Industry Committee on Jan. 30th, 2023

[The Chair, Liberal, Joël Lightbound]

I call this meeting to order.

Good afternoon, everyone, and happy Monday.

Welcome to meeting No. 54 of the House of Commons Standing Committee on Industry and Technology.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, December 12, 2022, the committee is meeting today to study a contract awarded to Sinclair Technologies.

Today's meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022.

During the first hour, we have the pleasure of welcoming the Honourable Marco Mendicino, Minister of Public Safety, whom I thank for joining us.

We are also welcoming two officials from the Royal Canadian Mounted Police: Bryan Larkin, Deputy Commissioner, Specialized Policing Services; and Samantha Hazen, Chief Financial Officer.

I thank all three of you for being with us.

Without further ado, Minister Mendicino, I give you the floor for five minutes.

[Marco Mendicino, Liberal, Minister of Public Safety]

Thank you very much, Mr. Chair. I am very happy to see you.

I also hope that all the committee members spent some quality time with their families and loved ones over the winter holidays.

Colleagues, it is a pleasure and a privilege to come before you today to say a few words and answer your questions about the nature of this study regarding certain questions around equipment that was procured by the RCMP vis-à-vis Sinclair Technologies.

At the very outset, I would like to state a few things up front.

First, national security and protecting Canadians are my top priorities. Our eyes are wide open when it comes to foreign threats, which is why we have rigorous screening procedures in place when we procure equipment and services to support our public safety agencies.

Second, the RCMP has conducted a review of the procurement, installation and maintenance of equipment in this matter and concluded that, at all times, they followed the applicable policies and protocols.

Third, the RCMP further assessed there were no breaches of security as a result of the equipment in question, and that the risks, at the time of procurement, were—and remain—low.

Fourth, the RCMP has suspended the use of the standing offer, and all other contracting and transactions with Sinclair Technologies and Norsat International until further notice.

Fifth, and finally, I have instructed all agencies within my portfolio to apply national security screening protocols to all procurement contracts with the strictest of diligence, so as to ensure the ongoing integrity and protection of all public safety-related critical infrastructure.

I will now highlight a few key facts to inform your study.

The current standing offer completed by Public Services and Procurement Canada—I will refer to them as PSPC—for radio-frequency filtering equipment was issued to Sinclair Technologies Incorporated on October 6, 2021, for a period of three years, until March 31, 2024. There are two one-year option periods to extend the use of the standing offer until March 31, 2026. The total value of the standing offer is $549,637. To date, the RCMP has issued only three call-ups against the standing offer, totalling $55,073.

Further, a separate standing offer for antennas was completed by PSPC and used by the RCMP between December 2013 and December 19, 2018. Under this standing offer, there were 11 call-ups, and these were issued payments totalling $188,982 for antennas, radio shelters and radio-frequency filtration equipment to Sinclair Technologies.

In addition to the above standing offers, there were also 11 contracts for various antennas, radio shelters and radio-frequency filtration equipment totalling $234,606. Thus, for the RCMP, the total call-ups and contracts with Norsat, operating as Sinclair Technologies, are 25. They are valued at $478,661.

In addition to these contracts, there were 144 low dollar-value payments between the RCMP and Sinclair totalling $461,184 for radio communications equipment, repair parts and other related products.

Radio frequency filters allow radio users, including RCMP officers, to communicate more clearly by preventing interference and background noise.

The equipment procured by the RCMP under this standing offer is basically unpowered assemblies of tin cans, metal rods and cables that filter out unwanted signals and interference to help optimize radio performance.

Given these characteristics, I want to be clear that the equipment in question does not have the technical capability to access RCMP radio communications. Moreover, RCMP radio communications are protected with end-to-end encryption, using the Canadian centre for cybersecurity's encryption standard.

While the radio frequency filtration equipment procured from Sinclair Technologies poses no security concerns given its specific function, the use of the current standing offer was suspended on December 9, 2022, and a stop-work order for undelivered goods was issued as well, on the same date. Further reviews are being conducted by the RCMP's independent audit unit.

Again, there is no reason to believe that Canada's national security was under threat at any time during this process. Regardless, there is no shortage of real threats.

That is why we are continually striving to ensure the integrity of our democracy and the protection of national security.

We are making investments to provide all the tools that law enforcement and public safety officials need to protect Canadians and our institutions, including the critical infrastructure that supports the RCMP.

These efforts are ongoing and part of our broader goals to protect national security.

Combatting foreign interference is a complex challenge, particularly in today's geopolitical environment. That is why we are attacking it from all angles, continually re-evaluating our approach, making new investments in public safety tools and reinforcing our already rigorous protocols to safeguard our national security.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Minister.

We'll now start the conversation with MP Perkins for six minutes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, Minister, for being here.

Minister, under the Investment Canada Act, you and the Minister of Innovation, Science and Industry are responsible, when an acquisition is proposed by a company, to examine whether or not it poses a national security risk and to, if you believe it does, order a full national security review. Is that correct?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

In fact, it is accurate. Both I and the Minister of Innovation, Science and Industry work together in tandem, under the authorities granted under the Investment Canada Act, to screen investments where foreign dollars and corporate entities are at play to ensure that there are no national security risks that may compromise our interests. We do work together. It is a two-turnkey system.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

That's great. Thank you.

You are aware that China's National People's Congress passed a national intelligence law in 2017 to compel all Chinese nationals, at home and abroad, to collaborate with agents of the Chinese state, on request, to further Chinese state interests.

Specifically, article 7 says, “All organizations and citizens shall support, assist, and cooperate with national intelligence agencies in accordance with [the] law, and shall protect national intelligence”. Article 10 goes on to say, “As necessary for their work, national intelligence work institutions are to use the necessary means, tactics, and channels to carry out intelligence...domestically and abroad.”

You are aware of that.

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

Mr. Perkins, I want to thank you for giving us an overview of some of the highlights around that law.

Yes, indeed, I am aware that such a law was passed by the People's Republic of China, and that is precisely why we have put in rigorous screening protocols to guard against those types of investments and procurement—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Do you believe that state-owned enterprises from authoritarian governments like China's can pose a national security threat to Canada?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

I think we need to be ever vigilant when it comes to the risks, the threat factors and the potential foreign interference that may be posed by the PRC or, indeed, by other hostile actors, which is why we continue to be “eyes wide open”, which is why we make investments and which is why we introduced policies and protocols around the procurement of technologies, equipment and services that come from abroad. That is precisely what the RCMP did in this case.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Would that include Chinese scientists doing research at Canadian universities, as they have been for the last decade? Military scientists doing research at Canadian universities in sensitive areas such as AI, where they get access and help develop it and take it home to their state government in China—is that a threat to national security?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

You raise a very important point, Mr. Perkins. That is why, among other things, we introduced guidelines around research partnerships that involve foreign individuals and foreign entities in the research and academic sector. Those are guidelines that are rigorously applied.

We are deploying those strategies, along with other measures, not only to protect the academic and research sector in Canada, which is a driver of innovation, growth, prosperity and new ideas, but equally, with other tools as well, to guard against the risks that are posed by potential hostile actors so that we can be sure we are growing in a prosperous way but protecting all of our institutions at the same time.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I appreciate that, but it appears that you're allowing it to happen since there are hundreds and hundreds of research papers published in the last couple of years by the Communist Party's military commission—

[Han Dong, Liberal, Don Valley North, ON]

I have a point of order, Chair.

I hate to do this to Mr. Perkins, but I just took a look at the motion itself. It reads, “That the Committee, pursuant to Standing Order 108(2), undertake a study concerning the contract awarded to Sinclair Technologies,” and so on and so forth.

It seems to me that the focus of this study is on the contract, which was reported to be problematic in the media. I'm just wondering about the relevancy of those questions to the minister are to the study today.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll tell you the relevance—

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Dong.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It's a pattern that I'm trying to establish here.

[The Chair, Liberal, Joël Lightbound]

I hear the point of order.

I'll ask Mr. Perkins to be reminded of the text of the motion and pursue his six minutes, which is the time he has left.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll come back to that.

Perhaps you might want to answer the question anyway about the threat of hundreds of projects now going on with the Government of China military researchers at our universities.

When Norsat was acquired by Hytera in 2017, the then Minister of Industry, on behalf of the Government of Canada, obviously, and the cabinet, as the act requires, sent a letter to Norsat and Hytera saying that they didn't believe buying this telecommunications company posed a national security threat. They didn't do a study of this company, which the RCMP and the Canada Border Services hired to supply them with equipment.

I know that you were not the minister then, but you were part of the cabinet that chose not to do a security review of a state-owned Chinese enterprise buying a critical telecommunications business. Could you explain to this committee why?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

I'm sorry. What year did you say that was?

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It was in 2017.

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

I was not yet in cabinet, but that is quite irrelevant to the point.

It is more important for you to understand, and for the members of this committee to understand, that in every procurement, for every piece of equipment, service and technology, there are rigorous screening protocols put in place to guard against potential foreign interference.

I want to assure you that, in this case, the RCMP followed the due process that was required in the acquisition or—I beg your pardon—in the eventual contracting of certain equipment that involves radio technology, antenna technology and filters, prior to carrying out those call-ups I described in my opening remarks—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I appreciate that, Minister, but do you not find it troubling that two of our most important security agencies for protecting Canadians in this country, the RCMP and the Canada Border Services Agency—both of which you are responsible for—have chosen to buy technology and hardware from a company that is ultimately owned by the Chinese government?

You've now said you're going to put out a directive, but does that mean that, in the future, you won't be dealing with Sinclair, Hytera or Norsat? Will you be dealing with them in the future?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

I have two answers in response to your question.

In the first case, the RCMP assiduously applied the applicable policies and protocols in the case of the procurement involving radio technology, filtration and the like from Sinclair. That is an assurance that I provide to you and to all members of this committee.

Second, going forward, I have instructed my portfolio to apply, with the strictest of standards, all protocols as they relate to national security so that we can be sure, as we purchase equipment, technology and services, it is done in a way that preserves and protects the integrity of our public-safety-related critical infrastructure.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Hytera and its subsidiaries will be banned in the future. Is that what you're saying?

[Marco Mendicino, Liberal, Eglinton—Lawrence, ON]

We will continue to apply those protocols with the strictest standards of rigour.