Other cards: Committee of the Whole—August 12, 2020

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Security screening equipment for Global Affairs Canada

Context

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.

Suggested response

• The government is committed to conducting fair and open procurement processes to meet its operational needs domestically and abroad
• Through this standing offer, GAC will be replacing and upgrading 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
• The government is committed to ensuring the safety of Canadians and visitors in its missions abroad
• 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 equipment and continue reviewing the security of Canada’s missions around the world

If pressed on awarding the NMSO to Nuctech:

• following a competitive procurement process, PSPC awarded 2 NMSO for the supply of security screening equipment, one to a US firm for walk-through metal detectors, and one to a firm in China for X-ray machines. This procurement did not include any security requirements
• 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
• To date, no call-ups have been issued against the standing offer. Each time a call-up is made against the standing offer a separate contract is entered into with the selected firm

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. It applies to all goods, services and construction contracts, subcontracts and real property agreements with a transaction value over $10,000
• 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 for listed offences
• 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

Background

The requirement was to establish 2 NMSOs for the supply of security screening equipment (conveyor style X-ray machines and walkthrough metal detectors) for GAC and other federal department users 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 1-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 offers 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.

Bidders had to meet a mandatory technical requirements in order to be considered for evaluation on price including 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 a procurement by PSPC. The solicitation was for conveyer X-ray machines and walk-through metal detectors. On July 31, 2020 the CITT accepted the complaint for enquiry. To date, no confidentiality order has been issued.

Related Integrity Regime items in the Postmedia article by John Ivison

A story published by Postmedia 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 specific offences. Adverse information alone would not be sufficient for declaring a supplier to be ineligible.

National Shipbuilding Strategy annual report

Context

The Government of Canada will be releasing the 2019 National Shipbuilding Strategy (NSS) Annual Report this month.

Suggested response

• The government is delivering on its commitment to continue to renew the Royal Canadian Navy and the Canadian Coast Guard fleets, revitalize the shipbuilding industry across Canada, create middle-class jobs, and ensure Canada’s marine services have the modern ships that they need
• The year 2019 was marked by important achievements, including the delivery to the Canadian Coast Guard of the first 2 large ships built under the NSS—the first and second offshore fisheries science vessels
• In 2019 we announced further investments renewing the Canadian Coast Guard fleet, with up to 24 additional large ships to be built in Canadian shipyards, and launched a competitive process to add a third Canadian shipyard under the NSS

If pressed on socio and economic benefits:

• the NSS continues to help stimulate the Canadian economy, with approximately $3.3 billion in new contracts having been awarded to Canadian companies in 6 different provinces in 2019. Of that amount, approximately $186.7 million went to small and medium-sized businesses with fewer than 250 full-time employees
• NSS contracts awarded between January and December 2019 are estimated to contribute more than $4.1 billion ($1.0 billion annually) to Canada’s gross domestic product and will result in approximately 10,365 jobs annually during the period covering 2019 to 2022
• through the value proposition, shipyards have to invest a value equal to 0.5% of contracts to benefit the domestic marine industry in 3 priority areas:
  • human resources development
  • technology investment
  • industrial development

If pressed on the report’s release date:

• the release of the NSS annual report is never done at a fixed date
• in its desire to be open and transparent, the Government of Canada allowed plenty of time for the report to be produced with COVID-19 also delaying the production this year

Background

This is the fourth edition of the NSS annual report. The 2019 NSS Annual Report covers the period between January 1, 2019, and December 31, 2019.

It is posted on the Public Services and Procurement Canada’s National Shipbuilding Strategy page.

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