Industry Committee on April 3rd, 2008

[Carl Marchetto]

Yes.

[Raymond Simard, Liberal, Saint Boniface, MB]

But there is a priority. Canada now has a priority. That would no longer exist once the satellite is taken out of circulation, correct?

[Carl Marchetto]

On RADARSAT-2?

[Raymond Simard, Liberal, Saint Boniface, MB]

Right.

[Steven Cortese]

The contract that exists currently is for the operation of RADARSAT-2 and Canada's receipt of inventory product from that under terms that have been negotiated and that would be sustained pursuant to the acquisition, over the life of that satellite. To the extent that follow-on satellites are constructed, the Government of Canada, through CSA, would enter into whatever form of agreement it would seek with MDA/ATK, if we were the producer or competitively acquire it, as Mr. Friedmann made reference to—the follow-on constellation opportunity.

So those terms and conditions would be offered by the Canadian government, and then we would determine how best we could respond to that competitive opportunity.

[Raymond Simard, Liberal, Saint Boniface, MB]

So if Canada does not sign further agreements with ATK/MDA and the satellite is out of circulation in seven years, basically ATK can decide who it wants to give priority to. Correct?

[Steven Cortese]

The Canadian priority would exist throughout the life of that satellite.

[Raymond Simard, Liberal, Saint Boniface, MB]

Right, which is seven to ten years.

[Steven Cortese]

Right.

[Raymond Simard, Liberal, Saint Boniface, MB]

Okay, so we agree.

[Steven Cortese]

Any subsequent satellites then would be the matter that would be determined by the Canadian government, what it wanted, and then I think the offerers of that satellite would respond to the terms set by the Canadian government. But for the life of RADARSAT-2, the prerogatives and priority of the Canadian government are locked in under the contract that we accept through the acquisition.

[Raymond Simard, Liberal, Saint Boniface, MB]

One of the comments that were made was “to my knowledge”, and that is very vague, for me. I would think this is probably the main concern of this committee. I don't want to speak for my colleagues out there, but it seems to me that when we launched the Telesat 2, it was supposed to be launched by NASA and at the last minute they decided not to do it. Mr. Friedmann told us it was because of technical problems. We're told it's because NASA had concerns for its national security, or the States had concerns for its national security.

So again we see where national security trumps pretty well everything else, any commercial deals. So you can understand the skepticism or the concern here. When Mr. Marchetto says, “To my knowledge, U.S. law will not trump this act that we have in place right now”, it's of major concern to us.

It would be nice if you could come back to us and say in writing that U.S. law will not trump Canadian law in this case. Is that possible? A legal opinion from your firm or—

[Steven Cortese]

Again, some elements of that are governed by agreements between the two governments, which have a mechanism to resolve—

[Carl Marchetto]

We don't have visibility to that now.

[Raymond Simard, Liberal, Saint Boniface, MB]

I'm sorry, you don't have...?

[Carl Marchetto]

Visibility to those agreements. Those are intergovernment agreements.

[The Chair, Conservative, James Rajotte]

Mr. Simard, you have a minute left.

[Raymond Simard, Liberal, Saint Boniface, MB]

Mr. Brison will ask a question.

[The Chair, Conservative, James Rajotte]

A very short question, Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

As always.

Sir, you've said a number of times that the technology will remain in Canada. Your CFO is saying that the technology will be transferred to the U.S., will be moved to the U.S. for the U.S. space business and to go after a growing classified U.S. market.

If this technology is not only in the hands of an American-owned company—whether it's a subsidiary, domestic, or foreign is irrelevant—and if the technology is transferred to the U.S., it is very clear under U.S. law, and I have that law here, that the American government will have control over the images and the technology. Unless you're going to seek some sort of congressional legislative means or amendment, I don't think you can defend it any other way.

[The Chair, Conservative, James Rajotte]

Thank you for that brief question, Mr. Brison.

Mr. Cortese.

[Steven Cortese]

Mr. Brison, referencing Mr. Shroyer's comments at that investor conference, he was speaking to future satellite programs where ATK would be the lead offerer, on behalf of our combined company, to the U.S. government. It doesn't apply to any activity or capability related to RADARSAT-2, which is currently flying.

I believe he was speaking specifically to the point that if the U.S. government seeks to procure additional types of satellites, we might have an opportunity to compete. But again, that would be subject to the technologies, governance, and release by the Government of Canada for any application outside of Canada.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Brison.

We'll go to Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you for appearing before us today, Mr. Marchetto and Mr. Cortese.

Do you know anything about Canadian politics?

[Carl Marchetto]

I do know—