Parliamentary Committee Notes: RCMP Standing Offers and Contracts with Sinclair Technologies

2022-2023 INDU – Contract for a Telecommunications System for the RCMP
Date: January 20,2023
Classification: Unclassified
Fully releasable (ATIP)? Yes
Branch / Agency: RCMP

Proposed Response:

• It is my expectation that the RCMP diligently apply its delegated contracting and procurement authorities and responsibilities, including working with other departments and agencies as needed to screen for national security concerns before procuring goods and services. This is particularly true when purchasing equipment that supports public safety.
• I understand that the RCMP followed applicable procurement policies and regulations, trade agreements, and security requirements when procuring the radio frequency filtration equipment from Sinclair Technologies.
• The Standing Offer completed by Public Services and Procurement Canada (PSPC) for radio frequency filtering equipment was issued to Sinclair Technologies Inc. on October 6, 2021, for a period of three years until March 31, 2024. There are two 1-year option periods to extend use of the Standing Offer until March 31, 2026. The total estimated value of the Standing Offer is $549,637.
• To date, the RCMP has issued three call-ups against this Standing Offer totaling $55,073, including tax. The call-ups were issued to Norsat International operating as Sinclair Technologies Inc.
• While the radio frequency filtration equipment procured from Sinclair Technologies poses no security concerns given its specific function, the RCMP has put a suspension on the use of this Standing Offer and all other contracting and transactions with Norsat International/Sinclair Technologies until further notice pending a due diligence review.

If pressed on other Standing Offers, and RCMP Contracts and Transactions with Sinclair Technologies:

• A separate Standing Offer for antennas was competed by PSPC and used by the RCMP commencing December 20, 2013, with an original end date of December 19, 2016. There were option periods in the Standing Offer which RCMP exercised to extend the end date to December 19, 2018. Under this Standing Offer, eleven (11) call-ups were issued totaling $188,982 including taxes.
• In addition to the two aforementioned Standing Offers, the RCMP has also awarded eleven (11) contracts for various antennas, radio shelters and radio frequency filtration equipment to Sinclair Technologies totaling $ 234,606 since its acquisition from Norsat in 2017.
• As well, additional transactions occurred with this vendor from July 1, 2017 to December 12, 2022, totaling payments of $461,184 through RCMP acquisition card payments and direct payments to Sinclair Technologies and Norsat Technologies. These payments represent purchases made within Section 32 of the Financial Administration Act delegated authority (contractual authorities up to $10,000) for radio communications equipment, electronic or automated office equipment, repair parts and other miscellaneous products.

Background:

The current Standing Offer for radio frequency filtering equipment and related technical assistance equipment was tendered on the Government Electronic Tendering System on May 31, 2021, and closed on July 16, 2021. Two offers were submitted in response to the tender. Both offers were found technically compliant. Sinclair Technologies Inc. had a lower price. The Standing Offer was issued to Sinclair Technologies Inc. on October 6, 2021 for a period of three (3) years until March 31, 2024. There are two (2) 1-year option periods to extend use of the Standing Offer until March 31, 2026. The total estimated value of the Standing Offer is $549,637. To date, RCMP has issued three (3) call-ups against the Standing Offer totaling $55,073, including tax. The call-ups have been issued to Norsat International operating as Sinclair Technologies Inc. Sinclair Technologies Inc. is a Division of Norsat International that is owned by China-based Hytera Communications. According to media reports, the Chinese government owns approximately 10 per cent of Hytera Communications through an investment fund.

The RCMP followed all federal government procurement policies and regulations, and applicable trade agreements, commensurate with the low level of risk identified for this specific Standing Offer. The RCMP, through internal discussions between security, procurement and radio technology experts determined there were no unique security requirements for the procurement of this technology due to the low security risk of RF filtering equipment. Prior to issuing the Standing Offer, PSPC performed the integrity verification on Sinclair Technologies, based on the Government of Canada Integrity Regime. The Integrity Regime ensures that the Government of Canada does business with ethical suppliers in Canada and abroad. The result on Sinclair Technologies came back negative (no match – no flags). The RCMP has put a suspension on the use of this Standing Offer until further notice and pending the review.

A separate Standing Offer for Antennas was competed by PSPC and used by the RCMP commencing December 20, 2013, with an original end date of December 19, 2016. There were option periods in the Standing Offer which RCMP exercised to extend the end date to December 19, 2018. Under this Standing Offer, eleven (11) call-ups were issued totalling $188,982 including taxes.

In addition to the above Standing Offers, the RCMP has also awarded eleven (11) contracts for various antennas, radio shelters and radio frequency filtration equipment to Sinclair Technologies totaling $234,606 since its acquisition from Norsat in 2017.

The total call-ups and contracts to Norsat Technologies operating as Sinclair Technologies Inc. are twenty-five (25) valued at $ 478,661 (Contracts awarded to Norsat International Operating as Sinclair Technologies since July 1, 2017).

In addition to these contracts, additional transactions occurred with this vendor from July 1, 2017 to December 12, 2022. During this time frame, total payments of $461,184 were made by the RCMP through acquisition card payments and direct payments to Sinclair Technologies and Norsat Technologies. These payments represent purchases made within Section 32 of the FAA delegated authority (contractual authorities up to $10,000) for radio communications equipment, electronic or automated office equipment, repair parts and other miscellaneous products.

The use of the current Standing Offer was suspended on December 9, 2022. A stop work order for undelivered goods was issued on December 9, 2022. However, the RCMP may receive outstanding invoices for goods that were delivered prior to the suspension which may not be reflect in the above total.

Contacts:

Prepared by: Christine Lamarche, Director General Procurement and Material and Asset Management, 613-867-2472
Approved by: Samantha Hazen, Chief Financial Officer, 613-513-3847

Date modified:

2023-05-23