Hong Kong firm's cargo screening deal questioned

Container-scanning contract being awarded on a no-bid basis should be receiving more attention, former Homeland Security IG says.

The Homeland Security Department's former internal watchdog said Monday that Congress should kill a deal that would let a Hong Kong-based company scan U.S. bound cargo going through the Bahamas.

Clark Kent Ervin, who was the first Homeland Security inspector general, said a $6 million contract being given to Hutchison Whampoa to scan containers passing through the Bahamas for radiation could compromise U.S. homeland security.

The National Nuclear Security Administration, which is finalizing a no-bid contract to the company, says it has to give the contract to Hutchison because it is the only port terminal operator in the Bahamas. Under the deal, the firm's employees will operate sophisticated U.S. radiation-detection equipment without the presence of U.S. Customs agents.

Ervin, who now heads the Aspen Institute's homeland security program, said Hutchison has close ties to China, which he described as "a potentially hostile government." He said the deal has not received enough public attention compared to the response that surrounded a bid by Dubai Ports World to take over port terminal operations at several major U.S. ports.

The Dubai deal was approved by the Committee on Foreign Investment in the United States, but killed under mounting opposition from lawmakers from both parties. The Hutchison Whampoa deal so far has drawn fire only from a few Democrats, including House Homeland Security ranking member Bennie Thompson, D-Miss., and newspaper editorials, but not from Republicans.

Speaking on a panel hosted by Sen. Max Baucus, D-Mont., to debate maritime security issues in the aftermath of the Dubai deal, Ervin said Congress should do a comprehensive review of which U.S. agencies can approve questionable transactions, and move the CFIUS process to the Homeland Security Department from its current home in the Treasury Department.

The DP World controversy, the panelists agreed, exposed the tensions between international commerce and U.S. homeland security.

Port of Seattle CEO Mic Dinsmore, who recently returned from a trip to Asia, observed that the rejection of the Dubai deal "is being shaped in a way that is going to be profoundly negative" for the United States. "There is tremendous angst now, offshore, about what kind of business or lack thereof does the United States of America want," he said.

The panelists also agreed that more funding is needed for maritime security, but differed over how far the U.S. government should go in regulating or restricting trade.

Gary Gilbert, senior vice president for Hutchison, defended the awarding of the contract to his company. Hutchison reports any security concerns to appropriate authorities, and moved 52 million containers around the world last year without a major incident, he said.

Joseph Bouchard, executive director of the U.S. Naval Postgraduate School's Center for Homeland Security and Defense, said the fundamental question facing the U.S. government is whether to treat private companies as part of the solution in maritime security or part of the problem. He said industry should be treated as a valuable partner.

Gilbert said shippers are willing to do more to increase security, such as giving Customs and Border Protection more information about cargo manifests and paying $10 to $20 more per container. But he added that the federal government needs to mandate standards across the industry so shippers and port operators do not compete against each other

Toward the end of the panel's debate, Baucus said he got the impression that better maritime security depends on a partnership between industry and government in the areas of funding and screening and inspecting cargo.