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OTTAWA — Federal officials have told MPs that following a review of purchasing practices for security equipment, the government won’t be buying Canadian embassy X-ray machines from a controversial Chinese firm after all.
The National Post reported in July that the government had awarded a standing offer for up to $6.8 million worth of conveyor-style X-ray machines to Beijing-based Nuctech, a company owned in part by the Chinese government and once run by the son of Hu Jintao, former General Secretary of the Chinese Communist Party.
Nuctech won the tender over Canadian, American and British competitors, and the standing offer included the delivery, installation, operator training and software for the machines for use at Canadian embassies around the world.
After the Post’s report, Global Affairs Minister François-Philippe Champagne said his office was “looking into” the deal and said the government hadn’t yet purchased any machines. Champagne also ordered a review of the department’s purchasing practices for security equipment, which was then conducted by consulting firm Deloitte Canada.
At the House of Commons government operations committee on Wednesday, MPs grilled officials about awarding Nuctech a deal for embassy security equipment, given its Chinese state connections.
“I’m sitting here, and I’m dumbfounded that this could have possibly happened,” said Conservative MP Kelly McCauley at one point. “I’m sorry for sounding so critical, but good lord.”
Dan Danagher, an assistant deputy minister at the department, told the committee he “can confirm today that Global Affairs Canada will not avail itself of the standing offer awarded in July 2020.”
He said that given the X-ray machines were to be used in a publicly accessible area and wouldn’t be connected to embassy computer networks, the government didn’t require the contract to go to a firm with high-level security clearance.
But the Deloitte review questioned that practice, Danagher told the committee, and recommended that equipment even for use in the embassy’s public zone should “only be accessible to companies with higher levels of security clearance.”
“They recommended that we consider that service personnel who had access to the equipment should be security cleared,” Danagher said. He said these steps would protect embassy equipment from “future threats should they emerge.”
Michele Mullen, director general of the government’s Centre for Cyber Security, told the committee that Global Affairs had not asked her agency to do a review of Nuctech and its connections to the Chinese state.
However, she did note that the X-ray machines now typically come with hard drives and USB ports that could conceivably be used for data downloads by hostile actors, and thus possibly be used “with malicious intent.”
“Because technology is evolving, things we didn’t use to look at, we now should start looking at,” she said. “Capabilities, like I mentioned before with embedded operating systems and USB ports, that didn’t used to exist on X-ray machines now do.”
Officials from Public Services and Procurement Canada, the government’s purchasing arm, said they had allowed Nuctech into the bidding because Global Affairs had not flagged any sensitive security issues with the equipment.
The officials stressed that the standing offer awarded to Nuctech does not become a binding contract unless the government issues a “call-up” against the offer, which sets out pre-arranged prices.
Officials from the Canada Border Services Agency, which has previously purchased some Nuctech equipment, also spoke at the committee and defended their use of Nuctech X-ray machines.
“We have a number of mitigating interventions that we put in place around this technology,” said Scott Harris, vice-president of the CBSA’s intelligence and enforcement branch. “One of the first ones is obviously to keep it disconnected from our networks and from any Government of Canada networks…the second is the fact that anyone affiliated with any of our suppliers would be screened through security processes and would be escorted on site if they were present in our facilities.”
Procurement officials told MPs that they can’t guarantee at the moment Nuctech will not win any future government contracts, because it depends on whether the equipment is deemed security sensitive.
“There is work being done to be able to identify commodities that may be at higher risk of vulnerability moving forward, where we would need to ensure that we’ve got the appropriate security approaches or mechanisms to decrease the potential risk,” said one official.
Copyright Postmedia Network Inc., 2020