There's no lack of controversy around the sale of MDA, and some suggest the U.S. considers its Radarsat-2 satellite technology a threat that must be contained

While controversy swirls on Parliament Hill, local business leaders decry the proposed sale of MacDonald, Dettwiler and Associates (MDA) to an American military contractor, and some even suggest greater reasons for concern than the loss of technology developed with public money.

Last week, MDA president Daniel Friedmann argued in favour of the proposal before a parliamentary committee, a deal that would see the company's space systems division sold to Minnesota's Alliant Techsystems in an all-cash deal worth $1.325 billion.

While he told politicians that the sale would not harm Canadian sovereignty and that Canada would retain control over the unique Radarsat satellite technology the company owns, opinion remains divided over whether the federal government should give its OK.

"I think it is a very big concern," Adam Chowaniec, chairman of the board at Tundra Semiconductor and chair of the Ontario Research and Innovation Council, told the OBJ.

Mr. Chowaniec, who's worked on both sides of the border over a multi-decade tech career, has bemoaned the sale of Canadian companies to foreign interests before. He compared the pending sale of B.C.-based MDA to IBM buying Ottawa's Cognos.

"When we lose technology companies, it undermines the whole business framework from which new companies can grow," he said. "It isn't just MDA, (which) is a particular case because of all the government money that went in."

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But companies like Cognos and ATI – I mean, we've essentially lost intellectual property (IP) that took 30 years to build."

Mr. Friedmann insisted that control of Radarsat-2 technology – able to provide the highest-quality scans of the Earth no matter what the weather or time of day – would remain in Canadian hands.

The only reason the company was sold, he said, was to recoup the $200 million it had invested in the technology, and to gain access to lucrative markets south of the border. But Mr. Chowaniec said gaining market access can be resolved with bilateral effort.

IMPROVE ACCESS TO U.S. MARKETS

"If the issue was access by MDA to the U.S. markets, we should be working with the government to make that a possible thing, rather than just selling the company," Mr. Chowaniec said. "There are restrictions, (but) that's a place where the government should get involved and give companies some help, rather than seeing this stuff disappear."

Before granting approval, the Canadian government should ask itself whether it needs to negotiate guaranteed access to the technology, said Allen-Vanguard CEO David Luxton.

"Unless the Canadian government negotiates access up-front as a condition to approving the sale, then under U.S. ownership the technology will become ITAR-controlled under U.S. law, and it will be very difficult or impossible to obtain," he said. "It will even be unlawful for Canadian staff of MDA with certain foreign backgrounds to continue working on the technology, so jobs may be at risk."

But John Reid, president of the Canadian Advanced Technology Alliance (CATA), said it was in the federal government's interest to refrain from interfering, lest the shoe be on the other foot down the road.

"Investors should have some say in the future direction of the company," he said. "And in this case, the Canadian government and taxpayers were investors. (But) while this opinion should be factored in, CEOs cannot have their hands tied (or be) limited in the options they have available to grow their enterprises," he added. "This equally applies to U.S. or international companies that are purchased by Canadian (ones)."

Mr. Reid said government and industry groups like CATA are better off creating incentives for companies with foreign ownerships to retain an expanded presence in Canada.

Canada should do "anything it can to encourage added value, in terms of product mandate, the expansion of the workforce, (and) new product sets," he said. "Just because the ownership changes, it doesn't mean you're going to lose the value add to the economy."

PLOT TO CONTROL TECHNOLOGY?

Local tech entrepreneur and federal Green party candidate John Ogilvie said the reason for the "sudden" American interest in MDA is strategic, an attempt to get at MDA's IP.

Alliant, he said, is part of the U.S.'s "military-industrial complex." Whoever controls the Radarsat-2 technology could fully report on the goings on of the American military throughout the world. Someone with access to $1.3 billion in cash wants that ability capped.

Mr. Ogilvie said the sequence of events made him suspicious.

"The timing of the transaction makes you say 'hmmm,'" he said. "NASA refused to launch Radarsat-2 because it's a national security threat. (After) we do get it launched by the Russians, a U.S. firm buys (MDA) less than a month later."

Canada offered to share data collected by the satellite with the U.S., as it did with Radarsat-1 in exchange for its launch, but the deal wasn't exclusive, said Mr. Ogilvie, and the U.S. did not want other countries knowing details of its military operations.

Canada is in a bit of a pickle, said Tom Brzustowski, author of The Way Ahead: meeting Canada's productivity challenge and a professor at the Telfer school of management at the University of Ottawa.

He resisted making comparisons with the cancelled Avro Arrow program of 1959, saying that the Arrow was unproven and possibly obsolete, whereas Radarsat technology is very good, and quite proven.

"The emerging possibility that Canada could lose a strategic, publicly funded asset in a private transaction reveals a startling lack of foresight in the upstream arrangement," he said.

"In addition, (Radarsat's) strategic context is not the least bit ambiguous. It is needed to help assert Canada's sovereignty in the Arctic," he said. He believes the sale should be blocked and that the Canadian government negotiate an alternative deal with MDA.

Industry Minister Jim Prentice, who has the final say on the proposed sale, is scheduled to make a decision on April 19.