Question Period Note: Security screening equipment for Global Affairs Canada

On behalf of Global Affairs Canada (GAC), Public Services and Procurement Canada (PSPC) issued a National Master Standing Offer (NMSO) to Nuctech Inc., a Chinese state-owned company, for x-ray screening equipment for use in non-operational areas in Canadian missions abroad.

• The Government is committed to ensuring the safety of Canadians and visitors in its missions abroad
  • PSPC responded to a requirement from GAC for the supply of security screening equipment on an as-and-when requested basis
  • The purpose of this standing offer was to replace and upgrade GAC’s older, conveyer style parcel x-ray machines currently in use at Canadian Embassies worldwide
  • These x-ray machines are located in non-operational areas and scan for prohibited items in parcels, handbags, backpacks, briefcases, etc. that enter the building
  • No equipment has been purchased from Nuctech Company Limited under the standing offer
  • In line with Canada’s commitment to the safety and security of our workplaces abroad, GAC is reviewing purchasing practices when it comes to security
  • Any possible issue related to security will be thoroughly reviewed and all appropriate actions taken
  • For requirements where security provisions have been identified, PSPC will only contract with eligible firms that meet those security requirements

If pressed on awarding the NMSO to Nuctech:

• Following a competitive procurement process, PSPC awarded 2 standing offers for the supply of security screening equipment, one to a U.S. firm for walk-through metal detectors, and one to a firm in China for x-ray machines
• Nuctech was selected because it was compliant with the mandatory technical requirements and had the lowest bid of all the firms that were also compliant
• The various trade agreements to which Canada is a signatory applied and Nuctech was eligible to bid on this process
• PSPC can confirm that there have been no call-ups issued against this standing offer, following an external review of the requirements for this work. GAC will be reviewing the report and confirming the security requirements for this work
• A standing offer creates no obligation on the part of the Government to buy the good or service
• The technical authority for this solicitation process did not identify any security requirements. No PSPC security services were identified as required and therefore none were invoked, nor were any requested by exception

If pressed on the Integrity Regime:

• The Government is committed to taking action against improper, unethical and illegal business practices and holding companies accountable for such misconduct
• PSPC has a framework of laws, regulations and policies in place to protect the integrity of the federal procurement system, including the government-wide Integrity Regime
• The Regime has been in place since 2015. It holds suppliers accountable for their misconduct, and also encourages them to cooperate with law enforcement and take corrective action
• Under the Regime, a supplier may be suspended or declared ineligible to do business with the Government if, in the previous 3 years, it, members of its board of directors or its affiliates, have been charged with or convicted of one of the offences listed in the Ineligibility and Suspension Policy in Canada
• Suppliers may also be debarred if they have convictions for similar offences abroad
• Prior to the award of a contract, the status of the proposed supplier is verified against the requirements of the Integrity Regime

If pressed on the Postmedia story on Nuctech - Integrity Regime implications:

• We are aware of allegations connected to Nuctech
• The Government of Canada’s Integrity Regime makes determinations of ineligibility or suspension based on convictions or charges associated with one of the offences listed in the Ineligibility and Suspension Policy
• In this instance, the verification process was followed and the supplier was found not to be ineligible under the Regime as no charges or convictions were found

The requirement was to establish 2 NMSO for the supply of security screening equipment (conveyor style x-ray machines and walkthrough metal detectors) for GAC and other federal departments on an as and when requested basis. The NMSOs will be in place for a period of 3 years from date of issuance with the option to extend for 2 additional one-year periods under the same terms and conditions.

The Request for Standing Offer was issued on December 16, 2019, and closed on April 3, 2020. An offer had to comply with the requirements of the Request for Standing Offer and meet all mandatory technical evaluation criteria listed therein to be declared responsive. The responsive offer with the lowest evaluated price for each product group were recommended for issuance of a standing offer. No security requirements were originally identified for this standing offer by the technical authority (GAC). As such no PSPC security services were identified as required, nor were any requested by exception, and PSPC’s Contract Security Program was not engaged in the solicitation process. An external review of the security requirements for this work has since been completed for GAC by Deloitte. GAC is reviewing the report and will be confirming the security requirements with PSPC going forward.

Bidders had to meet a mandatory technical requirements in order to be considered for evaluation on price. Mandatory technical requirements included providing alerts for various dangerous materials like explosives and weapons, a variety of screening modes, and safety protocols.

As for all contracts, PSPC conducted an integrity check on Nuctech and no issues were identified.

The Canadian International Trade Tribunal (CITT) received a complaint from K’(Prime) Technologies Inc. (KPrime), of Calgary, Alberta, concerning this procurement. With respect to the conveyer x-ray machines, the CITT did not find any basis of validity for the complaint, thus there is no impact on the procurement that led to the Nuctech standing offer.

A story published by Postmedia (John Ivison) mentions adverse information relating to Nuctech operations in Taiwan, Namibia, and Europe. However, under the Integrity Regime, determinations of ineligibility and suspension can only be made on the basis of charges or convictions related to one of the listed offences in Canada or abroad. Adverse information alone would not be sufficient for declaring a supplier to be ineligible.

Committee study

The Standing Committee on Government Operations and Estimates (OGGO) met on November 18, 2020 to begin a study on the Nuctech Security Equipment contract. At this appearance, GAC official Dan Danagher (Assistant Deputy Miniter of International Platform, Department of Foreign affairs, Trade and Development) indicated that his department will not avail itself of the standing offer awarded in July 2020.

This development was subsequently reported upon by the National Post following the appearance: https://nationalpost.com/news/politics/good-lord-security-scanners-from-a-chinese-firm-not-the-best-plan-for-our-embassies-mps-hear.

None