What the AI-Powered Supply Chains Cluster (Scale AI) Funds: Eligible Costs and Coverage
Canada’s AI-Powered Supply Chains Cluster (Scale AI) provides non-repayable co-investment to accelerate the adoption and commercialization of AI across value chains. This article explains what Scale AI funds, the typical funding percentages, eligible and ineligible expenses, and how reimbursement works in practice.
Program Funding Overview
Scale AI co-invests in industry-led projects that bring AI out of the lab and into operational supply chains. The program focuses on AI adoption and AI commercialization projects that improve productivity, competitiveness, and ecosystem impact across sectors such as manufacturing, logistics, retail, healthcare, infrastructure, and construction.
Key points:
Funding model: non-repayable grant-style contribution (co-investment).
Disbursement: reimbursement of a predefined portion of eligible costs, typically on a quarterly basis.
Scope: projects that are collaborative, include at least one SME, and execute work in Canada.
Status: continuous intake for industry-led projects; some special thematic calls may have bespoke rules and timelines.
Typical project duration: usually 12–18 months; no formal maximum, but timelines must follow the project agreement.
As of the latest program information, Scale AI reports substantial total project investment committed and continues to fund projects with real-world supply chain impact.
Funding Amounts & Rates
While Scale AI sets no fixed minimum or maximum per project, industry-led initiatives should plan around these core principles:
Percentage coverage: up to 40% of eligible project costs for approved industry-led projects.
Cost share: the remaining share must be covered by project participants (cash and, where permitted, eligible in-kind as per agreement).
Special calls: certain themes (e.g., healthcare or specific national priorities) may apply different co-investment ratios or rules.
Timing of support: costs are reimbursed after they are incurred and substantiated, generally on a quarterly claim schedule.
Note: The exact funding percentage, cost-sharing mix, and category caps (if any) are confirmed in the contribution or master project agreement. Applicants should plan conservatively and validate assumptions with the Scale AI investment team during due diligence.
Eligible Expenses
Eligible expenses are those essential to executing the approved project scope and achieving measurable supply chain outcomes. Typical eligible costs include:
1) Labour and Professional Services
Salaries and wages of employees directly performing project tasks (e.g., data engineers, ML specialists, product managers, change management leads).
Employer-paid benefits proportional to eligible salaries, as permitted.
Contractor and consultant fees for specialized AI development, integration, cybersecurity, data governance, or commercialization strategy.
Time-tracking is generally required for internal labour.
2) Equipment, Materials, and Services
Purchase or rental of equipment critical to the project (e.g., edge devices, sensors, compute hardware used for pilots).
Materials and supplies required to build, test, and deploy AI-enabled solutions.
Software and licenses essential to the project (e.g., MLOps tools, analytics platforms, data integration middleware).
Cloud or hosting services directly attributable to the project’s AI workloads when necessary to scope.
3) Dissemination and Knowledge Transfer
Costs that are vital to project performance and results dissemination, such as stakeholder workshops, technical documentation, or non-promotional knowledge-sharing artifacts targeted at operational adoption and ecosystem benefit.
4) Travel and Accommodation (Project-Critical)
Reasonable travel and accommodation costs necessary to perform project activities (e.g., onsite data validation, cross-site deployment support, consortium coordination), aligned with program and organizational travel policies.
5) Capital Expenditures (Project-Essential)
Capital expenditures linked to and necessary for the objectives of the project agreement, when they are vital to successful delivery (e.g., pilot-scale production equipment, specialized imaging hardware for supply chain QA).
Capital items must be directly tied to the approved scope and justified as essential to outcomes, not general corporate upgrades.
Important: Eligibility depends on the final approved work plan and budget. Costs must be incremental to regular business-as-usual activities and traceable to the funded scope.
Ineligible Expenses
Scale AI focuses funding on incremental, project-critical costs. Expenses commonly considered ineligible include:
Normal, ongoing operating expenses unrelated to the project.
General corporate overhead beyond allowable indirects, if indirects are not expressly permitted in the agreement.
Sales, marketing, or promotional activities not essential to project execution.
Entertainment, hospitality, gifts, and gratuities.
Fines, penalties, legal disputes, and costs related to lobbying.
Debt servicing, interest, financing charges, and exchange losses.
Land or building purchases (unless explicitly approved and essential to the project’s scope).
Costs incurred outside the approved project dates or before the formal project start.
Costs unrelated to Canada-based execution, unless specifically authorized.
Recoverable taxes or refundable tax credits.
The definitive list of ineligible expenses is set by the program agreement. Treat the above as guidance and confirm specifics during contracting.
Expense Documentation Requirements
Reimbursements are evidence-driven. To support claims, applicants should prepare:
Detailed invoices and proof of payment (e.g., paid invoice plus bank record).
Signed contracts or purchase orders for vendors and subcontractors.
Timesheets for internal labour showing hours, roles, and tasks tied to the project work breakdown structure.
Payroll registers and benefits calculations proportional to eligible labour.
Itemized receipts for travel and accommodation with clear project justification and itineraries.
Asset records for capital items (serial numbers, commissioning evidence, allocation to the project).
Progress reports aligning expenditures to milestones, deliverables, and KPIs.
A consolidated cost ledger reconciling claimed amounts to the approved budget.
Retention: Keep all records for the period specified in the agreement, as projects may be audited.
Examples of Funded Projects
To illustrate the scope of what Scale AI can fund, here are realistic examples across sectors. Funding percentages are illustrative and contingent on final agreements.
Manufacturing predictive planning:
Scope: demand forecasting and production scheduling using ML; integration with ERP and MES.
Eligible costs: data engineering labour, MLOps platform licenses, pilot sensors on bottleneck lines, contractor support for integration, dissemination workshops for plant teams.
Budget example: $2,000,000 total; Scale AI co-investment up to 40% ($800,000); participants cover $1,200,000.
Logistics network optimization:
Scope: dynamic routing, yard management optimization, and inventory visibility across a multi-site network.
Eligible costs: internal data science team, route optimization software, edge devices for telematics pilot, consortium coordination travel, change management consulting.
Budget example: $1,200,000 total; Scale AI up to $480,000; balance funded by partners.
Retail supply chain resilience:
Scope: AI-driven inventory allocation and shelf availability analytics with real-time alerts.
Eligible costs: cloud compute tied to model training, vendor integration services, store pilot equipment, training for store operations teams, documentation for knowledge transfer.
Budget example: $900,000 total; Scale AI up to $360,000; partners fund the remainder.
Healthcare materials flow:
Scope: optimizing hospital inventory and sterile processing using computer vision and predictive replenishment.
Eligible costs: specialized imaging equipment for pilot, data labeling contractor services, internal clinical engineering time, dissemination of operational protocols.
Budget example: $1,500,000 total; Scale AI up to $600,000; remaining costs shared by the consortium.
These scenarios highlight the program’s focus on incremental, deployable AI solutions that create measurable value chain improvements and broader ecosystem benefits.
Funding Disbursement & Claiming Process
Scale AI reimburses a predefined portion of eligible costs after they are incurred:
1) Pre-conditions
Project approval and execution of the contribution or master project agreement.
Confirmation of the consortium and roles; membership with Scale AI is required before funds can be disbursed.
Finalization of the approved budget, milestones, and reporting cadence.
2) Quarterly claims
Submit claims quarterly with supporting documentation.
Align expenditures to approved budget lines and milestones.
Provide progress updates demonstrating outputs, outcomes, and any variances.
3) Review and payment
The program verifies eligibility, completeness, and alignment to scope.
Approved portions are reimbursed according to the co-investment rate and agreement terms.
4) Amendments and variations
Scope or budget changes require prior approval; submit change requests promptly.
Keep procurement documentation consistent with the agreement’s requirements.
Tip: Establish a claims calendar and internal cut-offs to avoid delays, and designate a financial lead for consortium coordination.
Stacking Rules
Projects frequently combine multiple funding sources. Plan around these principles:
Public funding cap: total government assistance from all sources may be capped; ensure combined funding remains within the limit defined in your agreement.
Disclosure: declare all other public support at application and in each claim.
Non-duplication: the same cost cannot be reimbursed by two programs simultaneously.
Timing: align program timelines so project costs fall within all participating funders’ eligibility windows.
Because stacking policies can vary by call or agreement, confirm limits, definitions (e.g., municipal, provincial, federal), and documentation expectations during contracting.
Real-World Budgeting Tips
Tie every cost to a deliverable: if a cost does not map to a milestone, it may be challenged.
Right-size capital: fund only what is essential for the pilot or initial deployment; defer broader rollouts to post-project scale-up.
Document labour rigorously: implement project codes in your timekeeping system from day one.
Validate cloud and software allocation: tag project workloads and export auditable cost reports.
Anticipate procurement lead times: long-lead equipment can threaten timelines; secure quotations early.
Plan dissemination smartly: budget for training, playbooks, and operational documentation to ensure adoption.
Build contingency with partner cash: ineligible or over-cap costs should be buffered by partner contributions, not assumed reimbursable.
Prepare for audit: keep a live evidence folder per cost line; reconcile monthly, not quarterly.
Conclusion
Scale AI co-invests in the essential costs required to develop, deploy, and commercialize AI solutions that strengthen Canadian value chains. Expect up to 40% reimbursement for eligible, incremental, Canada-executed project expenses, paid quarterly against well-documented claims. By focusing budgets on labour, critical equipment and software, dissemination, necessary travel, and project-essential capital, applicants can align with program rules and accelerate impact. If your team is planning a collaborative AI project with at least one SME and clear supply chain outcomes, use this guide to structure your budget, evidence, and claiming plan before you apply.
