Regional Defence Investment Initiative

Expected Results

Projects supported through the RDII program will work towards achieving one or both of the following departmental results.

• Businesses and organizations in Northern Ontario are investing in the adoption and commercialization of innovative technologies and growing.
• Businesses are integrated into defence supply chains, both domestically and internationally.

Eligible Applicants

Eligible applicants include:

• Incorporated businesses including Indigenous businesses (First Nation/Métis/Inuit) within, or positioning themselves in, the defence supply chains.
• Not-for-profit organizations, industry associations, and Indigenous-led organizations (First Nation/Métis/Inuit).

Eligible Activities

All activities supported through the RDII must be military-first and qualify under the NATO spending target. They must clearly demonstrate how they meet a specific military need and how they contribute to strengthening Canada’s defence industrial and innovative capabilities that support military purposes. Eligible activities must align with the Initiative’s objectives:

• Strengthening Canada’s defence industrial base
• Integrating SMEs into domestic and international defence supply chains
• Enhancing industrial and innovation capacity
• Supporting existing strategic regional assets currently supporting Canada’s defence and security needs while also fostering regional economic development

Projects involving dual-use technologies (i.e., both civilian and military applications) must have a defined and measurable military component that could ultimately have a defence or military application. In all cases, investment decisions must be driven by a military or defence need, though broader benefits may also result from the investment.

Funding may support activities under the following streams:

1. Business Scale-Up and Productivity: support businesses, mainly SMEs, to increase production and innovation capacity, improve productivity and competitiveness, explore and secure new markets, meet defence certification/qualification standards, and support businesses to scale up, to integrate into defence supply chains (domestic and international) and responding to major military contractors and Government of Canada procurement opportunities.
2. Regional Innovation Ecosystems: support regional innovation and research centres, specialized not-for-profit organizations, Indigenous-led organizations, and industry associations which provide technical and business support services to SMEs, help with supply chain development and integration, and conduct collaborative industrial research for activities that include early development and those that directly or indirectly (e.g., dual-use technologies) relate to enhancing Canada’s defence capabilities, including pre-construction readiness activities and the capacity of local firms to bid on these projects.
3. Defence-related Strategic Regional Assets: to support the enhancement of public/private infrastructure that would strengthen the Canadian Armed Forces (CAF) presence / operations or would enable secure access to supply chains involving defence-specific critical minerals or metals.

General eligible activities include, but are not limited to:

• Digitization, automation, or technology integration investments enhance productivity and competitiveness.
• Market diagnostics, development, and expansion activities to support businesses; commercialization strategies, including participation in technology showcases.
• Certification required to integrate domestic and international defence supply chains for specialized applications.
• Acquisition of equipment, as well as expansion and modernization of facilities
• Adaptation, adoption, development, or improvement of dual-use technologies with both civilian and military applications
• Business and structural ecosystem support, market development, and guidance services
• Research and development (R&D) – Technology readiness levels (TRL) 7 through 9
• Acquisition of equipment to enhance the productivity of a strategic infrastructure used for defence purposes.
• Preparatory work to advance small-case infrastructure projects for defence purposes, such as technical assessments, environmental studies, Indigenous consultation, and preliminary design work (e.g., private training facilities that have a clear military link).

Eligible Costs

Eligible costs include costs such as:

• Cost of labour (e.g., wages and benefits) and of material used that are incremental and directly related to the project.
• Capital costs: purchase of machinery, equipment, and infrastructure.
• Consultancy fees (e.g. professional, and technical services) to support pre-construction readiness or other activities where expertise is required to advance a project.
• Costs related to preproduction activities (e.g., technological development and commercial demonstration) 
• Costs related to commercializing products, expanding, or maintaining markets.
• Costs related to specialized services such as testing services, research, and development services, technical or innovation services.
• Costs such as military certifications and/or standards (e.g., TAM, JCP, ADSM, CMMC, ISO, technical and engineering standards) to enable businesses to bid on defence projects.

Note: Eligible costs may be retroactive up to 12 months prior to the receipt of a funding application, but no earlier than April 1, 2025. Projects must be completed no later than March 31, 2028.

Ineligible Costs

Any costs deemed not reasonable and/or not directly related to the eligible project activities are ineligible, including:

• Regular maintenance and/or ongoing operation costs
• Regularly scheduled capital expenditures and/or asset replacement
• Refinancing of an existing debt
• Costs of amortization and goodwill
• Acquisition of land and buildings
• Entertainment expenses
• Lobbying activities
• Basic research
• The purchase of any assets for more than the fair market value of the said asset
• Costs for which the applicant has entered into a legal commitment/incurred prior to the eligibility date (April 1, 2025)

Cost of labour (e.g., wages and benefits) that are not incremental and/or directly related to the project.

Funding Conditions

• Repayable contributions up to a maximum of 75% may be considered for businesses.
• Non-repayable contributions up to a maximum of 90% may be considered for not-for-profit organizations to administer Regional Innovation Ecosystem projects aimed at providing technical and business support services to SMEs and help with supply chain development and integration to enhance Canada’s defence capabilities.
• Repayable and non-repayable contributions may be considered up to 100% of eligible costs for eligible Indigenous recipients.

Other Considerations

All projects will also be assessed against the following:

• Capable of entering into a legally binding agreement.
• Managerial, technical, and operational capacity to achieve the project's stated objectives by March 31, 2028
• The degree to which the project supports SME’s integration into the defence sector.
• The degree to which the project targets sectors that are reflective of Canadian military needs or defence priority areas (e.g., artificial intelligence, cybersecurity, quantum technologies, space, sensors, aerospace, shipbuilding/naval, uncrewed, and autonomous technologies, training and simulation, munitions, personnel protection)
• Degree to which the project helps the company boost productivity, productive capacity, and competitiveness.
• Advancing Indigenous economic inclusion
• Regional impact of the project, and quality of the project plan and budget, including:
  • Project readiness
  • Ability to repay (if applicable)
• Degree of risk and mitigation measures
• Quality of Intellectual Property (IP) strategies for IP-intensive projects
• Accrual of project benefits to Northern Ontario
• Financial capacity to complete the project
• Expected results of the project

Completing an application does not guarantee funding approval. All applications will be assessed as they are received. This assessment will include a review of the business case and financial projections, and the identification of any issues that may impact the project's success. Approval will also depend upon funding availability.

How to Apply

The application process is two phases and submitted through the FedNor self-service portal. It is recommended that you review the initial application guide.

Please call 1-877-333-6673 to discuss your proposal with a FedNor Officer in your area or begin your application process.

FedNor is committed to providing effective, efficient and client-focused programs and services. Visit our service commitment to find out more.