Public Accounts Committee on Feb. 10th, 2022

[The Vice-Chair, Liberal, Jean Yip]

We will move on to Mr. Desjarlais for two and a half minutes.

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Thank you very much, Madam Chair.

Thank you very much, Dr. Kochhar, for being with us today and answering these very important questions. I know this is a difficult line of questioning, but let me return to the previous line of questioning I was mentioning regarding accountability.

Section 10.31 of this report says:

In response to the 2010 internal audit, the agency developed the National Strategic Stockpile Policy in 2012—

You mentioned this earlier.

—to clarify the stockpile's role and objective. We found that, despite the requirement for “regular updates,” the policy had not been updated since its development and [it] contained outdated information.

Further, section 10.32 states;

The National Emergency Strategic Stockpile optimization plan outlines governance and authorities, as well as the composition, deployment, management, and procurement of inventory. We found that it too had not been updated since its development in 2013 and included outdated and unclear information as well.

Despite a clear need for regular updates, PHAC's NESS policy and optimization plan hadn't been updated since 2013.

How do you explain this major failure with PHAC?

[Dr. Harpreet S. Kochhar]

Madam Chair, I would really focus on two things here. Historically we focused on stockpiling strategic medical supplies not held by provinces and territories, which included medications and vaccines.

The Public Health Agency of Canada looked at both pieces of the optimization plan. We made significant efforts to see what we can do in terms of working with provinces and territories to pull that plan together.

In the end, progress was made, but not up to the level of addressing the current crisis. In the current crisis, the pandemic, we made significant efforts to mobilize, adapt and improve our processes for securing PPE and medical supplies. This really helped us to position ourselves in terms of supporting both the provinces and territories and the general—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

Why were there no reports like the policy demanded? The policy asked for more reports and more follow-up, but there were none.

[Dr. Harpreet S. Kochhar]

The intent was to continue to work with the provinces and territories and with our partners to redesign how our roles and responsibilities would be—

[Blake Desjarlais, NDP, Edmonton Griesbach, AB]

So the delay is the provinces' fault.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

We now move on to Mr. Bragdon for five minutes.

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

Thank you, Madam Chair.

Thank you to the witnesses who appear here today. It's been very insightful.

Just to summarize quickly some of the key points that we have found so far, in the 2010-11 report the findings and concerns have yet to be addressed. No one has been held to account for what amounts to placing our health care workers and frontline workers, at the beginning of the crisis, at greater risk due to the lack of PPE.

We've also heard testimony today that there really is no set deadline as to when this will be resolved or what the concrete plans for moving forward will be.

Canadians are speaking, and they're speaking quite loudly throughout this. I think one of the greatest pronouncements that's been coming as a result of the pandemic as whole is the need for increased Canadian self-reliance. We need to expand our manufacturing capacities and our ability to make sure we secure PPE and develop more of our own PPE. I think all of us would agree that we want to, wherever possible, make sure that we are domesticizing our supply as much as possible for the very necessary PPE.

I think what has become challenging became evident even in the report that was issued last year. It was a briefing given to the Minister of Innovation, Science and Industry from the Canadian Association of PPE Manufacturers. That is a group of companies that have invested over $100 million of private money and hired over 1,000 people to increase the domestic supply of PPE and our capacity. They note that the government procurement practices favour a small number of large manufacturers in Canada. They also note that foreign suppliers abused an interim order that relieved them of PPE tariffs until fall of 2021, allowing the dumping of foreign products into our market.

Have the PPE tariffs been reinstated as of today? Can someone answer that for me?

[Dr. Harpreet S. Kochhar]

Madam Chair, Mr. Thompson is best placed to answer that part.

[Paul Thompson]

With respect to the importance of moving to domestic production, there has been a significant shift over the course of the pandemic to more domestic supplies. Dr. Kochhar spoke about the NESS in particular, but if you look more broadly at procurement of PPE, our estimates are that about 50% of the contracts are with domestic companies and about 40% of the value is going to domestic companies.

[The Vice-Chair, Liberal, Jean Yip]

Thank you.

We will now move on to Mr. Dong for five minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you, Madam Chair.

This study is great. It kind of takes me back to where we were in 2020. We were fighting a war against COVID-19 and a war we weren't prepared for. I remember, while the health care workers were fighting on the front line, the entire population was working together, whether donating PPE or looking after a neighbour or a friend in quarantine.

Then we had our MPs and senators working together. I remember the days when we had those technical briefings on a daily basis. We put aside politics and would give ideas, observations and public service. And you were there every day taking the advice and acting on it.

The entire nation was fighting against one single enemy. I really miss those days, by the way.

With that, I just want to say a sincere thank you to Public Health and especially to the procurement folks. You guys worked magic in a hyper-competitive market. It's not buying product to satisfy wonks. It's actually buying product to save lives.

So every country was being super-competitive going to market and purchasing PPE. Unfortunately, Canada did not have the capacity to produce our own PPE, and you folks had to work around the clock—literally, because some of the producers around the globe are in different time zones. So I just want to say a sincere thank you to the witnesses here today.

To Mr. Thompson, can you tell us how your department, in a very short period of time, secured the amount of PPE Canada needed? In Parliament we talk about how the provinces are really having shortages, but we actually never see the bottom of the barrel. It was because our international procurement was doing the magic for a short period of time, and then domestic production capacity caught up. But tell us, what exactly did you do to secure those contracts?

[Paul Thompson]

As I alluded to in my remarks, a lot of it was just pure effort at the beginning, with the teams working around the clock. But it was also leveraging flexibilities we introduced to make it easier to secure products, such as the ability to delegate authority so we could move quickly, and to use sole-source contracts or advance payments where required.

Those were just some of the flexibilities we needed, because we knew when there was a supply available, we needed to move super-fast to secure it.

[Han Dong, Liberal, Don Valley North, ON]

Exactly.

On the report, 50% of the suppliers got this financial viability assessment. That means 50% didn't. Can you tell us what percentage of the contracts weren't honoured—i.e., for whatever various reasons they couldn't deliver the product at the end of the day?

[Paul Thompson]

With respect to situations where there was advance payment as part of the mix, the vast majority of those were delivered in accordance with the contract. And in the very small number of cases where there didn't happen, there's legal action to recover the payments. But it was a successful endeavour in the vast majority of cases, and the goods and/or the services were delivered in accordance with the contracts.

[Han Dong, Liberal, Don Valley North, ON]

To build on this success going forward, do you see perhaps a need to develop an emergency procurement protocol so that in case we have a global pandemic or something major happens, the government can have a different set of rules in terms of procurement that will protect the public interest and the integrity of the system? Meanwhile, we get products procured quickly.

[Paul Thompson]

That is certainly one of the lessons learned, and the Auditor General's report is helpful in this regard as to how we can institutionalize some of these practices and make sure that we approach it more systematically.

We have a checklist, as was alluded to earlier, so that we know when we're in a situation like this we can follow a set of predetermined procedures. We have procedures in place to rely on financial experts, for example, on this issue of financial viability of the suppliers.

Compared to the beginning of the pandemic, it has been a lot more systematized for if and when we face similar situations going forward. We still are facing challenges, for example, with procuring rapid tests, which is one of the key areas where we continue to push.

[The Vice-Chair, Liberal, Jean Yip]

Thank you, Mr. Thompson.

I would like to thank the witnesses for coming today.

We need to suspend the meeting to go in camera.

Members, you will have to log off and log in for the in camera part of the meeting.

Thank you.

[Proceedings continue in camera]