Industry Committee on April 1st, 2008

[Daniel Friedmann]

Absolutely. The Canadian government has a contract with our company to receive all that data. CSA just told you that. The Canadian foreign affairs ministry regulates everything about that satellite: when it's on and off, who gets to see what, and under what priority. It's all done from Canada, from a Canadian government facility. I cannot even get in it without Canadian government approval--by Canadian citizens. It's Canadian.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

A number of scientists, including those at the Université de Sherbrooke, use RADARSAT images for their research. They are very concerned about RADARSAT passing into foreign ownership. They are wondering whether they will still have access to RADARSAT images under the same terms and conditions that are currently in force. Will the same financial conditions and so forth apply? They are also wondering how the intellectual property arising from their own research will be affected.

Could you provide us with some clarification on these two points?

[Daniel Friedmann]

I think I've answered the question on the access to satellites. There are no issues. We have a binding contract. You can put all our executives in jail. I lived under the U.S. ownership for five years and I did what Canada wanted. The contract was awarded to a 100%-owned U.S. company--not 67%--over that time. There's no issue with their access to their stuff.

As far as their intellectual property is concerned, it's their intellectual property. I can't understand how the U.S. government would have anything to say about their intellectual property. If they're processing images, they're processing their intellectual property.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Could the U.S. invoke the Patriot Act to refuse access to Canada? Could the Americans refuse us access on the grounds that the data relates to strategic military information? Or will Canada and the provinces continue to have access to this information?

[Daniel Friedmann]

I'm not an expert, but my understanding is that anything that's done in Canada, the Government of Canada has access to. MDA or ATK do a fair amount of business in the U.S. right now. We do business in the States, and we do things in the U.S. that might not be accessible to Canada, just like the Canadian stuff is not accessible to the U.S. But what is done for Canada in Canada will always be accessible to the Canadian government and cannot be exported out of Canada without Canadian government approval.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Our scientists believe that RADARSAT is a true asset in the field of aerospace research. Are you not worried that Canada will lose its international status in the field by abandoning RADARSAT to U.S. interests?

[Daniel Friedmann]

Canada is in no way abandoning RADARSAT. Canada bought data. It will receive that data over the next seven to ten years. Canada has full control over the satellite. I don't see what Canada is abandoning at all. I don't understand.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

We have a privileged status in the international aerospace community as the country that developed RADARSAT; I believe that, by selling to a U.S. company, we will seriously undermine research in Canada. I am concerned that we are hollowing out our research centres and that, in doing so, we will lessen interest in our research.

[Daniel Friedmann]

Nobody is doing anything about any research centres. Nothing is changing. The original contract was awarded to a U.S. company in competition with a Canadian company.

[The Chair, Conservative, James Rajotte]

Merci, Madame Brunelle.

We'll go to Mr. Hanger, please.

[Art Hanger, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chairman.

Thank you, Mr. Friedmann, for appearing before this committee. It's not my regular committee, but I do have an interest in the issue.

I think your company is certainly to be commended for developing this technology. I do believe it is cutting edge, and it is going to serve whoever ends up with the product very well, I would think. I'm trusting it's going to be Canada in total, not just with the assets that are there but a lot of the intellectual property.

I'm curious about a couple of things. The satellite was constructed, and I actually saw the satellite just before it was sent up into space, not by NASA or the U.S., but by the Russians. Obviously there was some sort of concern that the Americans had. I've heard several reasons—one, it didn't fit on their rockets, and another, there was too much vibration—that Russia was chosen instead, because of their robust rocket system. But the Americans actually refused to launch it, and I'm curious as to why.

[Daniel Friedmann]

My understanding is that we had a launch contract with Boeing. It was going to be launched by the Americans. Our technical team came to a certain milestone, and at that milestone the launch vehicle did not meet the vibration requirements of our spacecraft. It would have destroyed it. We made the tough decision to switch contractors, which cost us money and time, and we moved over to a Russian launch. The American government understood that and granted all the agreements that were required to do that, and we went to space.

[Art Hanger, Conservative, Calgary Northeast, AB]

That's interesting.

The total investment I think is somewhere in the neighbourhood of $445 million. There was a substantial cost overrun, I understand, on that. Was it something like $200 million?

[Daniel Friedmann]

No, it wasn't that big.

[Art Hanger, Conservative, Calgary Northeast, AB]

What was the cost overrun?

[Daniel Friedmann]

First of all, Canada is paying for data, so all cost overruns, operations, and everything are our problem—MDA's problem. The total cost of RADARSAT-2 to MDA is in the order of $200 million, and the total cost to the Canadian government is $445 million, I think I heard.

[Art Hanger, Conservative, Calgary Northeast, AB]

Right. But I think if you look back at the original contract, wasn't it somewhere in the neighbourhood of $225 million, the total cost was somewhere in the neighbourhood of $305 million, and MDA would contribute $80 million? So additional investments obviously came out to another $220 million on the part of the Canadian government.

[Daniel Friedmann]

I have two clarifications. MDA's original contribution was in the order of $180 million. We just got shortchanged on $100 million of that because we are supposed to pay for all the operations and nobody considers that. The $80 million was construction. We spent more than $80 million on construction. That's why I said it was a total of $200 million.

In terms of the Canadian government investment, the original program was that Canada was putting in the money you mentioned, we were putting in the money I mentioned, and Canada was arranging for a free launch--not to be confused with a free lunch--from the U.S. government in exchange for whatever they were going to do with the U.S. government. The U.S. government did not come to the party as the king with RADARSAT-1.

The Canadian government of the day made the decision to continue with the program and basically financed the U.S. contribution, and today we have RADARSAT-2.

[Art Hanger, Conservative, Calgary Northeast, AB]

As you have explained, the agreement is that Canada will receive its contribution back through imaging and data.

The shelf life of the satellite is, what, seven years?

[Daniel Friedmann]

The design life of a satellite is seven years, but satellites are a bit like humans. Once they make it through the first few months, they live a lot longer than their expected life. RADARSAT-1 has outlived itself 30%.

[Art Hanger, Conservative, Calgary Northeast, AB]

Right, but it's all based on the seven-year....

[Daniel Friedmann]

Everything is calculated on seven years.

[Art Hanger, Conservative, Calgary Northeast, AB]

Will Canada receive $70 million worth of data a year?

[Daniel Friedmann]

Canada will receive whatever data it orders, and they expect to order the $450 million over the seven to ten years, yes. There is no limit from our part.

[Art Hanger, Conservative, Calgary Northeast, AB]

I believe you were in the room when CSA was making their presentation.