Infrastructure Fund (COMRIF), but were not funded due to limited funds under COMRIF.

In May 2007, the GoC announced an additional $200 million in federal funding under the MRIF Top-Up program. The notional allocation for Ontario was $64 million. As the federal delivery partner in Ontario, FedDev Ontario delivers the MRIF Top-Up program on behalf of Infrastructure Canada. FedDev Ontario delivers the program unilaterally and holds contribution agreements directly with municipalities.

The priority areas for MRIF Top-Up include improving water quality, wastewater and solid waste management; improving energy recovery and reducing greenhouse gas emissions; improving local road safety; enhancing the social, cultural and economic development of local areas; integrating sports and physical activities in the daily lives of Canadians; encouraging tourism in Canada; improving broadband access in communities as well as electronic delivery of public services. Project applications were assessed against published criteria within a standardized format.

A total of 25 projects are receiving funding totalling $36 million. The program expires on March 31, 2014, although Ontario project construction must be completed by March 31, 2013.

A.4 Canada Strategic Infrastructure Fund (CSIF) Program

The Canada Strategic Infrastructure Fund (CSIF) is a national infrastructure program that focuses on large-scale strategic projects of major federal and regional significance that contribute to economic growth and quality of life in Canada.

The CSIF was announced in the 2001 federal budget to complement Canada's other infrastructure programs, but different in its orientation. CSIF emphasizes partnerships with any combination of provincial, territorial, and municipal governments, as well as the private sector, with each partnership governed by specifically tailored funding arrangements. As the federal delivery partner in Ontario, FedDev Ontario is responsible for the delivery of the CSIF program on behalf of Infrastructure Canada.

The eligible infrastructure categories under the Canada Strategic Infrastructure Fund (CSIF) Act includes: transportation (highway, rail and local transportation); tourism and urban development; water and sewage treatment; broadband; and Northern infrastructure. Eligible applicants included provincial, municipal, or regional governments, as well as public and private sector bodies.

The ultimate outcomes of the support provided to large-scale infrastructure projects will result in:

The maximum federal contribution to CSIF projects was limited to 50% of total eligible project costs. In Ontario, total eligible costs for each project must be at least $75 million, but there was no funding limit for individual projects.

Under CSIF in Ontario, a total of 10 projects were approved for federal funding of$257.5 million. All funds for this program have been committed, with the program expected to sunset on March 31, 2013.

A.5 Canada-Ontario Infrastructure Program (COIP)

The Canada-Ontario Infrastructure Program (COIP) represents the Ontario portion of the national Infrastructure Canada Program (ICP). The Program was intended to help renew and build infrastructure in rural and urban municipalities across Canada and improve Canadians' quality of life through investments that protect the environment and support long-term economic growth.

The priority project areas for the COIP included "green" municipal infrastructure, particularly water and waste-water management systems, solid waste management and recycling, and energy efficient buildings. Secondary priorities included local transportation infrastructure, cultural and recreational infrastructure, rural and remote telecommunications, and affordable housing.

Eligible applicants included urban and rural municipalities, First Nations, and not-for-profit organizations. The COIP's primary target client group was municipalities. Applications were made in the 2000–2002 period, and were reviewed by the Government of Ontario and nominated to the Government of Canada (GoC) for funding. All $680.7 million federal funds available under the program were allocated in 2002 to the 533 projects approved from a total of 870 applications received.

In Ontario, IC and subsequently FedDev Ontario following its launch on August 13, 2009, delivered COIP on behalf of Infrastructure Canada. FedDev Ontario delivered the COIP in partnership with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) and the Ministry of Tourism's Secretariat on Sports, Culture & Tourism Partnerships (SCTP). The federal-provincial Joint Secretariat Committee and Management Committee were responsible for administering the program, ensuring timely decision-making, implementation of program policies and stakeholder communications. In addition, the two committees were responsible for project monitoring and program reporting, including information management systems and audit and evaluations. The program expired on March 31, 2011.

A.6 Ontario Potable Water Program (OPWP)

The Ontario Potable Water Program (OPWP) provided grants to municipalities that had experienced increased costs for their Canada-Ontario Infrastructure Program (COIP) water projects in order to comply with changes to Ontario drinking water regulations.

The OPWP responded to a funding situation that developed within the COIP. The COIP was implemented prior to the Walkerton drinking water issue. Walkerton led to enhanced and legislated standards being applied to water treatment facilities. These new standards imposed additional costs to COIP drinking water related projects already underway. Communities were obligated to meet these new standards and often sought an increase to the COIP funds approved from both the provincial and federal governments.

The Province was able to provide additional funds in response to requests from communities. However, the federal COIP allocation was fully committed and no additional funds were available. To address the federal shortfall, communities deferred other projects in their strategic plans in order to ensure completion of their drinking water infrastructure projects.

The OPWP was created in order to address the federal funding shortfall which may have occurred in these 195 projects. One time grants were available to communities that met the following criteria:

Of the total funding allocation of $48.5 million, $36.8 million was allocated to the 110 applicants approved of the 193 applications received. The program expired on March 31, 2011.

A.7 Brantford Greenwich—Mohawk Remediation Project (BGMRP)

In 2007, the GoC made a commitment to assist the clean-up and redevelopment of brownfields in Brantford, Ontario, totalling more than 50 acres. The project was transferred to FedDev Ontario by Industry Canada in 2009. FedDev Ontario, as the federal delivery partner, is providing funding for the redevelopment of this site with the aim of improving environmental quality, health and safety, helping create and retain employment opportunities, and revitalizing land and leading to infrastructure development in the city. The total cost is budgeted at $12 million, and the project agreement presently goes to March 31, 2013. The project has gone forward for a re-profile request. If the request is approved, the project will likely continue to December 2016.

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Management Response and Action Plan

Management Response and Action Plan
Recommendation Management Response and Planned Action Management Accountability Action Completion Date
Recommendation #1:
Performance measurement — progress reporting on the "actual" outputs and outcomes of the program initiatives (corresponding to the approved SODP/SOA performance measurement strategy) is required to provide comprehensive information on the achievements of the initiatives. A review of performance information should be undertaken in about six months to ensure that appropriate performance information is being collected/reported, and to provide an assessment of program performance when the initiatives are more mature.
Progress reporting on the outputs and outcomes identified in the SODP Performance Measurement Strategy has been undertaken on a quarterly basis since September 2012. Reports are presented to the Agency's Executive Committee. BICD Complete
The Interim Evaluation of FedDev Ontario Programs included a review of performance information to ensure appropriate data were being collected and reported. Another review at this time is not necessary since reporting and roll-up of performance data is ongoing. Targets have been established for most performance indicators and the initiatives appear to be largely on track for meeting these targets. N/A
Recommendation #2:
Surveys — as outcome information will become available at varying times after project completion, a plan for surveys of SOA initiative beneficiaries should be prepared, and the necessary beneficiary information collected. The plan should also include an update of the ARC and pre-SOA surveys to assess the extent to which they have achieved increased impacts since the previous surveys, which did not allow much time for impacts to occur.
As per standard FedDev Ontario Evaluation practices, recipient surveys will be conducted at the time of Final Evaluation. It is to be determined whether separate surveys will be conducted for each SOAI or if one program-level survey will be conducted. While ARC recipients  will be included in the survey,  it is unlikely that pre-SOA recipients will be contacted given they have already been assessed on multiple occasions and the evaluation will focus on SOAI projects. PPPM — Evaluation Directorate At time of Evaluation
BICD is not currently planning to update the ARC and pre-SOA surveys, but will contribute to evaluation requirements identified by the Evaluation Directorate. Since ultimate recipients (SMEs) of ARC (Phase 1) were part of the survey, if additional surveying is required, the focus should be on ARC recipients from the extension phase.
Recommendation #3
The economic modelling should be investigated further to assess its appropriateness for use on other programs, as a means of measuring the extent to which FedDev Ontario's programs are contributing to their ultimate outcomes and to FedDev Ontario's Strategic Outcome: A Competitive Southern Ontario Economy. For the modelling, accurate location and industry (NAICS) codes are required, and a standard approach for this coding should be adopted and consistently applied across all programs.
Strategic Policy Branch — Economic modelling, including input-output and growth accounting modelling, will be further investigated and used as appropriate to measure the economic impact of Agency investments. PPPM — Strategic Policy Branch, Evaluation Directorate

Fall 2013 (Data Collection Analysis)

Economic modelling assessed on an as required and appropriate basis

These models depend on the availability of complete and accurate data, including location and industry data (by NAICS code), for funding recipients. The Agency is actively seeking to strengthen its data collection and storage methods and to standardize coding across programs to the extent possible. For example, internal working groups are reviewing the data gathered through application forms and contribution agreements as well as the systems on which they reside. In addition, methods are being explored to classify funding disbursements by project type as a complement to NAICS details.
Evaluation Directorate — FedDev Ontario has continued to use economic modeling as a means of assessing program impact. Currently FedDev Ontario is assessing the impact (in term of jobs and GDP) of three of its programs — ARC, Prosperity Initiative and IBI. Going forward, FedDev Ontario will continue to investigate the usefulness of this methodology for its programs and  BICD will provide data as requested to contribute to the modelling.
Recommendation #4
The preliminary analysis of external and internal program delivery costs, the possible increased use of repayable contributions where appropriate/feasible, and the use of delivery partners should be considered and further analysis undertaken, in light of assessing the reasonableness of delivery costs required to obtain the benefits from individual programs/initiatives.
Going forward as part of its evaluations, FedDev Ontario is aiming to incorporate guidance from TBS document "Assessing Program Resource Utilization When Evaluating Federal Programs" with the purpose of assessing resource utilization. PPPM — Evaluation Directorate (during evaluation) At time of Evaluation

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Footnotes

Footnote 1

Transfers of funds to the Business Development of Canada (BDC) and the National Research Council (NRC) (see Section 3.1.1) were excluded from the evaluation, as FedDev Ontario was not involved in the administration of these funds.

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Footnote 2

Also excluded is the Brantford Greenwich—Mohawk Remediation Project transferred from IC. This project has been delayed and gone forward for a re-profile request.

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Footnote 3

Directive on the Evaluation Function

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Footnote 4

Directive on the Evaluation Function

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Footnote 5

Ontario has 39% of the Canadian population and contributes 37% to the national GDP, Conference Board of Canada, 2010

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Footnote 6

2010 Angus Reid survey

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Footnote 7

The Impact Group, 2006, The Federal Government's Role in Promoting a "Knowledge Culture".

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Footnote 8

Mitacs Enterprise brings benefits to start-ups, May 16, 2012.

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Footnote 9

Institute of Competitiveness and Prosperity — Strengthening Management for Prosperity

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Footnote 10

OECD, 2005, 2006

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Footnote 11

OECD, 2005, 2006

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Footnote 12

Conference Board of Canada, 2010

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Footnote 13

Conference Board of Canada, 2010

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Footnote 14

Centre for Study of Living Standards, 2009

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Footnote 15

Ontario Task Force on Economic Prosperity, Ontario

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Footnote 16

The CME is Canada's largest industry and trade association representing businesses in manufacturing. Its members account for approximately 82% of Canada's manufacturing production and 90% of Canadian goods and services exports. In addition, more than 85% of CME members are SMEs.

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Footnote 17

These figures differ from those in the FedDev Ontario Weekly BICD Report (As of June 21, 2012). Also, see Exhibit 2.3.

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Footnote 18

Community Futures Quarterly Report, January 1 to March 31, 2012.

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Footnote 19

Additional budgeted funding of $7.5 million has been provided for CAF extensions (18 projects) — see Exhibit 2.7.

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Footnote 20

Details of the calculations are provided in report prepared by Westbay Research Inc. for the Evaluation Group.

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Footnote 21

See Implementation Review of the SODP (2012) and Inventory and Forecast of SOA Performance indicators (2012), by Westbay Research Inc.

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Footnote 22

North American Industry Classification System (NAICS) code.

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Footnote 23

NRC/IRAP received $44.5 million from FedDev Ontario's SOAD program in 2009–10 ($27.5 million) and 2010–11 ($17.0 million) to support SMEs in R&D intensive sectors in Southern Ontario.

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Footnote 24

Parts I and II — The Government Expenditure Plan and Main Estimate (PDF version, 2.8 MB, 386 pages)

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PDF Readers

Footnote 25

Details of the calculations are provided in report prepared by Westbay Research Inc. for the Evaluation Group.

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Footnote 26

Rate information is provided at Consolidated Revenue Fund Monthly Lending Rates for Periods of One Year and Over

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Footnote 27

Details of the calculations are provided in report prepared by Westbay Research Inc. for the Evaluation Group

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Footnote 28

While not affecting the general conclusion, a refinement of the analysis would be to adjust the average administration rate of 16% for the two equations to reflect the additional administrative cost of collecting repayable contributions.

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Footnote 29

Y-STEM — $12.7 million, GEI — $18.5 million, and SEB — $9.8 million

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Footnote 30

Details of the calculations are provided in report prepared by Westbay Research Inc. for the Evaluation Group

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Footnote 31

For example, CME delivered 349 smaller SODP/pre-SOA projects for a contribution of $15.7 million.

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