Government Operations Committee on June 7th, 2021

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

[The Chair, Conservative, Robert Gordon Kitchen]

With that, we've come to the end of our—

[Matthew Green, NDP, Hamilton Centre, ON]

Mr. Chair, I have a quick point of order, sir.

[The Chair, Conservative, Robert Gordon Kitchen]

Mr. Green.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you. I just think it would be appropriate that our committee thank Ms. Hogan and congratulate her on one year tomorrow. I failed to do that in my haste for questioning, but I do recall being at her first committee.

Despite all of my peppering—she's probably going to be sick of me at some point—I just want to say that she's done a fantastic job, as Mr. MacKinnon has pointed out. I want to extend that good wish to her. She's done a great job.

[The Chair, Conservative, Robert Gordon Kitchen]

Thanks, Mr. Green. I will allow that point of order.

[Karen Hogan]

Thank you very much. I appreciate that.

[The Chair, Conservative, Robert Gordon Kitchen]

Ms. Hogan, I want to thank you for being with us again today. It is much appreciated. I know that you will step off camera now. We appreciate that.

I do want to thank you for providing us the letter early this morning in both official languages. That allowed us to get it out to the members as quickly as we received it. Thank you again for that.

With that said, I understand that we now have our other participants here.

I will now invite Public Services and Procurement Canada, if they would like, to deliver an opening statement.

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

Thank you, Mr. Chair.

Good afternoon, everyone.

My name is Michael Mills. I am an associate assistant deputy minister at Public Services and Procurement Canada, or PSPC.

I am pleased to discuss the Auditor General's report on securing personal protective equipment and medical devices during the pandemic, and specifically the role of Public Services and Procurement Canada in supporting the work of the Public Health Agency of Canada.

With me today is Alain Dorion, director general, Pandemic Response Sector.

First, we thank the Auditor General for this report and the one recommendation identified for PSPC.

In her report, the Auditor General recognized the significant work by our department to secure personal protective equipment and medical devices during a period of unprecedented global demand. The audit found that PSPC mobilized its workforce and adapted quickly to deliver on urgent procurement requirements for Canadians.

Procuring the goods and services required to combat the pandemic, particularly in the first 100 days, was an around–the–clock effort, undertaken in an extraordinary environment. PSPC took an aggressive approach to fulfil immediate, emerging and long–term medical supply needs, including buying in bulk from distributors in Canada and internationally to secure key items. This approach has allowed us to secure over 2.7 billion pieces of personal protective equipment and medical supplies to date.

The explosive increase in demand for medical equipment in the first few months of the pandemic drastically reduced global supply and stressed supply chains. On top of our existing supply arrangements and standing offers, PSPC leveraged emergency contracting authorities as part of its procurement strategy.

In addition, advance payments to suppliers were required to help Canada secure access to items that were ready to ship and be delivered immediately. Advance payments are normally used in exceptional circumstances only, but they became quite common during the early part of the pandemic response.

In her report, the Auditor General recognized that PSPC accepted and mitigated risks in order to procure large quantities of equipment in a very competitive market, and that without this action fewer pieces of equipment would have been available to front-line workers and vulnerable Canadians. The Auditor General also provided one recommendation to PSPC regarding financial checks of suppliers involving advance payments, which we accept.

Since the very beginning, we have worked tirelessly to acquire supplies and equipment to support Canadians and front-line health care workers as well as all Canadians. At the outset of the pandemic, PSPC established processes aimed at ensuring oversight and due diligence while balancing our needs to procure equipment as quickly as possible in a crisis. However, we recognize that procurement processes can always be improved, while we continue to prioritize the health and safety of Canadians.

Today, the situation is different. The market is more stable and domestic production of PPE has since increased. PSPC has helped establish this increase in domestic production, with contracts going to Canadian producers whenever possible, including agreements with Quebec-based Medicom and 3M in Ontario for made-in-Canada N95 respirators.

The department has also returned to the use of competitive bidding processes where circumstances permit and the needs are not urgent.

PSPC has issued a number of competitive procurement processes specifically for Canadian manufacturers and for indigenous providers to supply other items such as surgical masks, face shields and gowns.

And PSPC will continue to expand the use of competitive bidding processes to secure the goods and services required to meet Canada's evolving needs in response to COVID‑19.

Again, we thank the Auditor General for her report. This audit will help Canada adapt its ongoing response to this pandemic and inform our response to future emergency situations.

Thank you for your attention.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Mr. Mills.

Now we will go to the Public Health Agency of Canada for some opening statements.

[Cindy Evans, Vice-President, Emergency Management, Public Health Agency of Canada]

Good afternoon. I'd like to thank the chair and the committee members for inviting the Public Health Agency of Canada to return to speak today.

My name is Cindy Evans, and I'm the vice-president of emergency management. In this role, I'm responsible for the national emergency strategic stockpile.

As you may recall from my previous visit to this committee, the national emergency strategic stockpile, or the NESS, manages and allocates supplies that provinces and territories can request in emergencies when their own resources are insufficient, such as during infectious disease outbreaks, natural disasters and other public health events.

As the NESS modernized, it focused on stockpiling strategic medical supplies that are not typically held by provinces and territories. This includes items such as specialized vaccines and other drugs that require controlled environmental conditions.

The COVID-19 pandemic is on a scale that's not been seen in over 100 years, and it placed a great demand on the global supply of personal protective equipment, or PPE, as well as medical supplies and other supplies. In response, the Government of Canada quickly mobilized to secure and rapidly distribute supplies to the provinces and territories. This was done by launching a bulk procurement process that ultimately led to the procurement of over 2.5 billion units of PPE, medical equipment and other supplies. Through long-term contracts with third party warehousing and logistics providers, we expanded our warehousing footprint to over two million square feet to accommodate the unprecedented quantities of supplies.

Since the start of the COVID-19 pandemic, we've been able to distribute over one billion units of PPE, medical equipment and vaccine ancillary supplies to the provinces and territories to support our front-line health care workers. While significant strides have been made in the past year, the Public Health Agency of Canada acknowledges that it was not as prepared as it could have been prior to the COVID-19 pandemic. However, the dedicated and collaborative work of the agency and its federal partners to rapidly secure and distribute PPE medical devices supported the needs of the provinces and territories.

The Public Health Agency of Canada appreciates the Auditor General's recognition of the significant work that was undertaken in response to the COVID-19 pandemic. The agency accepts all of the recommendations of the Auditor General and recognizes that the performance audit identifies areas for improvement that will guide the agency to be better prepared for future health events of this magnitude. These include reviewing the management of the national emergency strategic stockpile and enforcing service level expectations for contracts with third party warehousing and logistics providers.

The agency is still in active response mode, distributing NESS assets to provinces and territories in need. We have committed to responding to the Auditor General's recommendation within one year of the end of the COVID-19 pandemic. We're working on a comprehensive management plan that will take into account lessons learned from the COVID-19 pandemic.

In conclusion, as the NESS is intended to provide surge capacity to the provinces and territories, we will continue to work closely with them to review and assess Canada's needs for key medical supplies in an emergency. We will also better define the federal, provincial and territorial roles and responsibilities in preparation for future emergencies. This includes reviewing the management of the national emergency strategic stockpile and enforcing service level expectations for contracts with third party warehousing and logistics providers.

Thank you.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you, Ms. Evans.

We'll now go into questions.

We'll start with six minutes for Mr. McCauley.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, Mr. Chair.

Witnesses, thanks for joining us today.

Mr. Mills, I want to chat briefly about the sole-source contract to SNC for the mobile health units.

Who made the decision to order these? That did not come from Health Canada or PHAC. It came from within PSPC.

[Michael Mills]

Mr. Chair, I'd first like to clarify that we don't have a contract with SNC. We have a contract with the joint venture SNC-Lavalin PAE Inc. The choice to procure MHUs was made in the context of our looking globally—

[Kelly McCauley, Conservative, Edmonton West, AB]

I didn't ask about the context.

Who made the decision?

[Michael Mills]

PSPC as a department made the decision to move forward.

[Kelly McCauley, Conservative, Edmonton West, AB]

PSPC is not a human entity by itself.

Who made the decision?

[Michael Mills]

I'm sorry, but the decision predated me. I'd have to get back to you on which officials were involved in the specific decision.

[Kelly McCauley, Conservative, Edmonton West, AB]

I appreciate it.

None of the [Technical difficulty—Editor] have been used of the SNC partnership, but there is money in the estimates. The supplementary estimates list $650.9 million to store, deploy, operate and maintain the mobile health units.

Is this for the B.C. side of the two sole-source contracts, or is some of this money going to the SNC partnership?

[Michael Mills]

We have in total four MHUs that have been purchased, two which are currently deployed in Ontario and two that were held in reserve, one of which is an SNC-Lavalin PAE joint venture unit, and part of their contract is to maintain them and storage them to be ready to deploy.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay. One is being held in reserve but the supplementary estimates are asking for $650.9 million for the mobile health units and other uses. How much of that is going for mobile health units and how much more to the SNC partnership? If you don't know offhand, you can get back to us. That's fine.

[Michael Mills]

As far as I know, as of to date, both those contracts have a total value, their task-based authorizations, which could go up to $150 million each. As of today, we're at around $64 million that has been spent on the SNC PAE contracts and—

[Kelly McCauley, Conservative, Edmonton West, AB]

For the one held in reserve....

[Michael Mills]

—for design—