Sort of, I'm hesitant to say surveillance, since its less of 'running spyware' or something similar and more 'tracking student commit history'; where it gets weird is this section of the paper:

In our system, the Makefile or Project file that compiles the project contains Git commit and push commands to automatically commit changes into the student repository. Using this system, changes are tracked every time the project is compiled. When a student modifies a source file as a part of the program-build-test- debug cycle, the Makefile commits and pushes the recent changes into source control. This creates a fine-grained sequence of commits that tell the story of how the program was developed.

They basically force-commit to your repo whenever you build your code, so they are able to 'track' your development?