Security experts usually not involved in purchases by Global Affairs Canada

Chinese X-ray machines bring issue to the fore

Government security experts aren't usually consulted by Global Affairs Canada when that department purchases equipment, including sensitive gear needed to protect diplomats and embassies, a procurement review has found.

The September 2020 study was sparked by an article in the National Post about a Chinese firm that had been authorized to provide security equipment to the department. Procurement Canada selected Nuctech, which is closely tied to the Chinese military, for the $6.8-million standing offer that included the delivery, installation, operator training and software for X-ray machines for use at Canadian embassies around the world. The Chinese company was picked over a Canadian firm that also bid.

Three days after the National Post article questioned why Global Affairs would use a Chinese company to provide such sensitive equipment, the department scrambled to get its security specialists to review the deal. Those experts concluded that the Chinese X-ray machines could “provide numerous opportunities for attack,” including being modified to covertly collect information and images at the embassies.

As criticism mounted over the deal, Global Affairs Canada spent $250,000 to have consulting firm Deloitte look at the procurement system that led to the arrangement with Nuctech.

The Deloitte consultants determined that “security subject matter experts are not typically included in the procurement planning process.” They also recommended that process be changed as having such specialists involved “increases the likelihood that security requirements will be identified in a more timely manner.” In addition, Deloitte recommended the department take more notice of security considerations when it came to buying equipment.

The documents, provided to the House of Commons government operations committee, reveal a stunning lack of common sense by federal bureaucrats in dealing with a country that has a track record of spying on Canada and other nations, Conservative MP Kelly McCauley says.

“We paid a quarter of a million dollars for a report that essentially says, `Don't buy sensitive security equipment from despotic regimes that spy on you and keep your citizens in their jails,' ” McCauley said, referring to Canadians Michael Kovrig and Michael Spavor, who remain in a Chinese prison after more than two years.

Kovrig and Spavor were arrested in China in December 2018. Their imprisonment is widely viewed as retaliation against Canada for the arrest of Huawei Technologies Co. chief financial officer Meng Wanzhou, who has been charged with fraud in the United States.

McCauley says he is also concerned about misleading claims by Global Affairs staff to François-Philippe Champagne, then Foreign Affairs minister, that security protocols were not needed for Chinese X-ray machines because they didn't have the capability to store data. The documents submitted to the government committee, however, clearly show one of the requirements for the X-ray machines was an ability to store data and another was a capability to transfer that data to other equipment.

Other government emails submitted to the committee showed that one bureaucrat at Public Services and Procurement Canada raised concerns about purchasing security equipment from China, but backed down after Global Affairs officials assured her there was no cause for worry.

McCauley said he was concerned about a “weird culture at Global Affairs Canada of not questioning the Chinese government.”

He noted that a July 20, 2020, security review prompted by the National Post article found Nuctech had direct connections to the People's Liberation Army and the Chinese Communist Party.

“Nuctech has been involved in several controversies, including alleged bribery cases in Africa and Taiwan, and allegations the company sold inferior products at inflated prices to Malaysia and the Philippines,” the GAC security specialists pointed out. “The company is also accused of selling their products at a loss as part of a long-term strategy of dominating the market.”

The Procurement Canada decision to award Nuctech was based on its equipment meeting the requirements at the lowest price.

Global Affairs Canada, in an email, noted that the department “has not and will not use the Nuctech standing offer.”

Changes are also being made to the procurement process, including a process for consulting security experts as well as creating and vetting a list of trusted suppliers, the email added.

“Global Affairs Canada is working with Public Services and Procurement Canada, Public Safety Canada and the Communications Security Establishment of Canada on this improved procurement process,” it said.

In November, federal procurement officials told MPs on the government operations committee that they couldn't guarantee Nuctech would not win any future government contracts because it depended on whether the equipment was deemed security-sensitive.

Officials from the Canada Border Services Agency, which has previously purchased some Nuctech equipment, also spoke at that committee and defended their use of Nuctech X-ray machines.

In 2014, the U.S. banned use of Nuctech X-ray scanners at airports nationwide because of security concerns.

Kelly McCauley