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Income Tax Information Circular
Scientific Research and Experimental Development
NO.: IC86-4R2, Supplement 2
DATE: April 10, 1992
SUBJECT: Aerospace Industry Application Paper
The purpose of this supplement to Information Circular 86-4R2 is to help taxpayers and our staff interpret how the circular applies to this industry sector.
Aerospace Industry Application Paper
Table of contents
| 1. | Introduction |
| 2. | Project eligibility |
| 2.1 | Basic criteria |
| 2.2 | Project completion criteria |
| 2.3 | Airworthiness and other regulations |
| 3. | The scientific and technological problems of aerospace |
| 3.1 | Inherent technological uncertainties |
| 3.1.1 | Weight minimization |
| 3.1.2 | The need for model and full-scale testing |
| 3.1.3 | Systems and powerplants |
| 3.2 | Mock-ups |
| 3.3 | Human/machine interaction |
| 3.4 | Activities following Type Certification |
| 3.5 | Vendors |
| 3.5.1 | Second (multiple) sourcing |
| 3.6 | Change Control Board activity |
| 4. | Specific considerations for determining eligibility |
| 4.1 | Project designs |
| 4.1.1 | Preliminary design |
| 4.1.2 | Project design |
| 4.1.3 | Project design in response to a Request for Proposal (RFP) |
| 4.2 | Developing methods and techniques |
| 4.3 | Product development |
| 4.4 | Space programs |
| 5. | Project documentation and project cost information |
Table 1
| Summary of airworthiness regulations (USFAA) that apply to Canadian aerospace product manufacturers |
| Notes |
The aerospace industry in Canada represents a technological leading edge. The products of this industry are of vital national importance, and have been steadily gaining prominence both in the research and manufacturing sectors. A large range of items is produced. Familiar examples are aircraft and aircraft components such as engines, landing gear, and flight controls. Other prominent examples are spaceflight hardware, including satellites and ancillary systems. In addition, there are airport/ground and earth station equipment; navigation, tracking, and surveillance systems; simulators; advanced diagnostic and monitoring devices; aerial survey and remote sensing equipment, and related devices. The industry has also developed highly advanced materials, processes, and manufacturing systems.
The aerospace industry by its nature must operate in a stringent, largely regulated field in a competitive environment. Imposed constraints may arise from legislation or from specifications on product performance. There are also numerous mandatory requirements that are the result of quality assurance and special procurement specifications issued by government or defence departments, space agencies, etc.
Regulation 2900 of the Income Tax Act defines scientific research and experimental development (SR&ED). We developed Information Circular IC86-4 (which is periodically revised) various industry groups, and issued it as the Canada Customs and Revenue Agency's interpretation of Regulation 2900.
We have also developed Application Papers to address issues specific to particular industries, and to help taxpayers and our staff understand how the circular applies in different industry contexts. The Application Papers are adjuncts to IC86-4. They do not override the circular.
We have prepared this Application Paper to improve the understanding of SR&ED as it specifically relates to the aerospace industry. The paper also expands on concepts that may not have been covered to the same degree in the circular concerning what constitutes eligible SR&ED. Clients can use this paper to decide if their technical projects and activities are eligible, and also to more accurately assess their own claims. We do not distinguish between military and commercial aerospace applications.
This paper identifies eligible work activities. For information on expenditure issues, see Interpretation Bulletin IT-151.
2. Project eligibility
2.1 Basic criteria: scientific research and experimental development (SR&ED) is defined in Regulation 2900 of the Income Tax Act. Information Circular IC86-4 indicates that, to be eligible, SR&ED activity must meet three essential criteria: scientific or technological advancement, scientific or technological uncertainty, and scientific and technical content. These criteria are defined in paragraph 2.10 of IC86-4. Briefly restated, it must be shown that the work for which the claim has been made:
- embodies scientific or technological advancement;
- involves scientific or technological uncertainty whose resolution
- has been attempted or achieved, usually through a combination of analysis and experiment, and a systematic approach; and
- embodies scientific or technological content, which is to say that the activity must reflect a systematic process of hypothesis formulation, analysis, and/or experiment. It must also be shown that the work was performed by competent persons who have relevant experience in science, technology, or the technical disciplines appropriate to the field of endeavour.
2.2 Project completion criteria: In addition to the three basic criteria above, there is also the question of determining at what point a scientific research and experimental development project has been completed.
Paragraph 7.3 of the Circular states that the basic criterion (for determining completion) is "...reaching the point at which the project's initial technological objectives have been achieved. Generally, this occurs when applying of standard operating practices will permit the achievement of the technological performance objectives that were established when the project was defined." While satisfactory in most cases, this criterion may not fully encompass the specific case of many aerospace products, and therefore may not always apply in this context.
The difficulty arises because, in the aerospace milieu, it may not be immediately evident at what point technological objectives have been attained. The technological objectives established at the project definition stage are often those of a potential user. For example, in the case of a transport aircraft, the technological objectives specify the payload, the distance which the payload is to be carried, the operating speed and altitude, and the direct operating cost per tonne-kilometre or per seat-kilometre.
These objectives, however, must be achieved within the conditions laid down by airworthiness legislation or manned space flight requirements, which may not take into account potential user requirements. It follows that the completion criterion of paragraph 7.3 of IC86-4 is not entirely appropriate as far as aerospace products are concerned, and due regard must be given to the provisions of the airworthiness regulations or, if they apply, the relevant manned spaceflight regulations.
The point at which we consider the original eligible project to be completed is the point at which the project's initial technological objectives have been achieved, or when the project is abandoned or stopped due to an inability to meet objectives, or at the point between experimental development and initial commercial production.
We recognize that in many cases the project's initial technological objectives may be modified as development proceeds. This usually does not affect eligibility. When technical problems arise after the initial technological objectives have been achieved, it is appropriate to consider that a new project or set of sub-projects has begun, and the original one ended. We recognize that specific projects that meet the three essential eligibility criteria are allowable, but generally view "ongoing development" as closely allied to routine engineering or routine development (see paragraph 2.7 (i) of IC86-4) which are not eligible. The claimant should therefore distinguish between new sub-projects and data collection that support a project, which are eligible, and routine development and routine data collection, which are excluded.
As discussed in section 2.3, stringent requirements arising from various regulations apply in the aerospace industry. It is likely that these requirements can lead to eligible SR&ED projects or activities either before or after the end of a project.
2.3 Airworthiness and other regulations: In paragraph 7.4, IC86-4 defines "regulated" as meaning that the product or process is required to meet some well-defined technological acceptance tests or specifications before it can be registered, marketed, or certified. These requirements may be established by formal regulatory agencies, by the industries, or by other bodies offering certification. When an eligible project exists, and the specifications for product performance, registration, certification, or safety are enforced, as is the case in this industry, the cost of the studies and the testing required to meet the requirements are eligible (see paragraph 7.5 of IC86-4).
In the aerospace industry, stringent requirements apply through airworthiness and other regulations, relating to the design and use of aerospace devices. Compliance with these requirements is enforced by law.
In many cases, the stringent requirements of the regulations will lead to an eligible project because of the impact on design and development criteria, procedures, and equipment. However, not all regulated matters are necessarily eligible. Examples of eligible cases that may arise in the context of Airworthiness and Type Certification are discussed in this paragraph and in section 3.4 of this paper. Others must be examined specifically against the three essential eligibility criteria. We should clearly see a departure from routine engineering practice if such cases are to be considered eligible.
The general principle that should be applied when considering eligibility is that there must have been a substantial technological problem whose resolution required analytical and/or experimental investigation, and that a technological uncertainty had to be removed.
In taking aircraft as an example, the technical end-user requirements and commercial objectives must be achieved within the provisions of the airworthiness regulations. These regulations are specified and imposed solely for reasons of aircraft safety without regard to commercial objectives or end-user requirements. The regulations define minimum standards relating to structural strength and system integrity1, and to certain performance characteristics concerned with safe operation. Parallel considerations may apply to manned spaceflight projects.
It can thus be seen that technological advance in the aerospace context often goes beyond the usual objectives of improving performance or the economics of operation, or both. Additional complexity and technical difficulty arises because the advances must be made within the stringent and detailed framework of legislated or mandatory requirements.
There are thus two levels of technological requirements. One arises from the technological objectives (end-user requirements), the other from provisions of the applicable regulations. An outline of the regulations that apply in Canada to aircraft, engines, systems, and components appears in Table 1. Full details may be found in the United States Code of Federal Regulations 14, which has been adopted in Canada. The minimum standards laid down in these regulations influence an aviation product from its conception to its obsolescence. Requirements that apply to the space environment may be imposed by various space agencies.
The stringent requirements and critical nature of safety, design, engineering, weight, physical volume/size, and performance often give rise to technological problems that result in the creation of eligible projects in areas which might be routine in other industries. Consequently, technological challenges and eligible activities may develop to a greater extent than would otherwise be normal in industry. The main tests of eligibility are the "advancement" and "uncertainty" criteria of IC86-4, with the "content" criterion generally being met in this industry.
A particular class of problems also arises from the unavoidable use of design approaches that have their own limitations. For example, aerospace design and development is conditioned by weight and physical volume considerations to a degree that does not usually apply in other engineering or technological areas. Such products as aircraft or spacecraft structures, powerplants, and onboard systems, while therefore embodying a minimum of materials, must still satisfy the regulations.
Consider the case of aircraft to illustrate the consequences. The existence of material minima is combined with the low values of Design Load Factors and Factors of Safety2 appropriate to aircraft structures. This leads to the assumption that unresolved technological uncertainties may still exist subsequent to Type Certification3, whose presence will become apparent only during the life of the aircraft. While the nature of these unresolved uncertainties may be known, their location, type, and severity of occurrence is not. A typical example is the occurrence of structural fatigue failures during the operational life of an aircraft.
(Similarly, certain unresolved technological uncertainties may still exist in space vehicles even after pre-launch Acceptance Testing, and may not surface until the vehicle has been launched and is in orbit or is on a mission. A more detailed discussion of factors inherent to space programs follows in section 4.4 of this paper.)
As a result of these uncertainties, the regulations require that aircraft be monitored throughout their operational life, and that appropriate and approved corrective measures be taken to rectify the deficiencies, failures, or defects if Type Certification is to be maintained.
Therefore, it may be appropriate to consider that some categories of work performed to maintain Type Certification are eligible experimental development. Such work may include determining and developing approved measures for correcting of deficiencies, failures, or defects, which have a direct bearing on Type Certification. However, it must be shown that the work does meet the three essential eligibility criteria. A distinction also should be made between the categories of routine measures and those involving experimental development or analysis.
In section 3.4 of this paper, the eligibility requirements are discussed for work that has been performed for re-certification, Supplementary Type Certification, or maintenance of existing Type Certification.
Certain manufacturers, particularly those of aircraft, may change or alter an existing model or series configuration: for example, to increase passenger capacity by lengthening an existing aircraft fuselage. In principle, the aircraft systems will be identical to those of the existing aircraft. In such cases, only the appropriate categories of incremental work involved should be considered as eligible experimental development.
Thus the design and development work involved in qualifying the structure, as altered, to the Airworthiness Regulations would be eligible. Also eligible would be the conduct and analysis of flight tests to determine changes in flying qualities and operational limitations, particularly as they relate to flight safety. However, system modifications should normally be routine and relatively minor, and claims for eligibility in these cases should be scrutinized carefully. Powerplant and engine control system modifications will be treated in the same manner as for aircraft modifications.
There are, however, certain kinds of mandatory changes to aircraft which, while they bear upon general safety, do not in themselves involve resolving of technological uncertainties. Examples of these are:
- incorporating approved, power-independent, floor-level lighting strips indicating pathways to emergency exits;
- incorporating approved flame-blocking fabrics in seats or furnishings;
- changing passenger information signs; and
- installing approved portable fire extinguishers or oxygen bottles in specified locations.
3. The scientific and technological problems of aerospace
3.1 Inherent technological uncertainties: Many technological uncertainties in aerospace endeavours arise from the requirements for minimizing the weight and physical volume of structures, systems, and powerplants that have low design load factors and factors of safety. Other problems arise from the complex interactions between the various sciences and technologies appropriate to the aerospace field. These sciences are essentially incomplete; that is, not every outcome of their application can be theoretically predicted with sufficient confidence. Thus it remains necessary to undertake experimental determination and development.
3.1.1 Weight minimization: The primary problem of weight minimization necessitates structural development through detailed and sophisticated analysis. This is supported and verified by developing and testing the structural elements, and eventually the complete structures. This approach is the only feasible way of achieving the technical objective of the use of minimum weight structures that (a) comply with the standards imposed by regulation, and (b) provide adequate economic life in terms of hours or cycles of operation.
A clear indication of the existence of technological uncertainties in the design and development of aircraft structures is afforded by Airworthiness Standard 23.641, Wings, Proof of Strength, which stipulates that: "The strength of stressed-skin wings must be proven by load tests, or by combined structural analysis and load tests."
3.1.2 The need for model and full-scale testing: Analysis alone cannot determine those aerodynamic characteristics of aircraft that influence not only performance, but also flight safety behaviour. This deficiency arises from the incomplete status of aerodynamic theory, and as a result, extensive testing is required.
Model testing in wind tunnels is therefore required to identify and resolve the technological uncertainties inherent in aerodynamic interactions. This alone, however, cannot resolve all such technological uncertainties since the representation afforded by scale model tests is limited by physical laws. For true representation, the aerodynamic scale, as measured by Reynolds Number (which determines, for example, the profile drag, and controls hinge moments), and the effects of compressibility of air at high speeds, as measured by Mach Number (which, for example, determines the lift slope of wings and tail surfaces, variation of pitching moment with angle of attack, controls hinge moments and wave drag) must both be satisfied. These cannot be done simultaneously at model scale, and in the end, full-scale flight testing and development is required to identify and resolve all of the technological uncertainties involved in the aerodynamic interactions.
3.1.3 Systems and powerplants: Considerations similar to those for aircraft apply to systems and powerplants. However, if a powerplant is installed in an aircraft (e.g., company commuter aircraft) which is used for non-scientific purposes simultaneously with in-flight development, a different situation exists. Only those incremental activities associated with installing the monitoring and data-recording systems, and the time technical observers spend monitoring the engine in flight, should be considered eligible activities. The same considerations apply to developing systems in flight.
The interactions between structural distortions and the aerodynamic forces and moments resulting from these interactions can be fully determined only at the flight test and development phases. These interactions may affect not only the structural integrity of an aerospace device, but also its flight characteristics. There is, consequently, often system uncertainty in the development of an aerospace device, as well as technological uncertainties at the more detailed levels. The spectrum of eligibility is strongly influenced by these factors.
3.2 Mock-ups: The construction and use of full scale models (mock-ups) of aerospace devices is often an essential component of the development program. They are generally eligible if they are built in support of design and development in an eligible project.
Another example is when an engine manufacturer provides a full scale model, or an actual engine, to an airframe constructor so that it can be incorporated in an eligible technical mock-up. Sometimes, models that are built for eligible technical development purposes are also used for other purposes such as sales promotion and marketing, which are not eligible. We will examine the facts of each case in accordance with audit guidelines when determining the eligibility of mock-ups and models.
3.3 Human/machine interaction: In many aerospace projects, the interaction between a human operator and the device that he or she is controlling poses a complex technological problem. Major contributing factors are the physiological, neurological, and other limitations of the human operator, considered as an element within a servo system. The effect of these limitations implies that changes to the purely physical elements comprised in the system may be necessary, and that these changes can be best undertaken by simulation or flight testing with the human operator in the servo loop. System adjustments or modifications are made until a point is reached where the human operator can carry out a prescribed task without excessive physical or neurological effort. Certain aspects of psychological research may also be involved in this kind of development, and when this research is done in support of eligible SR&ED, it would be allowed as specified in Regulation 2900.
Examples of situations demanding this type of approach are when modifications are made to systems: for instance, to achieve acceptable relations between the frequency and damping of control-induced pitching motions so as to permit the operator to track a specified path; or to limit the degree of adverse yaw, and the ratio and phase relationships between roll and sideslip angles so that an approach and landing path may be followed with accuracy.
3.4 Activities following Type Certification: following Type Certification, aerospace devices and systems in service may exhibit defects and/or deficiencies that could not reasonably have been identified and resolved at the initial development stage. When such defects or deficiencies directly influence the targeted technical performance or operational safety of the device, then those activities required to resolve the technical problem should be considered for eligibility. To illustrate, we can cite examples of significant problems arising partly or largely after Type Certification, when technological deficiencies are revealed through:
- fatigue tests, creep tests, and their implications;
- corrosion and stress studies;
- cold soak and other special environment tests;
- de-icing tests and modifications;
- lightning tests;
- propeller balance tests;
- autopilot refinements;
- wear tests;
- non-critical but significant flight tests;
- heat loss, insulation, and oil cooling changes;
- engine fuel control operation; and
- engine component operation.
When an aeronautical product is modified to the extent that re-certification is required, for instance when the fuselage of an existing model is stretched to increase its capacity, a new model Type Certificate may be granted. Alternatively, a Supplemental Type Certificate may be issued at the discretion of the regulatory agency. In either case, only the work involved in modifying and qualifying the prototype model of the modified device or system can be considered eligible.
Typical examples of modifications likely to require Supplementary Type Certification are:
- The installation of a new type of engine into an existing airframe, e.g., the substitution of a reciprocating internal combustion engine by a gas turbine engine, and the associated system changes engendered by such a substitution.
- Structural alterations that could influence the structural integrity of an existing aircraft e.g., structural alterations to a pressure cabin to provide an optically flat window for a survey camera.
- Configurational alterations that could alter the flying characteristics of an existing aircraft, e.g., the external mounting of magnetic anomaly detector arrays for geo-magnetic survey purposes; or the mounting of floats in place of the landing gear on an aircraft not previously certificated for operation on floats.
3.5.1 Second (multiple) sourcing: Multiple sourcing is an industry issue. Sometimes the first supplier does not comply with the top-tier regulations (vendor default), and it becomes necessary to change to another supplier. If this occurs, the work must meet the eligibility criteria. In some cases, there may be agreements to enter into joint R&D, or there may be a significant element of uncertainty or advance. For example, experimental flight tests may have been undertaken to pinpoint the need for a vendor-instituted `fix,' or to verify the safe incorporation of the change. However, if a firm is not really involved beyond the routine stage with a vendor who has developed a product past the initial configuration, then the work is not eligible.
3.6 Change Control Board (CCB) activity: Engineering changes do not automatically qualify just because they are done in an aerospace environment. Substituting a different material, or substituting one off-the-shelf item for another, or adding a spacer or a shim are considered to be routine (unless a technical case can be presented otherwise) and are not eligible activities. To be eligible, the engineering activity must be done in support of an eligible SR&ED project.
Rectifying failures can in many cases lead to eligible projects. However, correcting mistakes and oversights, such as errors in reading drawings, is a standard activity of Change Control Boards, and would not be eligible. There may be cases where an error is not obvious, such as when it is a result of the incomplete status of available knowledge. In such cases, a technical investigation and eligible project could arise. Each situation will be examined on its own merits.
4. Specific considerations for determining eligibility
4.1 Project designs: There are three types of project designs:
4.1.1 Preliminary design: Where preliminary design is undertaken using existing knowledge within the experience of the company, and/or based upon generalized data such as that which is available in standard handbooks (e.g., U.S.A.F. Data Compilation, or Engineering Societies Data Units), the project design undertaking is considered routine engineering, since it arises from applying established knowledge. If the process terminates at the proposal stage, the work performed will be judged ineligible, as at this point technological uncertainties have not been resolved, although they may have been identified.
An exception to the above is the preliminary and/or advanced design of new products for the commercial market where substantial analysis of new concepts, new materials, experimental research results, etc., must be incorporated to define a probable product that will show significant improvement over those products already available in the marketplace.
On the other hand, if the project design phase goes into the prototype development phase, which by its nature requires resolving technological uncertainties, then the technical work becomes eligible as supporting activities closely linked to an eligible project. However, if in a given time period, a design office creates 10 preliminary designs (proposals), and develops only some of them, then only the expenditures for those supporting activities for eligible projects will be considered qualifying expenditures. We consider R&D by projects, not by department or function.
4.1.2 Project design: The project design, in itself, requires developing new methods of analysis and undertaking or generalizing model tests and their results to confirm the adequacy of the analytical methods. This undertaking constitutes an extension to scientific or technological knowledge and thus the project, in itself, will be eligible. An example of such a case is developing aerodynamic prediction methods for the characterization of wings at high angles of attack in a slipstream, typified by tilt-wing vertical takeoff and landing aircraft.
4.1.3 Project design in response to a Request for Proposal (RFP): Requests for Proposals for aerospace systems or devices are extremely detailed, a response to which will in general require that certain performance parameters, extending the existing state of the art, be guaranteed. In many cases, particularly those relating to military aerospace products or devices, a limited number of manufacturers may be requested to respond. Usually, only one of the respondents will be contacted to continue the project into a prototype development phase. As advances in technology are required along with guarantees of performance, there will always be a need for experimental work or extensive analysis to meet these requirements. Under such circumstances, the technical preparation of the response to the RFP, even when it does not lead to a development contract, should be considered for eligibility.
Typical examples of eligible responses to RFPs are complete aerospace vehicles (aircraft, satellites or other space vehicles), powerplants, environmental control systems, for military or civil aircraft, and fuel control systems for advanced engines where experimental work, simulation studies, or full-scale mock-ups have constituted elements in the work supporting the preparation of the response.
4.2 Developing methods and techniques: There is continuous technological advancement in the aerospace industry, and thus the industry has an ongoing need to develop new methods of analysis, experimental techniques, materials and manufacturing techniques. Such undertakings contribute to the advancement of science and technologies, and will generally fall within the conditions for eligibility specified under Income Tax Regulations 2900(1)(b) and 2900(1)(c).
Typical examples of such activities include developing methods to analyze and design aerofoil profiles in the viscous flow regime, and supporting tests to verify these methods; advances in analyzing structures for strength and integrity; developing manufacturing methods for new materials; and developing methods to apply these materials in aerospace structures.
4.3 Product development: Aerospace product development may comprise the development of completely new devices or systems, the modification, of existing devices or systems to incorporate new technologies or technological advances, and the rectification of failures, defects or deficiencies that come to light during the operation of a device or system, and which may affect the maintenance of Type Certification of the device or system.
4.4 Space programs: While in principle space programs follow a development route similar to the path outlined above, there are certain specific differences arising from factors and conditions which are unique to the space environment and its related operational requirements. The following section summarizes the sequence and logical progression of typical spaceflight system development and testing.
The steps discussed cover the process of design, engineering, model hardware build and test, qualification hardware build and test, and flight article build and on-orbit/mission system test. It is only after this process has been shown to have been successfully carried out that a typical spaceflight system can be regarded as being acceptable for the purpose intended, and is ready to be reproduced through a production program.
In high technology development for space programs, the evolution of an acceptable design passes through several distinct engineering and test phases. The process typically follows a time-proven and rigorous development program in line with NASA and/or Canadian (or other) space agency requirements. A unique feature of many of these programs is that final verification of the system cannot be accomplished without significant and extensive on-orbit or on-mission testing, which can continue for some years after system launch. Typical nomenclature applied to a spaceflight development project would be the "Design, Development, Test and Evaluation Program (DDT&E)," which encompasses the following several distinct and complex phases of the work:
| Phase A - | Involves developing concept analyses and studies that lead to the generation of a "requirements document" and engineering layouts or preliminary designs to support the agreed concept. |
| Phase B - | Involves generating detailed systems analyses and the engineering work leading to top-level specification, from which all design and performance requirements are either obtained or derived. Further sub-system requirements are produced, based on preliminary engineering drawings and on the test data obtained from early engineering model hardware and some of the more complex electronic and control system elements. This leads to Preliminary Design Review(s) (PDR), where the customer and supplier review and approve the basic system design, allowing work to proceed into the detailed engineering phase. |
| Phase C - | In the detailed engineering design and development phase, all systems, sub-systems, and components (electronic black-boxes, control system hardware, and the like) are developed to the bread-board stage and subjected to bench testing. In parallel, and subject to considerable revision, detailed drawings defining the flight hardware design are produced. In addition, the bread-board hardware is refined into preliminary packaged sub-systems and assembled into an engineering model of the flight test article for all-up system testing. A large number of the detailed acceptance and qualification test specification requirements and procedures are developed. This work culminates in a Critical Design Review (CDR) with customers, where the detailed design of all elements of the system is approved, allowing the manufacture of both qualification and flight test hardware to proceed. |
| Phase D - | This phase consists of the flight and qualification hardware build and test. Qualification test hardware for the various modules is built and put through "life and environments" testing (over-test) which involves mechanical shock, random vibration, thermal vacuum, humidity, and electromagnetic interference (EMI) testing. There may not be a qualification system built per se, as no earth-based facility may exist to provide conditions of true "zero-g" or other true space environment conditions (such as radiation fields, magnetic fields, gravitational fields, high-energy particle flux, etc.) to test an all-up system to the levels expected in-orbit/mission.
In parallel, flight hardware is built and tested to lower levels of environmental exposure, and is then integrated, module by module, into the flight-test article. A test is then conducted of an all-up system, encompassing all flight hardware due to be flown, and numerous changes are then typically made to the hardware and computer software, and to the on-orbit operating, development, and flight-test objectives. These development and flight test objectives are typically defined by NASA or the appropriate space agency in consultation with the developer. The final requirement of the DD&TE program is to prove, within the limits of available test-time on-orbit/mission, that the system has met its design requirements as reflected in the objectives. Major reviews may be held during this phase. A Configuration Review (CR) examines the entire flight configuration of the system to ensure that it has been constructed to the defined drawings. The successful culmination of the CR results in approval to proceed to the integrated system test. A Final Acceptance Review follows the successful completion of the all-up system test. This review authorizes the conditional acceptance of the flight test system for a series of on-orbit system tests. |
| Phase E - | After the Configuration Review, intensive work continues to develop and refine the flight-test objectives (FTO's) for on-orbit/mission testing. Since much of the testing cannot be conducted on the ground, in-orbit or mission testing is done to confirm that the system is working properly and is complying with the requirements. All of the testing conducted during the flights helps to complete an element of the program called verification, which means that test DATA is compared against the requirements. The results of this testing, and subsequent analyses, comparison with ground test data, and other previous METHODS of partial verification, lead to the completion of the Operational Readiness Review (ORR). This review certifies that the system is ready for operational use as a result of the ground and on-orbit/mission flight tests conducted.
At this point, and if the results so demonstrate, the DD&TE program is considered to be over, and the commercial phase of activity can begin. The outline presented above suggests that many design and experimental activities up to and including the CDR phase will generally qualify as being eligible. In subsequent phases, work may also qualify, as long as it meets the criteria discussed in this paper. For example, as suggested above, eligible activity may continue to be found beyond the Critical Design Review stage if, despite all available techniques and reasonable measures such as extensive ground testing, sufficient uncertainties exist about whether the:
|
5. Project documentation and project cost information Claims for ITC under the SR&ED program must be submitted on Form T661, "Claim for Scientific Research and Experimental Development Expenditures Carried Out in Canada" in conjunction with Form T2038, "Investment Tax Credit (ITC) - Corporations." Narrative "project description" technical information and project cost information must also be attached. Form T661 and Guide T4088 clearly outline the documentation we require. To reduce the time and effort required for technical audits, claimants should submit complete documentation with each claim.
The determination of eligible and non-eligible projects and/or activities requires that descriptions of the work be directly related to a formalized system of identifiable cost collection accounts. Taxpayers should use a structured accounting system that clearly identifies project activity costs. Provision should be made for showing the hierarchical cost/activity nodes and identifying the support activity linkage to both major and sub-projects.
| TABLE 1 |
| SUMMARY OF AIRWORTHINESS REGULATIONS (USFAA) THAT APPLY TO CANADIAN AEROSPACE PRODUCT MANUFACTURERS |
| Part Number Sub Chapter |
Title | Basic Provisions |
| 21 | Certification Procedures for Products & Parts |
Impose procedural requirements for Type Certification, changes to Type Certificates, the issuance of Certificates of Airworthiness (the latter having particular reference for aerospace manufacturers to the issue Experimental Certificates of Airworthiness, Compliance with regulations flight testing, and special flight permits e.g., to flight test development engines in modified existing aircraft). Impose the requirement for reporting failures, malfunctions, and defects in Type Certificated aerospace products. |
| 23 | Airworthiness Standards - Normal, Utility & Acrobatic Category Aircraft |
Impose Airworthiness Standards for Type Certification and changes to Type Certificates for small aircraft having nine passenger places or less, and a gross weight of less than 12,500 lbs. |
| 25 | Airworthiness Standards - Transport Category Aircraft |
Impose Airworthiness Standards for Type Certification and changes to Type Certificates for Transport Category Aircraft. |
| 27 | Airworthiness Standards - Normal Category Rotorcraft |
Impose Airworthiness Standards for Type Certification and changes to Type Certificates for rotocraft of gross weight of 6,000 lbs. or less. |
| 29 | Airworthiness Standards - Transport Category Rotorcraft |
Impose Airworthiness Standards for Type Certification and changes to Type Certificates for multi-engined rotorcraft that meet the requirements of Transport Category A; rotorcraft with maximum weight of 20,000 lbs. or less that meet the requirements of Transport Category B. Parts 23, 25, 27 and 29 prescribe the provision of approved flight manuals and maintenance manuals as a condition of Type Certification. |
| 31 | Airworthiness Standards - Manned Free Balloons |
Impose Airworthiness Standards for Type Certification and changes to Type Certificates for manned free balloons. Impose the provision of an approved operating manual, or permanent placard, visible to pilot, indicating operating limitations. |
| Part Number Sub-Chapter C |
Title | Basic Provisions |
| 33 | Airworthiness Standards - Aircraft Engines |
Impose Airworthiness Standards for Type Certification and changes to Type Certificates for aircraft engines. Impose the provision of approved installation instructions, operating limitations, servicing instructions, inspection instructions, overhaul and replacement instructions, as a condition of Type Certification. |
| 35 | Airworthiness Standards - Propellers |
Impose Airworthiness Standards for Type Certification and changes to Type Certificates for propellers. Impose the provision of approved manuals containing installation, operating, servicing, and maintenance instructions as a condition of Type Certification. |
| 36 | Noise Standards - Aircraft Types & Airworthiness Certification |
Impose the noise standards for Type Certification, changes to Type Certificates, and Standard Airworthiness Certificates for subsonic transport category large aircraft, all categories of subsonic turbojet aircraft, and propeller-driven small aircraft. |
| 37 | Technical Standard Order Authorizations |
Impose requirements for issuing Technical Standard Order (TSO) Authorizations. TSO prescribe minimum performance and quality control standards for specific materials, parts, or appliances used on civil aircraft. (Typified by: Flight instruments, autopilots, communications and navigation equipment, oxygen masks, life rafts, etc.). |
| Airworthiness Directives |
Impose Conditions and limitations, if any, under which operations may continue with products in which an unsafe condition exists in a product, and that condition is likely to exist in other products of the same type. |
1. For example; the security of the flight control system from damage
caused by a disintegrating engine, or a bird strike, must be achieved
through the location of multiple pathways, interlocks, a duplication (at
least) of critical elements. In specified aircraft weight categories the
stalling speed (the speed below which steady level flight cannot be
maintained) is legislated. For multi-engined, aircraft minimum climb
gradients and rates of climb, following the failure of a single engine at
takeoff, are required.
2. Design Load Factor (or Limit Load Factor) is the ratio of the
maximum load anticipated in normal (manoeuvre) operations to the load under
steady, unaccelerated operations. For large transport aircraft this factor
is normally 2.5. The Factor of Safety is a multiplier upon the Design Load
Factor. For aerospace structures it is typically 1.5. Thus a large
transport aircraft structure will fail when the load, generated for example
by a rapid pullout from a dive, is 3.75 times the weight of the aircraft.
Factors of safety on terrestrial structures are typically eight or more, as
structural weight is not of overriding concern to the extent that it is in
aerospace structures.
3. Type Certification is granted at the point where conformity with
the Airworthiness Regulations has been demonstrated to the satisfaction of
the Regulatory Agency (Transport Canada). Upon the issuance of a Type
Certificate, aerospace products identical to that for which the certificate
has been granted may be produced for sale or exploitation.
4. A Certificate of Airworthiness is given to individual production
aircraft, engines, or systems identical to those for which Type
Certification has been granted. The Certificate of Airworthiness is
essentially a permit to fly and is conditional upon the aerospace device
being operated according to an approved flight manual and overhauled at
times specified by the issuing authority.
5. Request for Proposal (RFP) is a government term. The industry
equivalent is Bids and Proposal.