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Ottawa to put $650M into spy gear upgrades
Canadian high-tech firms won't be allowed to bid
David Pugliese
CanWest News Service

OTTAWA - The Canadian government is spending more than $650-million to improve its links with the top U.S. spy agency and to upgrade communications systems and codes over the next decade.

The program was started after a decision by the U.S. National Security Agency, the American government's electronic eavesdropping organization, to replace all its cryptographic equipment over a 12-year period. To continue operating with the United States and allies who use such American gear, Canada must adopt a similar upgrade program.

The upgrade will allow the continued exchange of sensitive information between allies and will better protect such data from prying eyes. The Canadian Forces and the Department of National Defence operate about 80% of the equipment to be modernized, but other federal agencies are also upgrading their gear.

Defence Department spokesman Lieutenant Paul Pendergast said the military's portion of the program is expected to be completed around 2016. The first part of the modernization project will be unveiled in January and will involve a more secure telephone communications system for the Defence Department.

Lieut. Pendergast said Canadian firms will not be allowed to bid on the program because such sensitive equipment can be obtained only from the U.S. government.

American defence analyst John Pike said the expense is unavoidable because Canada is closely allied with the United States, which sets the standard for such equipment. "You have to do it unless you're prepared to sit out the rest of the 21st century," said Mr. Pike, director of

The Conservative government has been putting much emphasis on rebuilding relations with the United States, which suffered under the Liberals. Prime Minister Stephen Harper is in Washington this week for what government officials are characterizing as a trip designed to discuss security and trade issues.

Thursday, he will meet with U.S. President George W. Bush for a get-together that Michael Wilson, Canadian ambassador to the United States, predicts will "result in a closer working relationship between our security and intelligence forces."

The upgrades for Canadian communications and code equipment will be co-ordinated by the government's electronic spy agency, the Communications Security Establishment.

There has been concern in the intelligence community that equipment used to transmit and store secret information might be at risk because of improvements in technology.

Lieut. Pendergast said Canada has an ageing inventory of cryptographic equipment that forms the backbone of secure communications not only within the Defence Department but with other federal agencies.

"Business in the national interest cannot be conducted safely if this equipment is no longer capable of protecting the information being transferred and stored," he said. The Lieutenant noted that Britain, Australia and New Zealand are also working on modernizing similar equipment.

For security reasons, the Defence Department will not be releasing details about what type of other cryptographic equipment will be purchased or when that might happen, he said.

The Canadian government has already purchased sensitive communications gear from the National Security Agency. In the past three years, it awarded more than $42-million worth of untendered contracts to the NSA.

Government officials declined to detail what has been purchased, other than to say some of the contracts involved buying secure telephones. Such contracts involved Foreign Affairs and International Trade and the Canadian Security Intelligence Service, among other agencies.

Some critics, however, have questioned why Canadian companies have been excluded from the process, noting the country's high-technology firms are capable of building such equipment and have the necessary security clearances for such a project.

The upgrade program comes as the Canadian Forces receives a major injection of funding for other equipment purchases. Last week, the Harper government announced it is spending $17-billion on new aircraft, trucks, ships and helicopters.

Those purchases have been greeted with approval by U.S. political and military officials as well as by NATO representatives.

U.S. defence industry officials are also positive about the moves. American aerospace and defence firms are expected to be awarded a major share of the equipment programs since Canada wants to buy the Boeing Chinook helicopter, the Boeing C-17 strategic transport aircraft and the Lockheed Martin C-130J transport plane.

© National Post 2006

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