Opening Up the Innovation Marketplace: Federal SME Targets for Innovation

By: Nick Schiavo, CCI Director of Federal Affairs and Michelle Ehinlaiye, CCI Federal Affairs Coordinator

Imagine a Canada where innovative ideas from high-growth scale-up companies are not just welcomed but actively sought out by our government. What if public procurement was not just a bureaucratic process, but a powerful tool that drives innovation, solves real-world problems, and fuels our economy.

Here at CCI, we believe this vision can become a reality. Earlier this year, we called on the federal government to create procurement targets for small- and medium-sized enterprises (SMEs) in our landmark policy report, Buying Ideas: Procuring Public Sector Innovation in Canada.

So we were pleased to see the federal government embrace SME procurement targets in the 2024 budget, and of course we have some ideas for how to make the forthcoming legislation successful.

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Why Public Procurement Matters

As we explained in Buying Ideas, procurement represents a truly massive amount of spending — about 14 per cent of Canada’s GDP. And as we’ll explore in our forthcoming report, Building Winners, procurement is uniquely suited to propel growth in innovative scale-up companies. From tech solutions to healthcare innovations, the opportunities are massive.

But right now, the system is stacked against the very businesses that could bring the most innovative solutions to the table—our homegrown, high-growth innovators. The complex, lengthy, and often rigid procurement processes leave many homegrown Canadian companies out in the cold, stifling their ability to compete and grow. Currently government procurement favours very large firms, often foreign multinationals, who have the time and the resources to navigate the thicket of procurement regulations. But awarding large contracts to large foreign firms doesn’t often provide the government with innovative solutions, and it does nothing to drive economic growth here in Canada.

It is not just about winning contracts—it is about giving these companies the platform to scale their ideas, improve public services, and contribute to a more dynamic Canadian economy.

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CCI’s Roadmap for Change

So, how do we turn this vision into reality? CCI has laid out a plan with four key recommendations that could transform public procurement into a powerful engine for innovation:

1. Empower Public Servants to Seek Innovation: Public servants are on the front lines of procurement, but they need the tools and the flexibility to find the best solutions out there. CCI recommends giving these decision-makers more freedom to engage with SMEs and explore innovative ideas. The goal is to shift the culture from playing it safe to thinking big and bold. With the right mindset and support, public servants can be the champions of innovation our country needs.
      
      
2. Streamline the Procurement Process: The current procurement process can be a nightmare for SMEs. The paperwork, the red tape, the endless hoops to jump     through—it’s enough to discourage even the most determined entrepreneurs. That Is why CCI is calling for the development of innovation procurement standards that simplify the process and make it more accessible. By cutting down the administrative burdens, we can unleash the full potential of our SMEs and get innovative solutions into the hands of Canadians faster.
      
      
3. Create an Innovation Procurement Agency and Concierge: Imagine having a dedicated team whose sole purpose is to bridge the gap between government     and innovators. That is what CCI is proposing with the creation of an innovation procurement agency. This agency would not only provide expertise and support to government departments and agencies through innovative procurement processes, but also act as a concierge service for SMEs, guiding them through the procurement maze. It is about making the system work for everyone, fostering collaboration, and ensuring that the best ideas do not get lost in the shuffle.
      
      
4. Prioritize Commercialization to Boost Innovation and Growth: To maximize the impact of government procurement, it is essential to prioritize     commercialization, providing clear pathways for firms to scale their innovations. A focus on commercialization, coupled with strong intellectual property (IP) protection, will de-risk innovation, stimulate economic growth, and enhance the value of government-procured technologies through broader adoption.

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This isn’t just about procurement. It’s about building a future where Canada leads the world in innovation — where our homegrown scale-up innovators have the support they need to bring their groundbreaking ideas to life.

You can download CCI’s submission on SME procurement targets here. To learn more about CCI’s work in Ottawa contact Nick Schiavo at nschiavo@canadianinnovators.org.

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About the Council of Canadian Innovators

The Council of Canadian Innovators is a national member-based organization reshaping how governments across Canada think about innovation policy, and supporting homegrown scale-ups to drive prosperity. Established in 2015, CCI represents and works with over 150 of Canada’s fastest-growing technology companies. Our members are the CEOs, founders, and top senior executives behind some of Canada’s most successful ‘scale-up’ companies. All our members are job and wealth creators, investors, philanthropists, and experts in their fields of health tech, cleantech, fintech, cybersecurity, AI and digital transformation. Companies in our portfolio are market leaders in their verticals, commercialize their technologies in over 190 countries, and generate between $10M-$750M in annual recurring revenue. We advocate on their behalf for government strategies that increase their access to skilled talent, strategic capital, and new customers, as well as expanded freedom to operate for their global pursuits of scale.