Public Accounts Committee on Feb. 10th, 2022

[The Vice-Chair, Liberal, Jean Yip]

I call this meeting to order.

Welcome to meeting number five of the House of Commons Standing Committee on Public Accounts. Pursuant to Standing Order 108(3)(g), the committee is meeting today to study “Report 10: Securing Personal Protective Equipment and Medical Devices” of the 2021 reports of the Auditor General of Canada.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely by using the Zoom application. The proceedings will be made available via the House of Commons website. Just so you are aware, the website will always show the person speaking rather than the entirety of the committee. I would like to take this opportunity to remind all participants at this meeting that screenshots or taking photos of your screen is not permitted.

Given the ongoing pandemic situation, and in light of the recommendations from health authorities as well as the directive of the Board of Internal Economy on October 29, 2021, to remain healthy and safe, all those attending the meeting in person are to maintain two-metre physical distancing; must wear a non-medical mask when circulating in the room, and it is highly recommended that the mask be worn at all times, including when seated; and must maintain proper hand hygiene by using the hand sanitizer provided at the room entrance. As the chair, I will be enforcing these measures for the duration of the meeting. I thank members in advance for their co-operation.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of floor, English or French. If interpretation is lost, please inform me immediately and we will ensure that interpretation is properly restored before resuming the proceedings.

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With regard to a speaking list, the committee clerk and I will do the best we can to maintain a consolidated order of speaking for all members, whether they are participating virtually or in person.

I would now like to welcome our witnesses.

From the Office of the Auditor General, we have Andrew Hayes, deputy auditor general, and Jean Goulet, principal.

From Health Canada, we have Dr. Stephen Lucas, deputy minister.

From the Public Health Agency of Canada, we have Dr. Harpreet Kochhar, president, and Cindy Evans, vice-president, emergency management.

From Public Services and Procurement Canada, we have Paul Thompson, deputy minister.

You will have five minutes to make your opening statements.

I will go first to the deputy auditor general.

Mr. Hayes, you have the floor. It's so nice to see you again.

[Andrew Hayes, Deputy Auditor General, Office of the Auditor General]

Thank you very much.

We are happy to appear before the committee today to discuss our audit of securing personal protective equipment and medical devices.

I want to start by acknowledging that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinaabeg people.

Joining me today is Jean Goulet, the principal who was responsible for the audit.

Personal protective equipment and medical devices are essential to the safety of Canadians, especially in health care settings and during a pandemic. Effective management ensures that increased demand can be met in a public health emergency.

The audit focused on whether the Public Health Agency of Canada and Health Canada helped to meet the needs of provincial and territorial governments for N95 masks, medical gowns, testing swabs, and ventilators before and during the COVID‑19 pandemic. The audit also focused on whether Public Services and Procurement Canada provided adequate procurement support to the Public Health Agency of Canada.

We found that, before the pandemic, the Public Health Agency of Canada had not addressed long-standing and known issues affecting the systems and practices used to manage the National Emergency Strategic Stockpile. There was no rationale justifying the quantities of equipment held in the stockpile. Some inventory records were inaccurate, and the agency lacked timely and relevant information to manage the stockpile. As a result, the agency managed the stockpile reactively and was not as prepared as it should have been to deal with the surge in requests for equipment that was triggered by the pandemic.

Despite these pre-existing issues, we found that, when faced with the pandemic, the Public Health Agency of Canada, Health Canada and Public Services and Procurement Canada adapted their activities and helped meet the needs for personal protective equipment and medical devices across the country. As the pandemic persisted, collaboration and communication among the agency and other federal organizations, provinces and territories continued to improve.

The Public Health Agency of Canada moved from reactive management to informed planning and allocation. An initial shift to a bulk procurement strategy, combined with improvements to how it assessed needs and allocated equipment, allowed the agency to meet the record number of requests for equipment from the provinces and territories. The agency also increased the capacity of the stockpile by outsourcing much of the warehousing and logistical support needed to deal with the exceptionally high volume of purchased equipment.

Health Canada reacted to the increased demand during the pandemic by modifying how it managed licence applications from suppliers so that they could be processed more quickly. The adapted process allowed for medical devices to be imported and sold while the licence applications were being evaluated. Should the evaluation subsequently show a problem, the department can take action. For example, it can seize equipment, stop the sales and prevent future imports.

Public Services and Procurement Canada quickly adapted its procurement activities. The department adjusted to the situation by adopting bulk procurement, reassigning staff and streamlining processes so that contracts could be awarded faster. The department also adjusted to the pandemic by accepting some risks, such as often paying in advance. This expedited the purchase of large quantities of equipment in a highly competitive market where supply did not always keep pace with demand. However, the department did this without always conducting an assessment of the supplier's financial viability.

If the agency and the departments had not adapted their approaches to the circumstances, it is unlikely that the government would have been able to acquire the volume of equipment that was needed.

The Public Health Agency of Canada, Health Canada and Public Services and Procurement Canada agreed with the four recommendations we made in our report and have prepared action plans to address them.

Madam Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have. Thank you.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

We now move to Dr. Stephen Lucas.

[Stephen Lucas, Deputy Minister, Department of Health]

Thank you, Madam Chair.

I'd like to thank the committee members for the opportunity to appear today.

Throughout the pandemic, the Public Health Agency of Canada and Health Canada have worked to facilitate the distribution of medical supplies and equipment to provinces and territories to support Canada’s COVID‑19 response.

In March 2020, Health Canada and the Public Health Agency worked closely with partners for the provision of timely and accurate data related to purchased personal protective equipment, or PPE, and medical devices, including those shipped to the provinces and territories. As part of this, as mentioned in the Auditor General's report, we developed a supply-and-demand modelling tool that allowed us to assess the sufficiency of stocks held by federal and provincial or territorial holdings, along with expected deliveries, and then compared these to the anticipated demand for PPE across the economy, in particular in the health sector, and with the modelling informed by an epidemiological model in terms of the expected demand for different health scenarios.

Health Canada's role as it pertains to recommendation 10.82 of the report concerns authorizing the sale of medical devices in Canada. Health Canada regulates the advertising, importation and sale of medical devices. This includes diagnostic tests, ventilators, swabs and PPE.

The regulation of medical devices in Canada is based on risk. Devices are classified into four classes, with class I presenting the lowest potential risk and class IV the highest risk. Under this system, all medical devices, including respirators, are subject to the safety and effectiveness requirements of the medical devices regulations.

Under the regular regulatory framework, only higher-risk devices, classes III and IV, are subject to a premarket scientific review. Respirators are class I devices and therefore do not require device-specific premarket authorization under the regular authorization process. The establishments manufacturing, importing and distributing class I devices are subject to the medical device establishment licensing regulatory requirements. However, through interim orders used to introduce regulatory flexibilities in the context of the pandemic, manufacturers have the choice between two authorization pathways for class I medical devices: the new interim order pathway and the regular medical device establishment licensing pathway.

Under the interim order pathway, manufacturers of class I devices submit an application to demonstrate the safety, effectiveness and quality of their medical device. Health Canada conducts a scientific review of the application before authorizing the sale of these devices. Alternatively, manufacturers of class I devices can obtain a medical device establishment licence from Health Canada, which is the regular authorization pathway for class I devices. Under this pathway, the department maintains regulatory oversight of products coming onto the Canadian market through establishment inspections and compliance verifications to identify risks. Officials make admissibility decisions on products received at the border.

Regardless of the pathway chosen, all medical devices are subject to the safety and effectiveness requirements of the medical devices regulations, and companies are required to provide Health Canada with information promptly, if requested.

In report 10, the OAG asked Health Canada to determine whether respirators are appropriately classified, given that class I medical devices are not subject to a Health Canada review of safety and effectiveness information under the regular regulatory authorization process. This is why Health Canada has been conducting premarket evaluations of all applications for Canadian respirators received under the medical device interim orders, even though they are class I. We will continue to do so as long as this alternative regulatory pathway remains in effect.

In addition, in response to recommendation 10.82, Health Canada agrees with the Auditor General and has already convened a team to begin assessing the classification rules associated with lower risk devices, including respirators.

As indicated in the Management Response and Action Plan, Health Canada will complete a thorough analysis of the classification of respirators.

Madam Chair, I'd like to thank the committee for inviting me. I'd be pleased to answer any questions you may have.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

Now we will move on to Dr. Harpreet Kochhar.

[Dr. Harpreet S. Kochhar, President, Public Health Agency of Canada]

Thank you, Madam Chair, for the opportunity to speak to you today about the progress the Public Health Agency of Canada has made to address the recommendations in the Auditor General's report regarding personal protective equipment—PPE—and medical devices.

Joining me today is Ms. Cindy Evans, vice-president of the emergency management branch. This is the branch responsible for managing the national emergency strategic stockpile, commonly referred to as the NESS.

The Public Health Agency of Canada manages the NESS to provide surge support to provinces and territories during an emergency, when their own resources are insufficient, such as during infectious disease outbreaks, natural disasters and other public health events. The stockpile includes a variety of medical supplies, such as PPE, vaccine ancillary supplies, medical equipment and pharmaceuticals, and social service supplies, such as beds and blankets.

Throughout the pandemic, the agency quickly adapted and responded to the changing circumstances, including risks posed by emerging variants, updates to public health guidance, changes to clinical practices, impacts of provincial and territorial decisions about public health measures within their jurisdictions, and emerging health technologies.

PHAC continues to work with provincial and territorial partners to monitor the sufficiency of NESS inventories. As of February 9, key supplies within the national emergency strategic stockpile inventory include around 19.7 million units of N95 respirators, 282 million units of surgical masks, 13 million units of face shields, 810 million pairs of nitrile gloves, 111 million units of disposable gowns and 210 million units of needles and syringes.

We continue and will continue to take steps to address emerging supply gaps if required. We continue to proactively distribute incoming medical supply equipment, such as PPE and vaccine ancillary supplies, to provinces and territories to support Canada's COVID-19 response.

While significant strides have been made since the beginning of the pandemic, the Public Health Agency of Canada acknowledges it was not as prepared as it could have been prior to the COVID-19 pandemic. The agency, however, is committed to enhancing its preparedness for future public health emergencies, including working on improvements on the management of NESS.

We appreciate the Auditor General's recognition of the significant work undertaken in response to the COVID-19 pandemic and the acknowledgement that the Public Health Agency of Canada helped to meet the needs of provincial and territorial governments for PPE and medical devices during the pandemic.

PHAC accepts all the recommendations from the Auditor General. We recognize that the performance audit identifies areas for improvement that are already guiding the agency to be better prepared for future health events. The agency agreed with the recommendation of the Auditor General to develop a comprehensive management plan for NESS to support responses to future public health emergencies. The plan will focus on key areas, such as optimizing life cycle materiel management, enhancing infrastructure and systems, and working closely with provinces, territories and other key partners.

The Auditor General also recommended that the agency enforce the terms and conditions in its contract with third party warehousing. This includes the long-term contract signed in September 2020 for the provision of timely, accurate and complete data. The agency took lessons learned from early contracts with the third party warehousing and logistics services provider and included clear service-level expectations in the long-term contract signed in September 2020.

In conclusion, Madam Chair, the agency is still in active response mode and is working with our provincial and territorial partners to finish the fight against COVID-19. We're committed to responding to the Auditor General's recommendation in full within the established timelines. In the meantime, I assure the committee that we'll continue to work closely with provinces and territories to review, assess and respond to Canada's emergency management and response needs.

Thank you very much.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

Mr. Thompson, you have the floor.

[Paul Thompson, Deputy Minister, Public Services and Procurement Canada]

Thank you very much, Madam Chair. I am very pleased to appear before the committee for my first time as deputy minister of Public Services and Procurement to discuss the Auditor General's report on securing personal protective equipment and medical devices during the COVID-19 pandemic.

I'd also like to provide an update on PSPC's action plan regarding the one recommendation that was provided to our department.

At the outset of the pandemic, my department was tasked with an extraordinary responsibility, to procure essential supplies to protect the health and safety of all Canadians at an unprecedented scale and pace. Procuring the goods and services required to respond to the pandemic, particularly in the first 100 days, was an around-the-clock effort. The global nature of this situation meant that we were competing with all countries, many with far greater purchasing power, for scarce supplies.

PSPC took an aggressive approach to fulfill immediate, emerging and long-term medical supply needs, including buying in bulk from distributors in Canada and internationally on behalf of and at the request of provinces and territories.

With the explosive increase in demand for medical equipment in the first few months of the pandemic, PSPC used all available tools to protect Canadians. This included making use of existing pre-qualified suppliers using PSPC's emergency contracting authorities for shortened tendering periods and sole-sourcing, and in some instances, making advance payments to secure scarce PPE.

I would note for committee members that we continue to use some of these approaches where needed, for example, to secure hundreds of millions of rapid tests that are in such high demand right now around the world. The vast majority of our contracts were successfully carried out, and this approach allowed us to secure over 2.7 billion pieces of PPE and medical supplies.

As the Auditor General's report notes, PSPC mobilized its workforce and adapted quickly to deliver on urgent procurement requirements for Canadians. The report also acknowledges that PSPC accepted and mitigated risks in order to procure large quantities of equipment in a very competitive market.

Our response was effective, but as with most emergency situations, there are lessons to learn.

In her report, the Auditor General identified one recommendation for the department regarding financial checks of suppliers when advance payments have to be made. We accept the recommendation.

I can report that the department has since identified a number of measures to strengthen procurement in an emergency, including improved processes for due diligence before issuing advance payment.

We have also updated tools and processes to further manage and mitigate risk, including the development of an emergency procurement checklist to better document decision-making when awarding contracts.

Today, we are in a vastly different situation. The market has stabilized and domestic production of personal protective equipment has increased. Our department has also returned to the use of competitive bidding processes wherever possible.

From day one, Public Services and Procurement Canada has worked tirelessly to acquire supplies and equipment to support Canada’s front-line health care workers, and all Canadians.

As we continue to support Canada’s response to the pandemic, the Auditor General’s observations have helped refine our approach and will enhance our response to future emergency situations.

Thank you. I am happy to take your questions.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

We'll now go into our rounds of questions, beginning with the official opposition for six minutes.

Mr. Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you, Ms. Yip.

I'd just like to start by thanking all of the panellists for their time and also for their commitment during COVID-19. My questions will start with the deputy auditor general and then proceed to Dr. Kochhar.

I just wanted to go over the fact that I believe—and I think it is well established—that we were woefully unprepared when it comes to the procurement and the maintenance of PPE equipment. It created significant challenges for our provinces and our frontline workers. The fact is that we had limited resources going forward. Would the deputy auditor general agree with me?

[Andrew Hayes]

Our audit findings confirm that the NESS, the national emergency strategic stockpile, had not established what, and how much, should be stockpiled for a public health emergency. We also found that there were opportunities to improve the way they managed information, their information system. These are important things that the Public Health Agency of Canada knew about from internal audits and we had hoped that they would have taken action on some of these long-standing issues.

We were happy to see that the agency had reacted quickly during the pandemic to address the increased needs of the provinces and territories and worked with them to meet their needs, as—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you, Mr. Hayes. My time is limited. I do understand and we will talk about the procurement component, but right now I just want to focus on the events that led up to it.

Can you also confirm that there were audits in 2010 and 2013, and this agency, I don't know of a better term, “ignored” the recommendations that came from those audits?

[Andrew Hayes]

I can confirm that those were internal audits conducted by the agency, and that we found the findings from those internal audits had not been fully implemented.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Dr. Kochhar, I'll shift to you now.

We've heard from the deputy auditor general and we've seen in this report that we had significant lapses here that put our frontline workers in not a great position, that put our provinces in a challenging position. There were serious issues with that.

I believe in accountability. Therefore, could you please advise how many individuals have been held accountable? Has any individual at Public Health realized any repercussions due to this tremendous failure?

[Dr. Harpreet S. Kochhar]

Madam Chair, I'd start by saying that there are multiple lessons learned from this aspect, and as the deputy auditor general pointed out, we've actually pivoted very quickly to respond to what was the need of the hour. We worked together with all the other departments and agencies.

Of course, this is the pandemic of once in 100 years—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I'm sorry, sir, but my time is limited and I would like to focus on the events leading up to it and the accountability. I asked a fairly direct question, so I would appreciate a direct answer.

Were any officials held to account? Was there any type of discipline, any suspensions, any firings, any discipline of any kind for the individuals who were responsible for the oversight; and who were they?

[Dr. Harpreet S. Kochhar]

Madam Chair, the accountability as such rests with the Public Health Agency in a cumulative way, as well as with the provinces and territories that have their own stockpile. The process of maintaining the national emergency strategic stockpile is to actually help the provinces and territories when they exhaust their stockpiles, and we—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Dr. Kochhar, my apologies. Once again, I asked a fairly direct question and I'd like a response. Was anyone held accountable?

Was there anyone whose employment was terminated as a result of these significant lapses in your department? Was there anyone who faced any discipline at all?

[Dr. Harpreet S. Kochhar]

As I pointed out, Madam Chair, this is a cumulative responsibility within the Public Health Agency of Canada as well as colleagues in terms of making sure that we learn from these lessons, and we continue to do that by making sure that we have the right governance and the right amount of strategic stockpile as we move forward. That is where the focus is while we are actually addressing the COVID-19 pandemic at this point.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Then, to be clear, no one has been held to account, even though there were significant lapses that put our frontline workers at risk.

[Dr. Harpreet S. Kochhar]

Madam Chair, I reiterate the point that we are working very closely with our partners, making sure that we have the right complement, we have the right governance, we have the right information to support—

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much. I'll move on from there and I'll take that as absolutely no one in your department was held accountable for putting our frontline workers at risk, which I find just absolutely abysmal.

In the—

[Peter Fragiskatos, Liberal, London North Centre, ON]

Madam Chair, I have a point of order.

[The Vice-Chair, Liberal, Jean Yip]

Thank you, Mr. Lawrence. Now we move on.

Go ahead, please.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Madam Chair, since we're in the second meeting, it would probably be good to establish a practice, I would think.

Members might not like the answers that are given by witnesses, but I think, to maintain basic decorum in the committee that is arguably the most non-partisan—or should be the most non-partisan—on the Hill is important. I understand that my colleague asked a question. He didn't get the particular answer that he was looking for, but let's try to maintain, as much as possible, a respectful tone. That would just be my view, and I think it's shared.