Government Operations Committee on Dec. 9th, 2020

[Matthew Green, NDP, Hamilton Centre, ON]

Okay. Maybe I misread some of my research notes. I'll have to get a better sense on that because I imagine at some point in time we'll be talking about 5G once again.

This is for K'(Prime) as well. Given that you were unsuccessful in your bid, you filed your complaint with the CITT. Into which specific aspects of the federal government procurement processes for security screening equipment did you want the tribunal to conduct an inquiry?

[Sime Buric]

We put our concerns on three different areas. In one area we spoke about the technology itself and how the technology that they were trying to apply outreached its capabilities in terms of the likelihood of differentiating between different types of threats, whether a gun or knife.

Another one we had was the concern of Nuctech being a subsidized state-owned company, with all the questionable practices. We provided a lot of newspaper articles from around the world in terms of some of the allegations. Basically, we brought to attention the information that they found to be true in terms of bribery, but the information was deemed not sufficient to go further.

The last one we brought up was about wanting to know the logistics of how to move equipment around the world. We stated that we use companies like FedEx or UPS, known suppliers of transporting goods, but they started knocking down points on how this was supposed to be done. Our response was that we work with our partners. That wasn't sufficient, so we challenged that response as well.

[Matthew Green, NDP, Hamilton Centre, ON]

Am I to take and infer from that you are not satisfied with the review completed by the tribunal, or do you agree with its statements and reasons for its determination?

[Sime Buric]

We are not in agreement, but we are accepting the outcome currently.

[Matthew Green, NDP, Hamilton Centre, ON]

That is extremely diplomatic of you. I do certainly appreciate that.

Is there anything else you want to add right now with K'(Prime)?

[Sime Buric]

Not at this time, thank you very much.

[Matthew Green, NDP, Hamilton Centre, ON]

Out of curiosity, what's the relationship with L3Harris?

[Sime Buric]

We have a relationship with L3Harris, but it's no longer with L3Harris—it's with Leidos—where we are their service arm for the airports. We provide the servicing of the X-ray equipment for multiple airports across the country.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Green. I appreciate that.

We have now finished our first round. We will go into our second round. We'll start with Mr. McCauley for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

Witnesses, thank you very much.

Mr. Olson and Mr. Buric, I'm sure you watched previous OGGO meetings regarding Nuctech. We know Nuctech is not going to get the contract now. I'm sure we'll go through the paperwork and their standing offer will be revoked.

Have you been approached yet for a rebid on this equipment or on this contract?

[Rory Olson]

No, VOTI Detection has not been approached for any rebid or given any information about a rebid.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's very strange.

I have a question for Mr. Olson and Mr. Buric. We've heard a lot about the problems of dealing with state-owned enterprises and the unfair subsidies they've received. Have you run up against this issue in other private sector bids or bidding for other government, provincial, Crown corporation or federal government contracts?

[Rory Olson]

Mr. Buric, you can go first.

[Sime Buric]

Depending on the region, if it's in the U.S. we've seen it on some private ones. Obviously price is usually the winning factor on a lot of these because everybody wants the lowest bid.

[Rory Olson]

In the other bid opportunities where we have seen Nuctech in other countries outside of North America, while they were given an initial status as being a bona fide bidder, they were subsequently removed as such.

[Kelly McCauley, Conservative, Edmonton West, AB]

I want to get back to the security issue of this. When we had Global Affairs and PSPC, basically they all just shrugged their shoulders and said that it wasn't a security issue, and they didn't know it or see it as such, but very clearly it was.

We paid Deloitte a quarter of a million dollars of taxpayers' money for basically a four-page double-spaced report saying, don't buy security equipment or reconsider buying security equipment from the Chinese government.

How should we be proceeding with our technology and our security procurement? Should it all run through a tick-off of the CSE, CSIS or other security departments within the government? Obviously, just leaving it up to the departments is not going to work.

[Rory Olson]

Listen, I'm not sure what the correct process is. I'm not a security expert and I'm certainly not an expert in the internal workings of government and best practices, but there are certain things that are so obvious that—

[Kelly McCauley, Conservative, Edmonton West, AB]

It didn't need to take a quarter of a million dollars to state the obvious.

[Rory Olson]

It certainly didn't need to take a quarter of a million dollars to tell you something, frankly speaking, that should have been quite obvious to everybody, and it was. The attempt to make it obvious to everybody was certainly something that was attempted.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Buric and Mr. Desai, one of my Liberal colleagues, Mr. Kusmierczyk, was talking about the ITBs and how great they are, etc. We laughed when we heard that, about a year ago for the Irving ITB obligations, they invested in a french fry factory in Alberta.

At what level should your association be involved in the government to perhaps advise or assist them on how we should be doing these ITBs so that the benefit is not being just pushed away as some throwaway investment, so that it's actually delivering real value to Canadians?

[Neil Desai]

I think a proper study on the number of ITBs that have actually been deployed for the specific-purpose or general-purpose technology that's being offset with a foreign piece of technology would be good. I think it's sometimes burdensome to force companies to try to find something in Canada that will work. Making sure that it's generally in the line of security would actually help the economic development piece.

However, an ITB, again, is really trying to create a local economic stimulus. I will go back to pointing out that, in some cases, when a Canadian company can fulfill a procurement and is being kept out for arbitrary reasons, or for unfair business practices from foreign players, I think we have to solve the narrow problem before we try to look at these big structural issues.

I'm blending into your previous question because it's a really important question. The separation between the subject matter expert in security and the procurement process is so wide, there is such a separation. I understand why. You want to make sure you have a fair, transparent process to make sure government money is being spent well. However, the reality of technology is that you need subject matter experts to review things like security, things like the governance of technology and how updates will be delivered. The only way to solve for that is to bring the subject matter expert closer to the procurement process.

I think the procurement officers do their best with what they're given, but there's such a time lapse and separation between those independent procurement officers and the actual technical problems to be solved. We have to figure out ways to get that transparency, but with those subject matter experts in the process to review the tech.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Desai.

Now we will go to Mr. Drouin for five minutes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair. I want to take the time to thank all of the witnesses who are before us at this committee.

My first questions will go out to K'(Prime) Technologies, and to VOTI Detection if it applies.

I wasn't sure from your testimony whether or not you—and I know this was brought to CITT—were on the standing offer. I would like a yes or no as to whether or not you were on the standing offer.

Maybe we could start with Mr. Buric.

[Sime Buric]

We were not on the standing offer. We were not in that final group.