DND at risk of losing Canadian spy systems to U.S.
Latest technology will be off limits to us after space firm's sale, critics warn
David Pugliese, The Ottawa Citizen
Published: Saturday, March 08, 2008

Canada's military could find itself cut off from using new generation Canadian satellite technology to keep watch over the Arctic and other key areas after the British Columbia company which developed the systems is sold to a U.S. firm.

Defence Department officials have been in contact with MacDonald Dettwiler and Associates of Richmond, B.C., trying to find out about the security implications of the proposed sale of the company's space division to Alliant Techsystems of Minnesota.

Alliant announced in January it was purchasing MacDonald Dettwiler and Associates, known as MDA, for more than $1.3 billion. The deal still has to receive approval from the Harper government, but company officials expect that by the end of April.

MDA, Canada's main space company, built and owns the government-funded Radarsat-2 satellite. Radarsat-2, launched in December, will still gather images for federal departments as well as the Canadian Forces, and one of its first jobs is to monitor activity in the Arctic.

But the concern the military has centres on new generation surveillance systems that MDA has developed which are said to rival even the spy satellite technology used by the Pentagon.

Alliant Techsystems officials have acknowledged that this technology is one of the reasons they want to buy the company and they intend to use the Canadian systems to win secret spy satellite contracts from the Pentagon in the future.

But if that happens, the technology would then be declared off-limits for Canadian use, says Hugh Thompson, an MDA spacecraft systems engineer and Paul Cottle, a former MDA optical engineer.

"Only U.S. citizens are allowed access to U.S. classified information," said Mr. Thompson, who represented a group of MDA employees when he testified this week in front of a Commons committee examining the sale.

"Canada will lose access to technology that has been developed by Canadians in Canada for the benefit of Canada." As an example, Mr. Thompson said when MDA was owned by a U.S. firm in the late 1990s, Canadian employees were prevented by American regulations from working on even non-secret programs.

MDA returned to Canadian ownership in 2001 and the federal government pumped hundreds of millions of dollars into the company to build it up as the nation's premier space industry firm.

Mr. Cottle, who quit MDA rather than work for Alliant, predicted that after the U.S. company obtains the B.C. firm's sophisticated technology, that will be the last Canada sees of it.

Once the technology becomes part of U.S. classified programs, no foreigners, even those who developed it, will be allowed access, said Mr. Cottle, a U.S. citizen.

"That's just the way it works in the U.S.," he explained. "And once that happens, MDA jobs will be lost." Both men stress they cannot discuss the specific work MDA has under way because it is proprietary information owned by the company.

Under the deal, Alliant would receive ownership of the $524- million Radarsat-2, the Canadarm robot arm technology, and a wide variety of other space systems.

MDA publicly acknowledges that the radar on board Radarsat-2 can view objects smaller than three metres in size from 800 kilometres in space. Other technologies it has on the drawing board will advance that capability.

The Defence Department declined to provide a specialist in military space capabilities to discuss the issue. A defence official said questions related to the sale of MDA and its impact on defence projects and national security should be answered by Industry Canada. Industry Canada did not respond to a request for comment.

MDA responded in an e-mail that "its capabilities continue to be of interest to the Canadian Government, and more specifically, to the defence community. There will be no change in MDA's ability and/or desire to offer them." Industry Minister Jim Prentice will have final say on whether the deal goes through. He is expected to make his decision by either the end of March or April.

Since the new technology is not under contract yet for any federal program, MDA has no obligations to provide it to the Canadian government or military, say industry observers.

Paul Dewar, the NDP MP for Ottawa Centre, called on the government yesterday in the Commons to put a stop to the sale because it could hurt Canada's national security, economic and scientific interests.

MDA has 3,000 employees, with most in Richmond, B.C., Brampton, Ont., and Montreal. About 50 workers are in the Ottawa area. Roughly 1,900 of its employees would transfer to Alliant Techsystems and the remaining workers would stay with MDA, which would focus on its current Internet-based financial information systems.

In a previous interview, Magued Iskander, MDA executive vice-president of information systems, said he does not foresee any job losses. Mr. Iskander said MDA will benefit from the sale since Alliant can open up new markets in the U.S. "Certainly for our U.S. customers, access to (our) intellectual property will be advantageous," he noted. "I think it's win, win, win all around." Alliant officials say they intend to bring more work to MDA once they gain control of the company.

MDA dominates Canada's space industry, providing the Canadarm technology for NASA's space shuttle and the international space station as well as satellites for the federal government. It has a number of key Canadian Forces space projects on the go, including a $60-million program to use Radarsat-2 to monitor the country's ocean approaches and Arctic.

© The Ottawa Citizen 2008