Sheriff’s Office spends millions on no-bid contract with company tied to Chinese government

In an effort to reduce overdose deaths in its jails, the Maricopa County Sheriff’s Office purchased body scanning equipment in a no-bid process from a company with ties to the Chinese government.

The company, Secure Technology Value Systems, describes itself as a U.S. business with a headquarters in State College, Pennsylvania, that specializes in "integrating numerous systems from multiple manufacturers and countries to serve our customers." But STVS formerly went by the name NucTech US.

NucTech is a Chinese company that the Department of Homeland Security has assessed as having a “close and enduring relationship with the Chinese Government.”

Pictures of the scanners provided to The Arizona Republic include decals saying the machines were manufactured in Beijing by a Chinese company called Shenmutek Company Limited, which NucTech lists on its product website.

NucTech has come under fire from the U.S. Department of Homeland Security and was added to the U.S. Department of Commerce’s Entity List in 2020 “for its involvement in activities that are contrary to the national security interests of the United States.” Inclusion on the list bans the export of U.S. technology to the entity.

Specifically, the Commerce Department report accused NucTech of making “lower-performing equipment” that impaired U.S. efforts to “counter illicit international trafficking in nuclear and other radioactive materials.”

“Lower-performing equipment means less stringent cargo screening, raising the risk of proliferation,” the report read.

A Department of Homeland Security brief, obtained and published by The Washington Post, details the "continual risks and threats" posed by NucTech.

“We assess that NucTech’s screening and detection systems likely have deficiencies in detection capabilities, which may create opportunities for exploitation by the Chinese Government,” the department found. The brief stated the department believed NucTech has a “close and enduring relationship with the Chinese Government” and accused the company of corruption, bribery, and product dumping “to gain an unfair market advantage.”

Officials at Sheriff's Office were aware of those connections when they bought the scanners for nearly $2 million dollars without a bidding process, a spokesperson confirmed. The Sheriff's Office spoke with its internal information technology department about the matter.

But the county's jailers still decided to buy the machines after Deputy Chief Jesse Spurgin, who oversees custody operations at the Sheriff's Office's Fourth Avenue and Towers jails and is leading the scanner project, had an in-person meeting with a company executive.

“The body scanners are a stand-alone product that do not use a county network, do not have any facial recognition technology, do not require the inputting of officers’ information, and no X-ray scanners were purchased from STVS,” said Sheriff's Office spokesperson Norma Gutierrez Deorta, adding that the scanners are approved for use in the United States.

The U.S. Departments of Commerce and Homeland Security weren’t the only agencies to issue warnings about NucTech.

In 2022, European lawmakers warned against allowing bids from NucTech for customs equipment, citing fears that information about goods and travelers from the scanners could be obtained and used by the Chinese government.

Nevertheless, Sheriff’s Office officials say they did their due diligence.

“The information was vetted by MCSO,” Gutierrez Deorta said.

What is the security scanner project?

Maricopa County Sheriff Paul Penzone announced plans for the scanner purchase in March in response to the arrest of a detention officer who attempted to carry drugs into one of the county's five jails.

He wants to use the machines to scan detention officers, attorneys, volunteers and others who go in and out of the county's jail system each day. In doing so, he hopes to ensure staff aren’t smuggling drugs into county lock-ups and to reduce deadly overdoses among those incarcerated in the jails.

The STVS body scanners are similar to those used in TSA lines at the airport. They use millimeter radio waves to produce black-and-white images of the people being scanned. The machines' software analyzes the images and highlights potential contraband, allowing detention officers to find it.

Related: 5 takeaways from Sheriff Penzone, including updates on drug smuggling, low staffing in jails

At a news conference last week, Penzone said his teams have installed all of the eight scanners he purchased, but his office was still in the process of hiring and training new employees to run the machines.

Penzone said his office has so far only hired 12 of the 46 positions he believes will be necessary to operate the scanners. He said he hoped to have the screening program fully operational by the end of the year.

In 2022 there were 18 overdose deaths in county jails. So far this year, there have been eight overdose deaths, Penzone said.

Scanner project totals $5.3 million

Contracts and invoices obtained by The Republic show the Sheriff’s Office purchased eight Millimeter Wave Body Inspection scanners from the company at more than $138,000 apiece.

The Sheriff's Office also paid $100,000 for installation, tech support and training, as well as nearly $550,000 for an extended five-year warranty. For another $400,000, they purchased conveyor scanners and training for them, bins, power cables, uniform patches and handheld scanners. Penzone's office footed the bill for all of it with leftover funds from last fiscal year.

Some costs of the security screening project, such as the security officers needed to staff the machines, will be ongoing. The jail system is already understaffed, Penzone told The Republic, so he can't take detention officers away from their current duties to do it themselves. And, he said, he prefers to keep a separation between officers and those watchdogging them. County supervisors gave Penzone roughly $3 million to fund those positions this fiscal year.

That brings the current cost of the project to just under $5.3 million — not including desks, chairs and computers for those manning the scanner stations. Penzone initially gave county supervisors a quote of $5.7 million, which he called “aggressive” and potentially an overestimate.

No-bid contract went to company with history of security threat allegations

Penzone said the overdose crisis in the jails was urgent and necessitated buying the body scanners quickly.

Normally, any time the county purchases an item that costs $100,000 or more, it must begin an open bidding process, Maricopa County Spokesperson Fields Moseley said.

But sometimes, items can be bought without a bidding process through existing contracts. That’s what happened in this case, Moseley said.

The purchase was conducted under a contract that Maricopa County has with Safeware Inc., a Maryland-based distribution company that specializes in public safety equipment procurement. Safeware purchased the scanners from Secure Technology Value Solutions.

Safeware has working partnerships with “several manufacturers,” Gutierrez Deorta said, and the Sheriff’s Office considered scanners from numerous companies.

“Multiple vendors were provided an opportunity to provide an online, interactive demonstration of their products and then submit their proposal for our review, consideration and decision,” she said.

Ultimately, MCSO officials liked that the scanners were specifically made for use in jails and prisons as opposed to airports and stadiums, Gutierrez Deorta said. The scanners are also used by several other law enforcement agencies, including the Delaware Department of Corrections and the Honolulu Police Department.

So, the Sheriff’s Office purchased them.

Safeware did not respond to requests for comment on the contract.

Secure Technology Value Systems CEO Barry Johnson said the company was honored to have won the contract with Maricopa County.

"STVS has grown into a leading supplier of contactless screening solutions because we provide quality systems and reliable service," Johnson said. "We are a proven partner to a growing number of corrections facilities and law enforcement agencies throughout the US."

Have a news tip on Arizona jails? Reach reporter Jimmy Jenkins at jjenkins@arizonarepublic.com or at 812-243-5582. Follow him on X, formerly Twitter: @JimmyJenkins.

Sasha Hupka covers Maricopa County, Pinal County and regional issues for The Arizona Republic. Do you have a tip to share? Reach her at sasha.hupka@arizonarepublic.com. Follow her on X, formerly Twitter: @SashaHupka.

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This article originally appeared on Arizona Republic: Sheriff's Office purchase equipment from company with ties to Chinese government