Subscriber Discussion

Does Hikvision Violate The Buy American Act?

EK
Edward Knoch
Aug 31, 2016

I recently sent an email to the procurement officer on a "complimentary" purchase that was listed in this thread and designated as HikVision. Here is my request and their response.

I'm inquiring about this procurement as you state that this is a HikVision or equivalent product. Are you aware that your request (without valid justification - other than cost) is a complete violation of the BAA act that you say applies to this procurement. I would believe that you are violating the BAA in addition to the fact that the HikVision product is produced by a company that is partially owned by the communist government of china. This is clearly not a friendly country to the US and is not on the approved list of countries from which the Federal Government may procure products. In addition, I believe that this product will not pass IA compliance.

Please consider pulling this procurement and specifying VALID products that are IA compliant and are considered approved under BAA.

: Response :

Thank you for inquiring about subject solicitation. After considerable research, I can assure you that we are not violating the Buy American Act.

DFARS 225.1101(2)(i) - directs me to use the DFARS 252.225-7001, Buy American and Balance of Payments Program clause for acquisition of commercial items (FAR Part 12)

DFARS 252.225-7001(b) states, This clause implements 41 U.S.C chapter 83, Buy American. In accordance with 41 U.S.C. 1907, the component test of the Buy American statute is waived for an end product that is a COTS item (see section 12.505(a)(1) of the Federal Acquisition Regulation). Unless otherwise specified, this clause applies to all line items in the contract.

DFARS 252.225-7001 defines COTS as "Commercially available off-the-shelf (COTS) item"-

(i) Means any item of supply (including construction material) that is-

(A) A commercial item (as defined in paragraph (1) of the definition of "commercial item" in section 2.101 of the Federal Acquisition Regulation);

(B) Sold in substantial quantities in the commercial marketplace; and

(C) Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and

(ii) Does not include bulk cargo, as defined in 46 U.S.C. 40102(4), such as agricultural products and petroleum products.

FAR 12.505 Applicability of Certain Laws to Contracts for the Acquisition of COTS Items

COTS items are a subset of commercial items. Therefore, any laws listed in sections 12.503 and 12.504 are also inapplicable or modified in their applicability to contracts or subcontracts for the acquisition of COTS items. In addition, the following laws are not applicable to contracts for the acquisition of COTS items;

(a)(1) The portion of 41 U.S.C. 8302(a)(1) that reads "substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States," Buy American--Supplies, component test (see 52.225-1 and 52.225-3).

FAR 52.225-1(b) 41 U.S.C. chapter 83, Buy American, provides a preference for domestic end products for supplies acquired for use in the United States. In accordance with 41 U.S.C. 1907, the component test of the Buy American statute is waived for an end product that is a COTS item (See 12.505(a)(1)).

These camera systems will never be connected to any outside or Air Force LAN.

Thank you again

The last line got me all hot and bothered - how are they going to ensure that this never gets connected to any outside or Airforce LAN .... how would you answer this?

NOTICE: This comment was moved from an existing discussion: US Embassy Requires Hikvision Cameras

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U
Undisclosed #1
Sep 01, 2016
IPVMU Certified

Great work, Edward.

Anyway now that you got him to show his hand I think there might be a joker in there.

Specifically, he quotes the COTS exemption for the "component" test of the BAA. In that he appears to be right. However, in more than one place I'm reading that the COTS waiver does not apply to the "end product" test, which I believe the Hik product may fail:

So, if I'm reading it right, the final manfacture would still have to take place in the U.S.

A couple caveats, this article is from 2009 so this may have been superceded. On the other hand he mentions only the component test.

Also, he may claim thay the "security system" is the product and the cameras are the compinents, so therefore exempt. Though I doubt that would stand much scrutiny.

Btw, it looks like they might have an "intelligence" exemption as well that they might use if needed.

Take a look yourself before drawing any conclusions, I'm wrong more than I would like to admit :)

Also, you could consider sending the procurement officer an IPVM invite; you never know he might take you up on it.

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Attila Szűcs
Sep 01, 2016

The last line got me all hot and bothered - how are they going to ensure that this never gets connected to any outside or Airforce LAN .... how would you answer this?

I would.

Separated network.

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JH
John Honovich
Sep 01, 2016
IPVM

Separated network.

You can certainly have a separated network only for the Hikvision cameras, the Chinese government LAN inside the US Air Force if you will.

Like any totally separate network, there are logistical issues.

  • Want to see the cameras in an office down the hall - need to run a new network cable.
  • Want to see the cameras in the next building over - needs a small construction project.
  • Want to see the camera in HQ or central command - needs a major construction project for the Chinese government camera dedicated fiber across the country.

At this point, I do not know if Hikvision does or does not meet Buy American but trying to justify by saying these cameras won't be on any LAN is a poor argument cause the military has value / demand to watch cameras remotely.

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Attila Szűcs
Sep 01, 2016
  • Want to see the cameras in an office down the hall - need to run a new network cable.

Solution: Proper design. And don't say it is not possible to think about how you want to use a system. I designed CCTV system for XXX embassy in the XXX country.

  • Want to see the cameras in the next building over - needs a small construction project.

Solution: Detto. And yes, if your design fails, you will have a larger construction cost than expected. But normally in government projects if the topic Security it is not an issue. Especially if that is a US property.

  • Want to see the camera in HQ or central command - needs a major construction project for the Chinese government camera dedicated fiber across the country.

Solutions: Network monitoring solutions, information security solution, dedicated VPN tunnel, etc. If ever in a life a camera/NVR wants to connect to a not allowed destination, which can be captured through properly managed networks (not soho devices), sue out the hell from Hikvision.

At this point, I do not know if Hikvision does or does not meet Buy American but trying to justify by saying these cameras won't be on any LAN is a poor argument cause the military has value / demand to watch cameras remotely.

This was not my argument, but Edward got hot and bothered, how is this possible.

Technically it is possible, with proper design. That is my viewpoint ;)

JH
John Honovich
Sep 01, 2016
IPVM

Attila,

You are adding far more expense with increased usability restrictions.

Your "dedicated VPN tunnel" idea for watching video at HQ is 'technically possible' but an implementation nightmare.

So you have your Chinese government made surveillance system that you don't want to put on the Air Force LAN but view remotely.

Let's do a "dedicated VPN tunnel".

We need some form of network connectivity from the Chinese government made surveillance system to the HQ. How are you going to get that? You need to bring that inside the base (a secured restricted area). Are you going to use the public Internet? How are you going to get it at the other side? Add connectivity inside the HQ just for this?

And then, inside HQ, are you going to set up a dedicated computer not connected to the Air Force's network just to watch those cameras that is separate from everything else?

Think about the cost involved and the complexity.

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Attila Szűcs
Sep 01, 2016

With all respect! What you are talking about is theoretical.

"We need some form of network connectivity..."

Who? You? Edward? Or you know they want it? Let's talk about the facts, and not about the fiction. Except the last one, which is certainly a hard issue, if you want to do that, every expansion of the system, or client, yes can be done with dedicated HW resources. Not an issue. Just proper design.

Or you will be happy, if your guard staff, could play Solitaire, work with Excel, or handling access control system, on a device which must be used for surveillance 24/7?

And what about hikvision OEM, JDM, ODM manufactured products? So you all not afraid to buy, Pelco, Sony, Axis, etc, because they are "well known".

If we are theoretical, with a hidden chip inside the cam/NVR any device can be used to spy our life. Not talking about the chineese manufactured smartphones, including Apple.

This topic starts to be more conteo than factual, and it is really really strange to me.

We are all from the security industry, and a healthy level of doubt and suspiciousness is always welcomed, but going over a level will make us crazy insanes.

So get back to reality, and let's talk about facts. ;)

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JH
John Honovich
Sep 01, 2016
IPVM

What you are talking about is theoretical

It's theoretical that a military base would want (either now or in the future) to be able to watch cameras from different buildings or from their HQ?

The point is simple. Whatever costs savings one gets from buying cheap equipment is eliminated when reasonable attempts are made at remote viewing that are not allowed to use existing networks.

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Attila Szűcs
Sep 01, 2016

Yes it is. (theoretical)

We faced this issue in an embassy project. not in a military bascamp. If we will, lets start over again :)

But also. network monitoring will help us to understand our systems communication. And find suspicious things. You can imagine that in a high prio object like your example have taken the ownership over their stuff. ;)

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Attila Szűcs
Sep 01, 2016

Might happen, that in a third country, especially as "hot" as Afghanistan, it is not really possible to purchase US products?

I have experience, with sending stuff otside EU to hot countries, suspicios things (yes can be cameras as well) never arrived there. And nobody knows the reason of loss, and where those landed... (Sorry can't name the country, due my job, and the nature/origin of info.)

Just asking. I was several times in the Middle-East, Pakistan, Iraq, but things are really going in a totally different path than in EU or US. Not talking about the installer companies requirements, etc.

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Ari Erenthal
Sep 01, 2016
Chesapeake & Midlantic

Might happen, that in a third country, especially as "hot" as Afghanistan, it is not really possible to purchase US products?

UPS and USPS fly there just fine.

Avatar
Attila Szűcs
Sep 01, 2016

I'm mainly talking about strange duty regulations and sometimes your package is spending 2 years under duty examination.

Trust me. I had this :/:/:/

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Ari Erenthal
Sep 01, 2016
Chesapeake & Midlantic

Normally, yes, but shipping DPO, like PPO, is not subject to those kinds of restrictions.

MC
Marty Calhoun
Sep 01, 2016
IPVMU Certified

Sorry folks, HIKVISION is acceptable, used everyday, worldwide, get over it....

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JH
John Honovich
Sep 01, 2016
IPVM

That it is used worldwide is not germane to the specific application of being used in government projects that require Buy American.

Marty, do you have any proof that Hikvision conforms to the Buy American Act?

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MC
Marty Calhoun
Sep 01, 2016
IPVMU Certified

Proof? The proof is in the sale John.

There have been hundreds if not thousands of individual companies from all points on the globe SUBMIT HIKVISION products to be installed as security cameras, recorders, etc. and every one HAS BEEN APPROVED time after time by educated individuals whose job is to make sure the products are in compliance.

Is anyone implying that thousands of procurement agents world-wide are in 'cahoots' to sneak in HIKVISION?

I ponder this: Can someone show proof where HIKVISION was denied? And if so, prove it to be authentic documentation.

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Attila Szűcs
Sep 01, 2016

Dear friend,

just because Hikvision sales are improving day by day, year by year does not means that they fits the BAA. Do they?

Just because you have no info about they were denied. It not means they weren't.

Just because nobody shown an autenthic documentation they failed it not means they not.

It is the nature of things around us. Nobody gave you the authentic document, to check by yourself that Mr. Obama is the winner of elections, but you accept him (and anybody else in the past 8 years) he is. :)

JH
John Honovich
Sep 01, 2016
IPVM

Is anyone implying that thousands of procurement agents world-wide are in 'cahoots' to sneak in HIKVISION?

No, the answer is simpler. They just did not know because your partner hid their government ownership

Now, it is out in the open and it is going to change. Let's look at this again in a year and the difference will be quite apparent.

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MC
Marty Calhoun
Sep 01, 2016
IPVMU Certified

HID??

What are you implying HIKVISION is hiding ? Are you saying that the small amount of financial and possible ownership information you have been able to ascertain regarding HIKVISION is secret and you have discovered it confidentially?

If not that would make it public information for anyone to see and therefore to say there ownership is 'hidden' is ludicrous.

So again what are they hiding?

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JH
John Honovich
Sep 01, 2016
IPVM

Marty,

Yes, hiding. Consider Jeffrey He, President of Hikvision USA when he said:

Like many companies across the globe, Hikvision does benefit from a certain amount of investment from the government. However, equating a company partially owned by SOEs with the government itself is simply incorrect and misleading.

There are two state-owned enterprises that own 42% of the company, with other people and venture capital investors owning the rest, including private equity in Hong Kong. Then in the open stock market there are shareholders all over the place. Some of the shareholders are foreign investors, as well.

Hikvision controlling shareholder is the Chinese government period. It is not simply an 'investment', nor is it just 'partial' (it's controlling), and it is not an open stock market but one run by the Chinese government for a Chinese government controlled organization, Hikvision.

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MC
Marty Calhoun
Sep 01, 2016
IPVMU Certified

I do not agree that misleading anyone is acceptable. Nor do I believe your representation of Mr. He is honorable or noteworthy to a forum that I joined for technical informational purposes.

I find the "witch hunt" for Hikvision not be worth pursuing any further as this is your personal forum.

Who owns Dahua? Who runs "Alibaba" Who runs or owns the thousands of other organizations that sell products to our government everyday? Is this the sole purpose of IPVM? It surely seems that way as every week, everyday its a constant "sniff test" of HIKVISION.

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JH
John Honovich
Sep 01, 2016
IPVM

Nor do I believe your representation of Mr. He is honorable or noteworthy

But do you disagree that Jeffrey He mislead the public relative to the actual facts we have discovered and presented?

If so, how? Be specific.

The fact that the Chinese government is the controlling shareholder of Hikvision, and that Hikvision USA has actively marketed that it was not, is newsworthy.

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U
Undisclosed #1
Sep 01, 2016
IPVMU Certified

Proof? The proof is in the sale John.

Just because a US agent bought one doesn't fulfill the requirements for BAA.

I think your interpretation may need a slight adjustment, i.e.

It's "Buy American!".

Not "Buy, American!".

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UI
Undisclosed Integrator #4
Sep 04, 2016

Or, Buy off American.

UI
Undisclosed Integrator #2
Sep 01, 2016

This would be interesting to follow up on its final conclusion. John, this is really great investigative work.

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EK
Edward Knoch
Sep 01, 2016

Hey - I sent a reply to the FCO on the DOD procurement I posted earlier. They (he included his manager in the procurement chain) have not responded. I am in process of sending this up to the OMB, my senators and reps. I intend to at least get this on record as a trouble trend of using Federal Dollars to procure products emplaced in sensitive areas in direct violation of the BAA and TAA.

In regard to everyone saying that this is a sour-grapes conversation - let me say this. There are plenty of "good" products that are accessible to the Federal Government from countries that are listed on the TAA. China is NOT and will not be listed there based upon their unfair trading practices. They have repeatedly violated WTO rulings and continue to hide their investments in home country companies. Jefferey He was one of the most honest in his exposure of the ownership stake. I have absolutely no problem with HikVision, Dahua or any other Chinese manufacture entering the US market. I do, however, take considerable umbrage to them getting access to Federal $$$ where it is explicitly prohibited. I would advise Chinese government officials to work on attempting to smooth over their negative perception in the US by stopping the unfair subsidizing and start competing on-par with other vendors - no more "bargin" basement pricing.

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U
Undisclosed #1
Sep 02, 2016
IPVMU Certified

Hey - Can you post the reply?

UI
Undisclosed Integrator #4
Sep 04, 2016

No more currency manipulation should be included.

U
Undisclosed #1
Sep 04, 2016
IPVMU Certified

No more currency manipulation should be included

on any DVR.

EK
Edward Knoch
Sep 02, 2016

My response to the procurement officer

John,

Thank you for the walkthrough on DFARS and BAA. As per your last point, your assurances do not give me any comfort. The moment some high-ranking general/colonel wants to have access to the system to "oversee" his/her personnel, that caveat of connectivity goes out the window. The true concern I have with your product selection (which I know is completely based upon price) is that this product (namely the company) is Owned by the Chinese Government with massive investment and oversight. {content redacted} If the fact that it is Chinese Owned and US Military doesn't cause you pause, I don't know what else to say. The use of Federal Funds {for military projects} to buy products that are designed, assembled and tested in China is unheard of and frankly, scares me.

This is not some customers home were talking about here -- and regardless of the notion you presented that this would never be attached to the LAN - give it time. As soon as the end-customer sees the IP feature set (remote view in a web browser, simple controls), they'll want to watch in on their own computers and then their cell phones and eventually - it will be added an insecure network.

Finally, they have never submitted their code base (nor are they required to provide you with copies of their firmware for inspection - as required under IA) since it is proprietary because you are using the "not connected to a lan" out clause.

Well, in anycase, I disagree with your application of the DFARS to this situation and I also believe that BAA in combination with TAA, China is definitely OUT as a procurement option for products when it comes to our military.

--- No reply as of yet....

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U
Undisclosed #3
Sep 02, 2016

"China is definitely OUT as a procurement option for products when it comes to our military."

Really?

Hikvision Achieves RMF Certification at U.S. Army Facility

U
Undisclosed #1
Sep 02, 2016
IPVMU Certified

Edward, did you miss post or was my information mistaken about DFARS and BAA? Basically, he is conveniently overlooking the fact the the COTS BAA waiver only exempts the components from us origin, not the end-product.

Here from another source:

The BAA uses a two-part test to define a domestic end product:

1. The article must be manufactured in the United States

2. The cost of domestic components must exceed 50 percent of the cost of all the components. DoD has issued a final rule amending DFARS 252.225-7000 and 252.225-7001 provision and clause which includes a partial waiver to the two-part test.

The waiver allows a Commercial Off- The-Shelf (COTS) item to be treated as a domestic end product if it is manufactured in the U.S., without tracking the origin of the item’s components.

In any event seeing as he has given you in writing his possibly flawed interpretation, I think it might be more fruitful to engage him directly on this point.

GS
Gary Sharpe
Sep 06, 2016

Honestly, 'most' of US purchased technology comes from overseas, mainly China.

Let me challenge you to find a single technical product, scratch that, find any product used in your workplace that is not manufactured in china, or one of its bedmates.

I challenged my staff to that same task a month ago. Not a single camera, laptop, server, switch, router, phone, pencil, container, chair, peripheral, wire, aluminum, steel, etc. (you get the picture) was manufactured in the United States!

So, how can the BAA be enforced when we manufacture nothing here?

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Ross Vander Klok
Sep 06, 2016
IPVMU Certified

If you are sitting in one of our chairs at one of our desks pulling papers out of one of our file cabinets and your office is in North America, South America, Europe, Australia, India or Russia your product is not made in China. There are products in all our workspaces that aren't made in China.

Unless, that is, your office is in China......

GS
Gary Sharpe
Sep 09, 2016

Okay I get it, your chairs and filing cabinets are not made in China...

But what about everything else? You will have to prove it to me, because if something "is" made in America, the components are from China, Taiwan, Korea etc...

I can prove it. I bought some Talstar P insecticide yesterday (they claimed it was manufactured in the USA)...low and behold, it is assembled in the US, however the bifenthrin is made in China! Other examples include; my panasonic phones are made in malaysia, my lenovo laptop is made in china, my canned duster is made in china, my lg cellphone is made in china, my copier paper is made in china, my plastic cup is made in china, my cd's and dvd's are made in china, my HIKVISION DVR and cameras are made in china, all of my printers are made in china, all of my metal we use for manufacturing is made in china, my bandsaws were made in taiwan, my welding machines were made in china, my cranes were made in china, my forklifts were made in taiwan, my trucks were made in mexico, every single component we install on our trailers is made in china, your brakes on your car were made in china, your airbags are made in japan, my ip phones are made in china, my bulletin boards are made in china, my mouse and keyboard is made in china, my file cabinets and safes were made in china, my clocks were made in china, my alarm system was made in china, all of my power tools are made in china, my safety glasses are made in china, my gloves are made in china, the clothes that I am wearing right now were made in bangladesh, my first aid kits were made in china, you probably get it by now.

My company is located in the Southeastern US, I do not know where you are, but I challenge you to prove to everyone that any of the products that you use on a daily basis are made in the US. Not Germany, not the UK, but the US.

U
Undisclosed #1
Sep 09, 2016
IPVMU Certified

I challenge you to prove to everyone that any of the products that you use on a daily basis are made in the US.

Most U.S. flags are made in the U.S. I "use" them everyday.

Avatar
Ari Erenthal
Sep 09, 2016
Chesapeake & Midlantic

How do you use a flag? Salute it? Raise and lower it every dawn and dusk?

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GS
Gary Sharpe
Sep 09, 2016

All of the above....I'm not bashing anyone here. I'm only saying that we no longer manufacture anything in the United States...period. I do not like that one bit! In fact, I despise the fact that we are relegated to purchasing from china!

We fly an American Flag here...it reads "hecho en mexico"...no offense, I did not purchase this flag. This company has been in business for seventy five years, and up until two years ago, we tried to purchase all American made, but that's impossible now, or until the politicians fix that. However; we know that is not going to happen as long as our debt to china remains in the trillions of dollars.

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Ross Vander Klok
Sep 13, 2016
IPVMU Certified

My issue is with this statement "we no longer manufacture anything in the United States...period." That is simply not true. However, this is getting off topic so I am not going to list the thousands of things that are manufactured, assembled and therefore made in America that can easily be found with a Google search.

Although to quickly answer your daily use question, our Maglites.

U
Undisclosed #1
Sep 13, 2016
IPVMU Certified

Although to quickly answer your daily use question, our Maglites.

Everything in a Maglite is made in the USA, except for the lite.

U
Undisclosed #1
Sep 09, 2016
IPVMU Certified

How do you use a flag? Salute it?

Sure, you can do that. That's what their designed for, day in and day out.

American made American flags are made to endure.

Trying saluting one of those imported flags 10,000 times or more, I guarantee it'l be in tatters!

PH
Patrick Heenan
Sep 06, 2016
IPVMU Certified

The question "Does Hikvision Violate The Buy American Act? is not the proper question. Hikvision does not violate BAA. The question should be " Do COTS items completely produced and packaged in a offshore country meeting the BAA requirements?" I think that the answer would be the products do not meet the requirements of BAA.

I have been on both sides of this issue with quotes to the federal government and the contract officer (CO) has the final say and can produce chapter and verse to support his decision. The only way to reverse a CO decision is to get a good attorney and file a request for hearing and present the facts to the arbitrator. Most companies just walk away shaking their heads in disbelief.

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U
Undisclosed #1
Sep 06, 2016
IPVMU Certified

Yes, I agree, the products do not seem to be BAA compliant, as the COTS waiver only refers to sub-components, as I noted here.

Mr.Knoch above, was apparently in contact with the procurement officer directly, who had responded with his reasons outlined. He either is unaware or not addressing the issue of the full scope of the waiver, and Mr Knoch has fallen silent.

In any case, as you say, it would take legal action at this point. Even then I wonder what the scope of it would be, e.g. Kabul Embassy cannit buy Hik cameras. That's hardly worth pursuing.

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EK
Edward Knoch
Sep 06, 2016

My apologies. I was actually taking Labor Day weekend to cease from any Labor - and it was good (except for the deck and yard that I had to re-do). in any case, I haven't had further conversation with the FCO on this procurement. I actually sent the last note (that you are in receipt of) to him for answer and they have declined to respond. I am preparing another note based upon the comments and suggestions from this group and will let you know the ultimate result.

Thank you for the input ...

Edward Knoch

UI
Undisclosed Integrator #2
Sep 09, 2016

I'm voting Edward into the IPVM staff.

RS
Robert Sears
Sep 26, 2016

No and Yes..

Who knows but the red chinese communists what kind of network spy gadgets they have built into those systems but it bears looking into if the former Sect of State got any donations to the Clinton Foundation from them or their distributor network.

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