Can a private sector company contract some of the research within a project to a university?
They can contract discreet parts of the project to universities, but not the entire project. For any significant involvement in the project, it would be preferable to have the university join the project as a participant. Everything else being equal, a proposal with private sector companies and universities as research partners will be viewed more favorably than proposals in which the university does only contract research work for the private sector company. Also note that the ISTPCanada funds to the company are given as loan repayable only on the commercial success of the project where as the funds provided to the academia is given as a grant.