Government Operations Committee on April 14th, 2021

[Bill Matthews]

I'm going to see if my colleague Mr. Mills can answer that, or I'll offer to get back to you. I'll see if Mr. Mills has a quick answer.

[Michael Mills, Associate Assistant Deputy Minister, Procurement, Department of Public Works and Government Services]

I think it's now greater than 40%, but we will come back to the committee with a more specific number.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Okay. Are we—

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Kusmierczyk. We're right at five minutes.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

That's no problem at all. You have to do your job. Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

We'll now go to Ms. Vignola for six minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

For an end-to-end vaccine distribution logistics solution, the federal government awarded a contract to FedEx Express Canada, a Canadian subsidiary of an American company, and to Innomar Strategies, another American company, which has offices in the Montreal area.

For the transportation of vaccines, Amazon, UPS, FedEx and Innomar Strategies, all American companies, are being used. Are there no transportation companies in Canada that could take over, even if only for regional transportation? Is it not possible for our companies in Canada to work together? What is the problem?

I want to be clear that I am not pointing fingers. I'm trying to understand why we're not using our resources, not American resources.

[Bill Matthews]

Thank you for the question.

I'll start by talking about the FedEx and Innomar Strategies contract, which was awarded after a competitive bidding process. So it was a competitive process, and the winners were FedEx and Innomar Strategies. Both companies have the ability to serve the country very effectively.

We are very happy with how FedEx and Innomar are performing, but it was awarded based on a competitive process that was open to all, including Canadian companies. They were certainly eligible to apply, and we were looking for a service provider that could serve the country and had a specialization in vaccines, obviously, or medical supplies, because there are very specific transportation requirements for the vaccines.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much.

Since the beginning of the pandemic, we have been very dependent on China for the supply of personal protective equipment and other materials. So I'm referring to the dependence on others. The proportion of equipment supplied by Canadian companies has increased, at least I hope so.

Can you tell me what proportion of equipment was supplied by foreign countries at the beginning of the pandemic compared to today?

[Bill Matthews]

Thank you for the question.

At the beginning of the pandemic, it was a matter of getting goods as soon as possible. Those goods often came from China, as the member mentioned, as well as from other countries.

As the year went on, Canadian industries were scaled up, so you certainly saw a greater number of contracts being awarded to Canadian companies that were often getting into new business lines. I think we are now, and this links to the questions from the previous member, at about 40% of contracts to domestic suppliers.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much.

As you mentioned, we have been and remain dependent on China. China is a major industrial producer, but its ethics can be questioned. You are aware of the human rights issue, not only with the Uyghurs, but with the whole population. I'm also talking about the Canada-China agreement, which China abandoned, and a host of problems ensued. The list is long.

Apart from China, there are 190 other countries in the world. I would imagine that there are producing countries with which we could do business. Why don't we do more business with ethically responsible countries, rather than China? It's not a trick question, it's just a question.

[Bill Matthews]

Thank you for the question.

Yes, Canada could do business with other countries, but some goods are concentrated in two or three countries.

Especially with PPE early on, three or four countries were specializing in this equipment. We have seen, as the pandemic has gone on, broader diversification in terms of where these goods are located or manufactured. You now see N95 masks being made in two locations in Canada, in Quebec as well as Ontario. You see gowns, you see face shields, but when this started there was a heavy concentration of goods being made in China, and that was just the way the market looked. There are still a couple of goods that only a handful of countries manufacture. Gloves are one I would point out and there are only a couple of countries that manufacture gloves.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Yes, I see.

On May 4 last year, Public Services and Procurement Canada posted a letter of interest and request for information on the buyandsell.gc.ca website to solicit interest from large logistics service providers. The request for proposals period closed on May 7, three days later. I believe UPS was awarded the contract.

Did they know about the request before it was issued? How many proposals were submitted? Three days is not a long time to turn around and respond to an offer. It seems to me that this is below the usual standard.

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Matthews, if you could do that fairly quickly, I'd appreciate it.

[Bill Matthews]

Mr. Chair, I think I'm going to have to provide a written response to the committee.

[The Chair, Conservative, Robert Gordon Kitchen]

Okay. Thank you very much. We greatly appreciate it.

Mr. Green, you have six minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you.

I want to begin by commending PSPC for its tilt and pivot towards domestic procurement on critical life-saving PPE. I know we heard in the opening remarks that something like 44% of the dollar values were produced in Canada, which I think is important. It is important to have domestic supply chains, as the previous speaker, my friend Ms. Vignola, pointed out.

I'm wondering about the dollar value. How much money would that represent going to Canadian firms on these 137 contracts?

[Bill Matthews]

I think, Mr. Chair, we'll have to do some quick math and maybe before the end of this round we can get back with a number.

[Matthew Green, NDP, Hamilton Centre, ON]

As just a ballpark figure, take a guess.

[Bill Matthews]

I'm guessing somewhere around 40% of probably $600 million, but don't hold me to that. My colleagues will do some math while—

[Matthew Green, NDP, Hamilton Centre, ON]

When doing that calculation, Mr. Matthews—through you, Mr. Chair—would you include the tax?

[Bill Matthews]

Would we include the tax? Do you mean in terms of the value of the contracts?

[Matthew Green, NDP, Hamilton Centre, ON]

In terms of the overall cost of the program, would you include the sales tax if there is provincial local sales tax?

[Bill Matthews]

We'll have to check, but typically when you see government disclosures of government contracts, you'll often see the pre-tax value and then the tax above, because the way departments are funded, there are actually two separate buckets of money, one for operation—

[Matthew Green, NDP, Hamilton Centre, ON]

Through you, Mr. Chair, is that $600 million pre- or post-tax?