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When the Lowest Bidder is a Chinese Company

Eyes should be opened wide when it comes to the process of awarding contracts for the security of our ports and critical infrastructure. It was noted last week in Government Security News that a Chinese company had underbid two other companies (Smiths' Detection and Rapiscan Systems) for an x-ray scanning system for the Port of Los Angeles.

The Port of Los Angeles is the Nation's largest port (I didn't know that), and just purchased a $1.7 million system from a Chinese company named Nuctech to "inspect trucks delivering food, groceries and other supplies to cruise ships that are scheduled to depart from the busy West Coast port.". It is interesting to note that the Nuctech proposal was actually submitted by a U.S. based company named DULY Research.

While there are the almost expected questions of "reverse engineering," no IP infringement issues are either alleged or identified. Further, according to reports, the Port of Los Angeles appears to have followed all procurement procedures, and there was no "Buy America" provision in its regulations.

It is never easy to determine whether a company is submitting formal bids at prices below its own production costs, actions which could lead to charges of illegal dumping, but few observers doubt that Nuctech has an extremely close relationship with the Chinese government. The fact that the president of Nuctech, 37-year-old Hu Haifeng, is the son of Hu Jintao, the President of the People’s Republic of China and the General Secretary of the Communist Party in China, only fuels such suspicions.

There is no allegation of wrong doing here. However, this sort of comes under the heading of it "Doesn't Look Right."