Mr. Chair and members of the committee, thank you for this invitation. I will speak in English, but you may ask your questions in the official language of your choice.
I just want to say, as a preamble, that I think it's really important that we put partisan politics aside. The report this committee is going to write is incredibly important, because this is about the legislative branch holding the executive to account. The basic principle of the Westminster parliamentary system here, which is ministerial responsibility, has failed us. You've already heard that AECL is not being held to account. It was not held to account by its board, and it was not held to account by the minister.
I will try to explain to you why I think what happened here is absolutely unacceptable and reflects the cognitive dissonance that we have in this town, where we talk about diversifying and protecting Canadian sovereignty, and then we sell the Crown jewels or effectively give the Crown jewels over to Americans to manage in contracts.
The CNL contract that is the subject of this meeting was not competitive. As you heard in previous testimony, there was a single bidder. Awarding a seemingly uncompetitive bid to a U.S. consortium with no actual Canadian participation raises questions about the way the bid itself was structured and the way CNL is structured. That cognitive dissonance, at a time when the government is making a big deal about diversification, raises four concerns: value for money, sovereignty, national security and accountability.
Instead of swapping out management when we went to the GOCO structure, the new structure simply created a new layer of management, so now, instead of one layer of management, there are three layers of management: CNL, AECL, and the contractor, NLPC. That's efficiency the Canadian way.
At the time of the first GOCO contract, in 2015, two of the companies that made up the consortium were Canadian. All companies that are now part of the consortium are U.S.-owned. Nordion and Kinectrics have since been acquired by U.S. entities. Some of these companies are direct competitors to CNL, because Kinectrics and BWX do the same work that CNL bids on.
These companies earn far more from their U.S. operations than they do from the CNL contract. Where do their loyalties lie? Online testimony suggests that CNL contract priorities over the last 10 years were driven by maximizing profitability of the U.S.-led GOCO, not what was best for Canada.
At stake in the new contract are administrative barriers to be put in place by CNL to avoid conflicts of interest and access by contractors to intellectual property held by CNL. Those barriers are largely dependent on cybersecurity and information management. Given that Canada has no cybersecurity legislation for critical infrastructure, contrary to Mr. Dermarkar’s previous testimony at this committee, my level of confidence in any such barriers—let alone their effectiveness—is very low. By way of example, the first regulations on cybersecurity for nuclear were introduced only in late 2025.
There is also a broader strategic issue with American companies managing the direction of CNL, since the contract effectively reduces CNL to a service provider. The contractor sets priorities and decides who controls IP and whose industrial base benefits from Canadian public investments, basically telling CNL what work to do and what work not to do.
Currently, there is a quasi race to design, construct and build secure supply chains for small nuclear reactors. Ontario is spending $1 billion on small modular reactors. Moreover, defence applications are part of Canada’s SMR action plan. National Defence is looking at a subset of SMRs known as micro modular reactors for use in the Arctic and at some bases.
When the U.S. political executive is keenly interested in the Arctic and threatening to annex Canada, does Canada really want U.S. companies to have access to dual-use IP and proprietary strategic Canadian nuclear information, such as what, when and where Canada might place SMRs in the north? Would that not be detrimental to Canadian national security? The government purports that its intent is to protect Canadian sovereignty, yet it allows foreign actors to set strategic directions at Canada’s only national nuclear laboratory.
In awarding the CNL contract, AECL made an economic decision that considers neither national security nor sovereignty. The bid was reviewed only by AECL and its government-appointed board. There appears to have been no external review or accountability for the way AECL awarded the contract, and had the bid not gone through, that would have jeopardized AECL's existence and the jobs of AECL management. The bidding process, in my view, was neither fair nor accountable.
What needs to happen? I have six points.
One, conduct an independent threat and risk assessment of the contract. This assessment should be carried out not by a government agency but by an independent third party that is completely unbiased.
Two, conduct an economic review on whether the labs operated any more efficiently under the previous contract to see if there were real cost savings. By going from one layer of management to three, I would venture to guess that there were no cost savings.
Three, if that turns out to be the case, then fold AECL. Turn CNL back into a Crown corporation, thereby eliminating triple layers of executive management. Hire new management at CNL based on clear metrics of competency, KPIs and accountability. The U.K. tried the GOCO model and has reverted to the previous model. We can learn from our allies.
Four, establish a new accountability structure, different from the GOCO model. To be sure, there were inefficiencies, but as the U.K. shows, a GOCO is not the only solution.
Five, this matter reflects broader, systematic issues with government accountability. Why is NRCan only getting involved now, after AECL was effectively unaccountable for the last 10 years? Who holds AECL to account? The fact that Elizabeth May raised the issue shows a continuity in the executive's disregard for ministerial accountability.
Six, the Canadian Nuclear Safety Commission has the same problem: no accountability.