Industry Committee on April 1st, 2008

[Daniel Friedmann]

No, no. To do business you have to have operations in the country. I can get a Canadian government contract and I can subcontract, like I did with the bus to Italy or a launch to the United States. A U.S. company can get a U.S. contract and subcontract with me to do a radar payload. So through the ATK partnership, we will jointly be able to win work in the United States that MDA could not win before, and MDA will be able to execute part of that work in Canada.

[Raymond Simard, Liberal, Saint Boniface, MB]

What do you see happening with regard to a possible brain drain? Obviously, MDA is one of the most advanced companies when it comes to this. There are 1,100 jobs apparently at your place. What will happen in terms of jobs staying here and jobs going to the States?

[Daniel Friedmann]

As I mentioned, the number one reason we picked this option was to maintain the jobs in Canada. That's what I'm trying to do. But the only way you can have jobs is to have work, and I need work.

We can't just have any work. It doesn't matter that Canada decides to do $1 billion a year in space; if they're not going to build a space station for whatever it costs the United States.... I have to participate in that work, otherwise I'll be a side issue. I have to participate in the U.S. programs, otherwise we cannot be world-leading.

[Raymond Simard, Liberal, Saint Boniface, MB]

Should we not be concerned, as parliamentarians, that the remote sensing satellite information that we basically bought through years of investment--$445 million, you were saying--will now be shared with another country? And post-9/11, security seems to trump everything else. Should we be concerned in that regard in terms of who would get information first and who would benefit from it first if we ask for it?

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Simard.

Go ahead, Mr. Friedmann.

[Daniel Friedmann]

You should be concerned. To my knowledge, it's completely taken care of by the very competent people in our government, dating back many, many years.

[Raymond Simard, Liberal, Saint Boniface, MB]

You are saying that we should not be concerned.

[Daniel Friedmann]

You should ask the Minister of Foreign Affairs, but I think it's taken care of.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Friedmann.

Thank you very much, Mr. Simard.

We'll go to Mr. Stanton, please.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Welcome, Mr. Friedmann.

This is a very intriguing topic. I wonder if I can take you back to some of your early comments with regard to this difference between ownership and control. I'll use as an example RADARSAT-2, a satellite that was developed by MDA, a private company, in contract with the Government of Canada. You've told us today that in fact on a day-to-day basis, its operational control is Canadian. In other words, in the place where they task this satellite, it's all, I assume, Canadian Space Agency staff that are basically running this.

[Daniel Friedmann]

Well, it's our staff, under contract with the Canadian Space Agency, in their facility.

[Bruce Stanton, Conservative, Simcoe North, ON]

Okay. It's MDA staff working out of the unit in Quebec. I can't remember the exact location. So they're there.

You're now using this satellite to sell other commercial imaging services to other customers, be it the U.S. government or somewhere else in the world. We understand the control with respect to the contracts and the deliverables the agreement required, but now you're using this satellite to sell product to other people. When those contracts come in, is it the same group of people? Is it still Canadian control that tasks that satellite for these other contractors?

[Daniel Friedmann]

It is the same group of people under the same facility under the same rules.

[Bruce Stanton, Conservative, Simcoe North, ON]

Will that continue even if the shareholding mix changes under this proposed agreement?

[Daniel Friedmann]

Yes.

[Bruce Stanton, Conservative, Simcoe North, ON]

Okay, that takes me to the next question. You said that we have roughly a seven- to ten-year timeline. Is it seven or ten? What is the distinction there?

[Daniel Friedmann]

It's as long as the satellite lasts. RADARSAT-1 has lasted more than ten years, and it's $400 million--I forget the exact figure.

[Bruce Stanton, Conservative, Simcoe North, ON]

Is there a sunset point? Is there a point at which the undertakings by the government are now satisfied, when we've gotten our money's worth, and the satellite is still owned by MDA or its parent or its new company? Are you then free to do with it what you wish?

[Daniel Friedmann]

No. There's a point at which we fulfill our contractual obligation to deliver x amount of data, but that satellite is controlled under the laws of Canada forever.

[Bruce Stanton, Conservative, Simcoe North, ON]

That is until the day it drops out of the sky.

[Daniel Friedmann]

We have to drop it specifically according to their instructions. We can't drop it anywhere.

[Bruce Stanton, Conservative, Simcoe North, ON]

Very good.

In regard to going forward, we've heard that satellites, of course, have a stale date on them. As we go forward now, as far as you understand, does Canada have the rights to the kinds of technologies that were developed for RADARSAT-2, such as RADARSAT constellation, for use in its future projects? Whatever else might come, we're going to be continuing this technology. Can we make sure that we're building on some of the work that's already been done? Do we still have access to that, or could we be in a spot wherein a foreign-controlled company could take that away and we'd be starting from scratch?

[Daniel Friedmann]

No, you absolutely have access to that. The technology has been developed. In the case of RADARSAT-2, it's our technology, MDA's technology, that was the innovation. We're bidding that technology and a parallel technology we developed for the RADARSAT constellation. That technology resides in Canada. It cannot leave this country without an export permit. The technology is available for use by the Canadian government. We certainly intend to keep it, and ATK does too. As you heard, half the money of the CSA that's contracted out comes through MDA.

Now, if the U.S. government were to pay any company to build some technology specifically for them that they decided was classified, well, that would stay there. But it would only be that extra piece.

[Bruce Stanton, Conservative, Simcoe North, ON]

You may have covered this at another time. Just refresh my memory if that is the case. Has MDA looked at its prospects to move forward, to market its products more broadly in the world? How many other companies were more or less on the consideration list besides ATK? When you went out to look at this, were there multiple proposals that came your way?

[Daniel Friedmann]

Yes. In the end there were three proposals. Before that, there were a few more, but it got down to three.