Government Operations Committee on June 7th, 2021

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay.

I thought that you may have had those figures. You provided data in the report on the average number of days between the signing of the original contract and the first delivery by the suppliers.

I was just curious. I would have liked to know whether there was a difference. Obviously, we could learn from this. If there isn't any difference, we could make sure that the recommendation is followed.

You also spoke about the Public Health Agency of Canada's quality assurance process for the procurement of medical devices. What did you mean by that? Can you comment on this?

[Karen Hogan]

We looked at what the Public Health Agency of Canada did to ensure the quality of the personal protective equipment ordered. We used many suppliers, and several of them were unknown or had no previous dealings with the government.

The agency tested samples to verify the quality of the equipment before recommending that Public Services and Procurement Canada award the contract. When the supplies were received, the agency tested the equipment again to ensure that it met the requirements for medical use.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

You also commented on advance payments and the fact that some suppliers couldn't state their intentions in this area.

In general, was the Government of Canada able to collect these amounts?

Were there any problems?

[Karen Hogan]

In terms of the contract referred to earlier with another committee member, the government is still taking action to collect the money.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I thought that you said that, in most cases, Public Services and Procurement Canada had received the money, but that there were still issues with some suppliers.

[Karen Hogan]

Do you want to know whether all the equipment purchased has been received since we completed our audit?

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Yes.

[Karen Hogan]

I don't know.

I don't know whether Mr. Goulet or Mr. Duvnjak can respond.

I think that this didn't concern advance payments for supplies that weren't received. I think that we're talking about supplies in general here.

[Milan Duvnjak, Director, Office of the Auditor General]

I can—

[Karen Hogan]

I'll give you the floor, Mr. Duvnjak.

[Milan Duvnjak]

I think that Mr. Goulet is having technical issues.

I will try to help out.

I think the best response to that question is to refer you to the public information that PSPC has posted. When I checked a couple of days ago, it was up to date as of May 25. This will give you a broader set of information, not just the 39 specific contracts that we examined.

Thank you.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Great, thank you.

Mr. Chair, I think I have about 20 seconds left, so I'll just say thank you to the Auditor General for her work.

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Drouin.

We will now go to Ms. Vignola for six minutes.

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

Ms. Hogan, thank you for joining us. It's always a pleasure to see you and your staff.

The COVID‑19 pandemic is an “unforeseen”—I'm using quotation marks—situation, despite 17 years of warnings from scientists.

How should the federal government now determine the level of acceptable risk in contracts for personal protective equipment and medical devices when it doesn't perform financial due diligence?

Should it determine a level of acceptable risk? If so, how should it do so?

[Karen Hogan]

At this time, the procurement contract policy requires a financial viability audit when advance payments are made.

That's why we expected this audit to be done, even during the pandemic, given the high risk involved in advance payments.

Payments usually aren't made in advance, which is why this takes place. However, this isn't the case in all other procurement processes.

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

Normally, the officials conduct an audit. However, in this case, they didn't do so because of an emergency beyond their control.

If another situation of this type were to occur, meaning an emergency beyond their control, and if it were necessary to start making advance payments again without having time to conduct an audit, what should be accepted as a minimal risk?

[Karen Hogan]

The government shouldn't accept this risk when dealing with suppliers that it hasn't previously worked with.

It should be noted that all steps of the procurement process are there to reduce risk, but the steps won't completely eliminate risk. Even if an assessment is done, there may still be an issue with the contract. However, an assessment increases the chances that there won't be any issues. That's why an assessment should be done.

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

I just want to confirm that I understood both what the report said and what you said earlier.

Of the contracts that you have audited to date, some of which weren't financially audited, only one is really an issue. Is that right?

[Karen Hogan]

Yes, that's right.

There were 14 contracts involving advance payments. Seven of these 14 contracts were assessed. Personal protective equipment wasn't received in only one case.

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

Okay.

Were samples required from all suppliers that received an advance payment in order to verify the quality of their products beforehand?

[Karen Hogan]

I think the Public Health Agency required all suppliers to send in samples, so that the agency could assess the products' quality. This did not apply only to suppliers having received an advance payment.

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

PSPC indicated that its employees have been presented with challenges during the pandemic.

Are you satisfied with PSPC's response to your recommendation on advance payments?

If so, why?

If not, where can improvements be made?

[Karen Hogan]

PSPC clearly said it agreed with our recommendations, but I would have rather that it said it was in agreement and that it do all the financial viability assessments going forward.

PSPC said it needed to find a balance between quickness and assessments, as a number of assessments need to be carried out. In the case of contracts involving advance payments, I think the supplier's financial viability should have at least been assessed.

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

I will go back to FTI Professional Grade and Baylis Medical. I think we have ordered enough respirators to supply the entire planet for 10 years. We have received 21,000 respirators, 168 of which have been distributed in Canada and 350 of which were sent to India.

The Ordre professionnel des inhalothérapeutes du Québec representatives said a shortage of respirators was not to blame, but rather a shortage of personnel. Respiratory therapists undergo pretty specialized training and programs have limited spaces, at least in Quebec.

Is the contract awarded to Baylis Medical part of the contract category involving advanced payments for which the supplier's financial viability has not been assessed?

[Karen Hogan]

The contract you are referring to was not part of our sample, so I don't have any more details than what I have seen in the newspapers.