Chinese government-owned firm wins $6.8M contract to supply security equipment to Canada's embassies
17 July 2020
The government of Canada has awarded an estimated $6.8 million contract to a state-owned Chinese company to supply security equipment for 170 embassies, consulates and high commissions around the globe.
The contract for conveyor-style X-ray machines was awarded to Beijing-based Nuctech Company, a company owned by the Chinese government and founded by the son of former General Secretary of the Chinese Communist Party, Hu Jintao.
Nuctech is known as the “Huawei of airport security,” supplying X-ray machines, scanners and explosive detection systems to airports and customs offices in 160 countries. The company sees a bright future for its airport body scanners, which feature a thermal imaging camera that can detect elevated body temperatures.
Global Affairs Canada has been upgrading embassy security and, through the department of Public Services and Procurement Canada, issued tenders for walk-through metal detectors, X-ray machines, and bullet resistant windows and doors.
Security companies were invited last December to submit bids, separately or jointly, for the metal detectors and X-ray machines. The tender document said the contract would be awarded to the lowest-bidder.
California-based Rapiscan Systems won the contract for the metal detectors but was undercut by Nuctech for the X-ray contract.
The winning bids were posted on the government’s Buy and Sell website on Thursday.
A security industry source said that the X-ray machines are stand-alone systems that would not be connected to embassy networks. But he said he is concerned that there will now be “significant pieces of Chinese technology sitting in every embassy”. The contract includes delivery, installation, operator training and software.
Nuctech has been accused in the past of engaging in controversial business practices in Asia, Africa and Europe, including offering soft loans and illegal dumping.
Critics of state-owned enterprises allege the Chinese government subsidizes its companies to allow them to bid at lower prices than Western competitors.
They point out that no Canadian company would be allowed to install security equipment in any Chinese embassy.
Guy Saint-Jacques, a former Canadian ambassador in Beijing, said reciprocity is important when dealing with China.
He said he hopes Ottawa re-examines a bidding process that awards contracts on price alone because it “creates vulnerabilities.”
“The problem of competing with state-owned companies is very difficult,” he said.
The former ambassador said he recalls a conversation with an ex-CEO of Bombardier, who said he could compete with Chinese companies in China but not in Boston or Chicago, where they would submit subsidized bids up to 40 per cent lower than Western companies.
The Chinese strategy overseas is to win market share and, once dominant, dictate prices, Saint-Jacques said. “There are long-term implications for Western economies,” he said.
Emails seeking comment from Nuctech were not answered by press time.
Public Services and Procurement Canada did not respond to questions about the size of the contract; whether price was the only criterion on which the winner bid was chosen; and, why a security contract was awarded to a state-owned Chinese company when there were bids from North American competitors.