ANNEX B

Atlantic Innovation Fund

GUIDE FOR THE PREPARATION AND SUBMISSION OF A LETTER OF INTENT AND PROJECT PROPOSAL

To Be Used by Proponents

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2.0 PURPOSE OF GUIDE

This guide has been developed to assist in the completion of letters of intent and project proposals. It also provides information on the criteria used by ACOA and the AIF Advisory Board in evaluating any project proposal submitted under this competition.

2.0 SUBMISSION OF A LETTER OF INTENT AND PROJECT PROPOSAL

2.1 Mandatory Letter of Intent

Proponents must indicate their intention to submit a project proposal by providing a mandatory Letter of Intent no later than the specified deadline. Please provide one (1) double-sided paper copy, as well as an electronic copy of the Letter of Intent. Proponents must submit a separate Letter of Intent for each stand-alone project.

Project Proposals received without an affiliated Letter of Intent cannot be considered in this round of funding. Letters of Intent must be delivered either by courier or in person to any of the designated ACOA offices listed in Annex E.

To prepare a Letter of Intent, proponents must use the AIF Letter of Intent template available on ACOA’s website.

2.2 Project Proposal

The project proposal must be received by ACOA in its entirety no later than the specified deadline and delivered either by courier or in person to any of the designated ACOA offices listed in Annex E.

Proposals must be marked “Atlantic Innovation Fund – Response to (Month/Year) Request for Letters of Intent and Project Proposals” and follow the format outlined in this guide. The proposal must also include a completed Administration Form and Declaration Form (Annex A), which are available in a Word template. Please provide two (2) double-sided paper copies of the entire project proposal, one (1) of which should be unbound, as well as an electronic version of the entire proposal consolidated into one (1) file, using the Microsoft Office Suite of products (Word, Excel, PowerPoint), Rich Text Format (RTF) or Adobe’s Portable Document Format (PDF). Please ensure that the paper and electronic copies are identical.

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3.0 FORMAT

Project proposals must be complete, clear and concise and should not exceed 200 pages.

The 200 page limit (including all templates, figures, graphs, cvs, annexes and appendices) will be strictly enforced and pages beyond the limits will be removed by ACOA staff before they are reviewed. If this occurs, applicants will be notified, but they will not have the opportunity to revise their applications to meet the page limits.

Clarification points include:

Submitted proposals must be complete, clear and concise; Applicants should write the main body of the proposal within 100 pages (i.e. title page,

executive summary, project description, description of proponent, key collaborations, project team, commercialization potential/strategy, economic benefits, building capacity, technical details, project financial information);

Mandatory annexes and appendices should not normally exceed 100 pages. Examples of annexes and appendices include, but are not limited to:

O Annex A: Administration and Declaration Forms;O Annex C: Costs and Financing Templates;O Annex D: Results Measurement Information; O Corporate Ownership Structure;O Proof of Legal Existence of the Organization;O List of Directors;O Description of Shareholders and Equity Contribution;O Professional Capabilities/Experience/Resumes of Project Team Members;O Project Team Organization Chart;O Relevant Memoranda of Understanding (if applicable); O Independently Prepared Financial Statements; O Latest Interim Monthly Financial Statements;O Projected Financial Information;O Quotes Supporting Major R&D Subcontracts;O Letters of Support;O Supplemental Market Study;O Summary GANTT Chart; andO List of Acronyms.

Proposals must be submitted using the following format:

paper format – 8 ½ x 11; font size for text – 12; pages are to be double-sided and numbered; and page foldouts, schematics, drawings, etc., may be included or attached for clarity of

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4.0 CONFIDENTIALITY OF A PROPONENT’S INFORMATION

All information regarding the terms and conditions, financial and/or technical aspects of a proponent’s proposal that, in a proponent’s opinion, is of a proprietary or confidential nature should be clearly marked “PROPRIETARY” or “CONFIDENTIAL” on each relevant item or page or in a statement covering the entire proposal.

When a proponent provides requested information to ACOA in confidence by indicating that the disclosed information is confidential, ACOA treats it as such unless otherwise required by the Access to Information Act and the Privacy Act.

5.0 CONTENT OF PROPOSAL

Proponents must submit a separate proposal for each stand-alone project to facilitate the overall project evaluation by ACOA. A stand-alone project has a distinct scientific/technological basis for the development of a technology, product, process or service that is technologically innovative and commercially viable. Stand-alone projects are not dependent upon the success of other projects or activities. Where stand-alone projects from a proponent are complementary (i.e. from the same area of research), proponents should provide cross-references in each of their proposals to the other projects.

5.1 Title Page

PROJECT TITLE

Response to (Month/Year) Request for Letters of Intent and Project ProposalsAtlantic Innovation FundSubmitted by (Proponent)

5.2 Project Description (Including Technical Overview)

This section should not exceed two (2) pages and should outline the objective(s) of the proposed project, summarize the R&D approach, and describe the anticipated resulting products.

Provide a brief description of the proponent, and each key collaborator, including their role in the project.

Summarize the issues this project intends to address and their significance for Atlantic Canada. State the related project objectives.

Provide, in a non-technical manner, a concise overview of the underlying technology and explain the innovative aspect(s) of the resulting product(s). Articulate if there would be any derivative applications for the new technology.

Provide an overview of the R&D that would be carried out in the project. Explain, in broad and non-technical terms, what scientific or technical challenges exist, the major

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activities that would be undertaken, the milestones, timelines and deliverables. List the project location(s), total cost and assistance requested from the AIF program.

Describe the resulting product(s) that would be developed during this project. For each product, identify the commercial applications and the economic benefits. The AIF seeks to support projects where the resulting product is not presently available in the marketplace, at least not in the form envisioned by the proponent. If the resulting product would be a new technology, product, process or service that builds capacity that could be used for other product development activities, provide examples.

As the AIF can only support incremental activities (i.e. new or additional activities over and above existing/ongoing activities), explain how this project would be incremental.

NOTE: ACOA may provide all or a portion of this section to potential external experts to determine their suitability to review a proposed project. A proponent’s signature on the Declaration Form (Annex A) constitutes consent regarding the sharing of information for this purpose. Before a proposal is released to an expert for project review/evaluation, the expert is required to sign a confidentiality agreement with ACOA.

5.3 Project Management

The information submitted under this heading should allow the Agency to assess the proposal against the essential criterion “Must demonstrate management capability to successfully undertake the project.” This section provides sufficient information about the managerial capability of the proponent and its collaborators to undertake and bring the proposed project to successful completion. The proponent and collaborators should have strong project management, financial control and technical development skills. Where weaknesses exist, remedial measures should be explained.

This section should address the following:

(a) Description of Proponent

Describe the organization and its history (e.g. name and legal status; how long in existence; what it does; how it has grown); and, its size (e.g. in terms of annual sales or operating budget, and number of employees).

Discuss its area of specialization; the proposed role in connection with the project; and historical track record in R&D, technology development and commercialization.

Explain why the proposed project is relevant to the proponent, and what it expects to gain from undertaking it.

Summarize the governance structure of the proponent. Provide an organization chart, list the key personnel and provide their resumés as

appendices. In the case of a commercial proponent (i.e. private company), please also list the principal(s) and their percentage of ownership.

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(b) Description of Key Project Collaborator(s) and the Partnership Arrangement(s)

Briefly name and describe each key collaborator in terms of legal status, size (e.g. in annual sales, operating budget, number of employees), area of specialization, and financial commitment to the project.

For each key collaborator in the project, describe its role and explain its rationale for participating in the project.

If the key collaborator is making a financial contribution to the project, its contribution should be detailed in the financial information section.

The name and contact information for the project representative of the key collaborator(s), as well as the collaborator’s website address should be provided.

Describe each collaborator’s historical track record in R&D, technology development and/or commercialization, particularly as relates to the proposed project. Indicate the strategic assets each key collaborator brings to the project.

Outline the agreed partnership/collaboration arrangement(s). Letters of agreement, memoranda of understanding and/or other partnership/collaboration agreements should be included as appendices to the proposal. (Do not attach corporate brochures or annual reports.)

Please note that proponents must disclose whether any subcontract(s) will be awarded to a key collaborator under the project.

(c) Project Team

Identify the key members of the project team and state their specific expertise and experience for the work involved. It is important that the roles of project team members (including representatives of key collaborators) be clearly described in the proposal. Detailed resumés for key research positions must also be included as appendices, as indicated in section 5.9 (a). State the name (if known) and the qualifications of the project manager. Indicate provisions for back-up personnel for key positions.

Provide an organization chart of the project team and describe the relationship of the team to the proponent. If a project team member has not yet been identified, provide a statement of qualifications and the plan to recruit personnel.

It should be indicated if the lead researcher is already participating in active AIF project(s) or has significant commitments to other, non-AIF research projects.

(d) Project Control System

Project management and financial control are important considerations for the successful completion of a project. The proposal should provide clear evidence that the proponent has in place an accountability framework likely to result in effective leadership and sound financial decision making for the proposed project.

Describe the project management plan, including its administrative/organizational

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structure, and show how it addresses the following: - the ability of the project management team to manage a multidisciplinary, multi-

institutional, national and/or international team;- the accountabilities of each member of the management team; - the mechanism for communicating among the project team and

collaborators/partners, and the strategy to coordinate project activities and manage changes; and

- the method of making the research results accessible to the scientific community, where appropriate.

Explain the process for making critical decisions regarding the overall research direction, including: - the mechanism for making go/no-go decisions;- the evaluation of research progress, including the participation and role of key

project collaborators and any external scientific advisors;- the process for making strategic decisions when a consensus cannot be reached;

and- the discussion and documentation of key challenges and plans to address them.

Summarize the proposed plans to deploy human resources, equipment and infrastructure throughout the duration of the project, including the initial ramp-up period. Show the impact of the ramp-up period on the achievement of proposed milestones.

5.4       Commercialization Strategy 

A key component of any strong proposal to the AIF is a detailed and practical commercialization strategy, a well-defined plan for how the technology of interest will be introduced into the marketplace and how revenue will be generated while meeting the challenge of various market forces. Therefore, proponents are expected to elaborate on how the commercial outcome of the AIF project will be promoted, distributed and sold.

The commercialization strategy will require an outline of the proponent’s vision of the market potential of the proposed resulting product(s), as described in section 5.2 of this annex. Topics for discussion should include, but not be limited to:

   the market need to be addressed; the size of the market;    the targeted niche within the market;   the potential competitors and competing products, processes or services;    the market penetration objectives and the associated major challenges;    the potential barriers to generating economic benefits through commercialization,

such as new laws and regulations that might affect the business;

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   the expertise of the team and its collaborators as relates to commercialization of new products and services in the marketplace; and

   where possible, independent market assessments.

As a second step, based on the market niche/segments identified above, proponents must outline their vision of the business model to introduce the resulting product(s) into the marketplace. Topics for discussion should include, but not be limited to:

the value proposition that the resulting products will deliver to the end customer; how the resulting products will achieve competitive advantage in the marketplace; a description of the key partners and how they will help introduce the resulting

products into the market; an outline of the customer relationships needed in order to execute the value

proposition; a description of cost structure (e.g. compete on pricing or value, % fixed costs vs.

variable costs, economies of scale); a description and rationale for anticipated revenue streams from resulting products

(e.g. usage fees, subscriptions, licensing, royalties);  an outline of key physical, human, financial and intellectual resources needed to

deliver proposed value proposition for resulting products; and defining the proposed channels to reach intended customers.

Proposals should clearly identify aspects of the business model that are already established versus areas that need to be developed and maintained. Specific details about how the business model will be (or is) executed are required. Hence, where applicable, a detailed breakdown of existing sales and market projections by product and customer, and confirmation of existing sales contracts, are welcomed.

The information should be provided in a way that will enable ACOA to assess the economic benefits to Atlantic Canada and the impact the innovation will have on the global economy.

Notes for Non-commercial ProponentsNon-commercial proponents should also comment under this heading on how they expect to fulfill the desirable criterion, “Includes private-sector participation (for institutional proposals).”  Meaningful private-sector participation in a project is viewed as a key factor during the evaluation process as it will likely increase the chances for commercial success and represent a strategic advantage. Information from the commercial collaborators should clearly address the points noted in section 5.4, Commercialization Strategy.   Non-commercial proponents should consult with their private-sector collaborators in the writing of this section to ensure the proposed commercialization strategy accurately reflects their involvement in the commercialization of the resulting products.

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5.5 Economic Benefits

The information submitted within this section should allow the Agency to assess the proposal against the essential criterion “Must demonstrate significant economic benefits for Atlantic Canada”.

Proposals must show how the project creates significant economic benefits in Atlantic Canada through the commercialization of technologies, products, processes or services, the creation of high-tech jobs, and the potential for export/import replacement. These can be addressed in terms of short-, medium- and long-term benefits to the region.

More specifically, the proposal should document how the project will generate economic benefits with respect to the following aspects:

the contribution to job creation, economic growth, development of a product, service, licences or the creation of start-ups;

the attraction and retention of top talent from around the world (postgraduate and post-doctoral students and internationally recognized business leaders) in areas and technologies critical to regional productivity and economic growth;

the opportunities generated to create, grow and retain companies in Atlantic Canada that are able to capture new markets with breakthrough innovations;

the acceleration of the commercialization of technologies, products, processes and services in priority areas where Atlantic Canada can significantly advance its competitive advantages;

the plan to transfer, disseminate, use, and/or apply the potential deliverables to realize the benefits (including whether there is adequate end-user support of the project);

the strategies and implementation plans for forming and strengthening partnerships among relevant organizations (industry, governments, universities, hospitals and research institutes) and individuals, regionally, nationally and internationally; and

the relevance and impact of anticipated results and the potential for Atlantic Canada to further develop its capacity for innovation and as a world leader in the application area.

5.6 Technical Details

The information submitted under this section (as well as under section 5.2) should allow the Agency and scientific experts to assess the proposal against the essential criteria “Must be scientifically and/or technically sound” and “Must support new or improved technologies or new applications of technologies”, as well as the desirable criteria “Builds on research excellence” and “Builds critical mass through networks/cooperation of existing and/or additional talent (researchers).”

This section should display a clear understanding of the science and/or technology and the context of the application. Specifically, it should identify the major technical problems to be solved in order to achieve the desired objective(s) and the proposed approach for solving these

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problems. Proponents must provide sufficient detail to enable independent scientific/technical reviews of the proposal by experts in the field. Commercial proponents should consider partnering with research organizations that could add scientific credibility to their projects and assist in writing this section.

(a) Background

Explain how the project addresses high priority issues, resolves industry-wide problems or advances strategic sectors and technologies for Atlantic Canada.

Explain the originality of the proposed investigation(s), the creation of new or improved technologies, the development of new applications of technologies, and the importance of the expected results.

(b) Literature Review

Indicate the scientific basis for the proposed research, culminating in one or more new or significantly improved technology-based products, processes or services, and comment on preliminary investigations (e.g. proof of concept) related to this research.

Identify references to key scientific and technical literature, and provide the scientific rationale and key assumptions (e.g. initial data generated) that support this project.

Provide technical evidence of proof-of-concept and any supportive data references to support the feasibility of the proposed research.

(c) Methodology

State the approach and methodology to be used to meet the project objectives and to develop the resulting product(s). Address the quality of the scientific resources and the environment in which the research is to be undertaken.

Divide the project into major activities. For each major research activity (or phase), describe the work to be undertaken, including:- the activity objective; - anticipated scientific/technical challenges; - experimental procedures or research methods to be employed;- team members involved in each task and their role;- expected duration of the activity;- indicators of success;- expertise required; and- milestones and deliverables.

The methodology must also account for the time to be spent by each team member on the project. A summary schedule should relate key activities, milestones and deliverables to a project timetable and clearly identify target dates for completion.

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(d) Technical Risk Assessment

Describe in detail the technical risks involved, including technological uncertainties, and mitigation strategies for addressing the technical risks identified. In order to develop applications of advanced technologies through technology-based products, processes and services, some risk has to be assumed. In general, the degree of risk is related to the level of technical innovation and the level of planning effort. The extent to which higher technical risks are acceptable is dependent upon how well they are identified, defined, assessed, planned for and managed once encountered.

(e) Regulatory Approval

If applicable, demonstrate that regulatory approval has been received, or that a strategy has been developed to obtain this, for any phase (e.g. R&D, production, commercialization) of the proposed project.

List anticipated costs and timelines (i.e. industry standard) to obtain regulatory approvals.

(f) Intellectual Property

For any technologies to be transferred into the project (i.e. background intellectual property) and/or technology to be developed (i.e. foreground intellectual property), describe the intellectual property arrangements, including the proponent’s rights to, and protection for, the intellectual property required to exploit the technology involved in the project.

Describe the measures to be taken to ensure that the resulting technologies would remain in and provide continuing benefits for Atlantic Canada.

The proponent’s plan for the commercialization and handling of intellectual property addresses ownership issues, the expected outputs in terms of patents to be filed, and the costs of patent filing and protection.

Research organizations (e.g. universities, colleges) must submit documentation that they have the provisions and authority with employees, contractors, collaborators (partners) to manage and fulfill the obligations of the AIF contribution agreement.

5.7 Financial Information

The information submitted within this section should allow the Agency to assess the proposal against the essential criterion “Must have adequate financing for the duration of the project” and the desirable criterion “Leverages funding from other public and private sector sources”.

Contributions from the AIF program will be the least amount required to allow a project to proceed. Proposed projects may vary in duration (from several months to a maximum of five (5) years).

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AIF assistance per approved project will not exceed of $3 million. Therefore, proponents should seek to leverage financing for their projects from other (non-ACOA) sources, and such leveraging is a key consideration in the evaluation of proposals. Possible sources of investment include the private sector, other government programs, universities, associations and research foundations.

To enable the Agency to assess the reasonableness of the proposed project costs and the feasibility of the project financing, the proponent must provide a detailed breakdown of costs and financing. This should follow the format presented in the costs and financing templates presented in Annex A, B and C:

Template A – Project Costs Template B – Wages and Salaries Detail Template C – Project Financing

Proponents should only use those cost and financing line items that are relevant to their project. These templates are available in Word, Excel or PDF format on the ACOA website. To ensure completeness of the required financial information, proposals should include the following:

(a) Project Costs

A detailed description of costs considered eligible under the AIF program is articulated below under section 5.8. It should be noted that only incremental (i.e. new or additional) costs deemed essential for the implementation of a project are eligible.

Provide detailed breakdown of each cost line. Explain, as appropriate, any significantly high or unusual cost element(s). Include quotes, as appropriate, to support specific cost items.

(b) Project Financing

Proponents should fully describe the source of their own contribution to the project (e.g. cash, working capital, and other internal revenue source).

Explain, as appropriate, any monetary and non-monetary contribution expected from related parties, collaborators and/or third parties.

Include letters of commitment received from financing partners (e.g. letter of offer, legal agreement) as appendices.

(c) Historical Financial Information

Commercial proponents must provide their independently prepared financial statements (audited or review engagement) for the last three (3) fiscal years. These financial statements must include the Balance Sheet, the Income Statement, and the

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Statement of Cash Flow. Proponents must also provide the latest monthly interim financial statement. Include these as appendices.

Depending on the nature of partnerships, the Agency reserves the right to request similar information from key collaborators, if required, to complete an assessment of the project proposals.

(d) Projected Financial Information

Proponents must clearly demonstrate their ability to finance their current operations and any follow-up activities, including the commercialization phase.

As appendices, commercial proponents must provide projected statements for the company for the duration of the project, including a Statement of Cash Flow, Income Statement, and Balance Sheet. These should be supported with an explanation of the key assumptions used in their preparation.

Non-commercial proponents can satisfy this requirement by providing detailed proof of financial commitment from key collaborators, as well as their willingness and ability to commercialize the research.

(e) Other Considerations

It should also be noted that expenditures and cost commitments incurred prior to the closing date for project proposals are not eligible for AIF financial assistance. For projects that are approved, expenditures and cost commitments incurred prior to project approval, but after the closing date for project proposals, might be considered as eligible costs. Should a proponent proceed with a project, in whole or in part, prior to receiving a decision from ACOA, the associated costs would be at the proponent’s own financial risk.

Notes for Commercial Proponents The AIF provides assistance of up to 75% of total eligible costs for commercial

organizations. Commercial proponents of proposed projects seeking a contribution of $1 million or less

are NOT eligible for assistance under the Atlantic Innovation Fund. Such projects could be eligible for assistance under ACOA’s Business Development Program. For more information on this program, please refer to ACOA’s website.

Notes for Non-commercial Proponents The AIF provides assistance of up to 80% of total eligible costs for projects undertaken

by non-commercial organizations. If non-cash transactions are included in the project budget, provide a rationale to

support the value given.

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5.8 Project Cost Principles

(a) General Principles

The total eligible costs of the project shall be the sum of the applicable direct costs that will be reasonably and properly incurred in the performance of the project, less any applicable credits. These costs shall be determined in accordance with the proponent’s cost accounting system as accepted by ACOA and applied consistently over time.

Eligible costs include only those incremental costs deemed essential for the implementation of the project.

(b) Definition of Reasonable Cost

A cost is reasonable if, in nature and amount, it does not exceed that which would be incurred by an ordinary, prudent person in the conduct of a competitive business.

In determining the reasonableness of a particular cost, consideration shall be given to:

whether the cost is of a type generally recognized as normal and necessary for the conduct of the performance of the project;

the restraints and requirements of factors such as generally accepted sound business practices, arm’s-length bargaining, federal, provincial and local laws and regulations, and contribution agreement terms;

the action that prudent business persons would take in the circumstances, considering their responsibilities to the owners of the business, their employees, customers, the Government of Canada and the public at large;

significant deviations from the established practices of the proponent that might unjustifiably increase the eligible costs; and

the specifications, delivery schedule and quality requirements of the particular project as they affect costs.

(c) Eligible Costs and Cost Categories

Eligible costs must be classified under four (4) categories: Buildings and Major Renovations, Other Capital Costs, Wages and Salaries, and Other Operating Expenses.

Eligible costs include all reasonable direct and incremental costs deemed essential to the implementation of the project and that are not specifically identified as being ineligible by the Agency.

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(i) Buildings and Major Renovations

Buildings and major renovations include costs related to new construction and costs related to renovations to an existing building whether owned or leased (i.e. leasehold improvements).

Building and major renovation costs might be eligible under the AIF, but only on a very selective basis and only if absolutely essential to the project. Proponents are required to clearly demonstrate the requirement for an investment in newinfrastructure as opposed to the utilization of existing facilities. It should be noted

that AIF assistance for eligible building and major renovation costs would not normally exceed 30% of the proponent’s costs.

(ii) Other Capital Costs

This category includes capital assets other than those included in Buildings and Major Renovations and that are considered essential for the project. These include assets such as testing equipment, computers, furniture, machinery and any other equipment that is considered essential for the project. Technology rights are also covered under this category and include costs incurred for the acquisition of the rights to use (background intellectual property) technology.

Notes for Non-commercial ProponentsFor projects receiving a contribution from the Canada Foundation for Innovation (CFI) toward specific capital costs, the AIF assistance to those costs will not exceed the CFI contribution.

(iii) Wages and Salaries (Including Payroll Burden)

Since remuneration for the cost of human resources is usually a significant portion of project costs, these are presented separately from Other Operating Expenses.

The acceptable wages and salaries are those considered essential to the project and might include the services of engineers, scientists, technologists, technicians, draftspersons and market researchers.

Good project management is key to success. Proponents should not neglect the need for qualified administrative and financil management of a project and its related contractual requirements. Incremental costs related to financial control and management of a project are eligible costs.

Payroll burden associated with the eligible wages and salaries, which includes items such as group insurance, pension plans, employer’s share of federal deductions, etc., is also eligible for personnel directly associated with the project.Notes for Non-commercial Proponents

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The AIF supports the hiring of incremental research expertise, including faculty whose principal focus is the funded initiative, and whose research, teaching and outreach, while directly related to the objectives of the funded initiative, will also strengthen faculties and enhance graduate opportunities. Incremental wages and salaries of faculty must be above and beyond the normal wages and salaries paid by the university.

At no time will the AIF fund teaching activity. However, in cases where existing faculty is assigned to an AIF project, the backfilling cost (i.e. salary of replacement personnel) is an eligible cost under the program. Proponents should be careful not to double claim, by claiming both the R&D position and the backfilled position. The salary of the replacement personnel is the only eligible cost allowed.

(iv) Other Operating Expenses

This category includes all other costs that are not included in the previous three (3) cost categories.

A – Direct materials and consumablesDirect materials include those consumed in carrying out the project, including those utilized in the production of models, prototypes or pilot plants. Direct materials can be purchased solely for the project or issued from the proponent’s inventory at cost.

B – Leased/rented facilitiesThe project may be located in facilities that are leased or rented. Lease and rental payments are eligible if incremental. These costs are only acceptable up to thecompletion date of the project. Furthermore, cost allocation for the use of existing space owned by the proponent is not eligible.

C – Professional fees and consultantsLegal fees for patent searches and patent filing fees are acceptable. Patent filing fees will only be allowed for countries that are identified as necessary for the success of the project. Patent costs should be charged at actual cost. Maintenance fees and all expenses incurred to protect a patent are not acceptable.

Also eligible are the costs of consultants engaged to carry out additional market research, technical searches, financial analyses or other investigations that, in the opinion of ACOA, are desirable to determine the specifications and characteristics of the product and are required for determining the course of the development activities. The eligible cost acceptable for a consultant is the actual incurred and paid contract amount.

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This category is strictly related to R&D activities of the project. The amount acceptable for a subcontract is the amount actually incurred and paid. If the subcontract is to be done by a party related to the proponent or by a key collaborator, the expense will be eligible at cost as this is a non-arm’s-length transaction. Any such case must be fully disclosed by the proponent.

The cost related to the preparation of the first engineering draft of a user manual or related to defining or refining the specifications of a product, process or service under development are acceptable.

Services fees for tests conducted by testing organizations or accredited laboratories (e.g. Canadian Standards Association, Underwriters Laboratories or Canada Mortgage and Housing Corporation), and that are essential to the success of the project, are eligible. Testing services should be charged at actual cost. Regulatory costs, where required, will be accepted.

E – Travel expensesTravel expenses may be included as eligible costs and are defined as those reasonable travel-related costs that are necessary to, and incurred solely in performance of, the project. “Reasonable” travel costs would be those that are generally comparable to the Treasury Board Travel Guidelines for the Public Service and exclude items such as entertainment and first-class airfare. Food and accommodation costs are normally expected to be less than $200 per day in Canada and $250 (Canadian) per day outside Canada.

F – Other direct incremental costsCost for expenditures such as office supplies, courier charges, utilities, telecommunications (e.g. telephone, fax, internet) and other office expenses are eligible if directly attributable to the proposed project. Only the incremental cost is acceptable. Proponents must provide a detailed budget of such costs.Certain proponents may not be able to individually track and account for expenses at a project level. In such cases, an allocation based on an appropriate factor (e.g. salary, square footage or other cost) can be calculated by the proponent and used to claim such costs.

(d) Non-Eligible Costs

Non-eligible costs include, but are not necessarily restricted to, such items as:

cost of land, goodwill and asset costs in excess of fair market value in kind goods or services cost allocation for the use of existing space owned by the proponent motor vehicles and vessels not used exclusively for the project fixed/period charges: recurring charges such as property taxes, rentals and reasonable

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provision for depreciation insurance, dues and other membership fees interest costs, bond discount and other financing costs promotion and selling expenses professional fees, salaries, overhead or other costs incurred in the normal course of

operations non-incremental expenditures expenditures incurred and cost commitments made before the proposal receipt date costs related to activities undertaken by federal and provincial government

departments.

(e) Credits

The applicable portion of any income, rebate, allowance, or other credit relating to any applicable direct cost, received by or accruing to the proponent, shall be credited to the eligible costs.

5.9 Appendices

As a reminder, references have been made in this guide for proponents to include information as appendices to their proposals. As appropriate, the following items should be included:

(a) Proponent, Key Collaborator(s) and Project Team Information

proof of the legal existence of the organization(s) (e.g. letters patent, charter of incorporation)

corporate ownership structure, list of directors, etc. list of any related, associated and affiliated company/organization and relevant

information as appropriate (e.g. description, financial statements) organization chart, resumés of key personnel or statement of qualifications, etc. project team chart, resumés, accomplishments, references, etc. letters of interest, commitment and memorandum of understanding with

collaborators/partners (i.e. details, level, timing, and monetary participation)

(b) Financial Information

quotes supporting major cost items letter of offer, legal agreement, etc. independently prepared financial statements (audited or review engagement) for the

last three (3) fiscal years latest monthly interim financial statements projected financial information

(c) Commercialization Information

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market study

As the above might not be a comprehensive list, include any other relevant information to complete or to facilitate the Agency’s assessment of the proposal.

Completeness of Proposal Package

Project proposals must include:

Administration and Declaration forms (Annex A) Project proposal (Annex B) Costs and financing templates (Annex C) Results measurement information (Annex D) Appendices (refer to section 5.9)

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