Security Experts ‘Not Typically Included’ in Canada’s Procurement Process, Says Review of Nuctech Deal

A transportation security administration worker monitors bags as they enter an explosive detection system at the Oakland International Airport in Oakland, Calif., in a file photo. (Justin Sullivan/Getty Images)

Global Affairs Canada drew public concern last year over plans to purchase security equipment from a Chinese state-owned company. A recent review found that the department does not usually consult security experts prior to procurement.

In July 2020, the federal government awarded Nuctech, a Chinese state-owned firm, a $6.8 million contract to install X-ray machines for 170 Canadian embassies, consulates, and high commissions.

But the deal raised security-related concerns due to Nuctech’s links to the highest levels of the Chinese Communist Party (CCP) and to the Chinese military.

As criticism mounted, Global Affairs spent $250,000 to hire consultation firm Deloitte to review the department’s procurement process.

“The department has a procurement planning process for significant procurements and the plan is presented to the Departmental Contract Review Board. The security subject matter experts (SME), however, are not typically included in the procurement planning process,” Deloitte concluded in its report.

Deloitte suggested that Global Affairs develop guidelines for considering “specific security threats and vulnerabilities.” It also recommended enlisting security experts in future procurement assessment processes in order for the department to “keep abreast of evolving security threats around the globe.”

Nuctech was founded by Hu Haifeng, son of former CCP leader Hu Jintao. The company has connections to the Party and to the People’s Liberation Army.

Nuctech has a history of controversies related to unfair business dealings and bribery, including in Namibia and Taiwan.

The company is dubbed the “Huawei of airport security” for providing screening for cargos and baggage. However, U.S. officials have expressed concerns that its system can give the CCP easy access to personal data and sensitive commercial information.

In 2014, the U.S. Transportation Security Administration barred Nuctech equipment from the country’s airports due to security concerns. The United States has also been pushing its European allies to ban Nuctech for the same reason.

Conservative MP Kelly McCauley said in a Facebook post that the Liberal government ignored warnings in trying to buy security equipment from the Chinese regime instead of from an Alberta company. Calgary-based KPrime was one of at least three Canadian companies that had bid on the contract.

He also said the Deloitte review was a “mind-boggling waste of $250k of taxpayers dollars for a consultant to basically tell them: ‘don’t buy sensitive security technology from authoritarian dictatorships like the Chinese Communists.’”

“Despite the Liberal attempts, we got the Communist Chinese firm blocked from this purchase,” McCauley wrote.

With reporting by Isaac Teo and Emel Akan