2021 Minister’s Transition Book 2: Core responsibility 1—Purchase of goods and services

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Procurement services

In this section

Procurement branch overview

Mandate

Public Services and Procurement Canada supports the daily operations of the Government of Canada as its central purchasing agent. The department provides sound procurement stewardship through leading practices in procurement management, effective risk management, a robust policy framework and effective performance management. The department acts as the common service provider for over 100 government departments and agencies in procuring a full range of goods and services.

The federal procurement process is guided by the following core principles:

The department has 2 branches that undertake procurement: the Procurement Branch and the Defence and Marine Procurement Branch (focused on military), which together form the Acquisitions Program. Procurement professionals from these branches help federal departments and agencies navigate the complex web of legislative, regulatory, and policy requirements on their behalf. The Acquisitions Program plays a critical role in ensuring that procurement outcomes go beyond simply acquiring goods and services.

Key activities

In Canada, public procurement (federal, provincial, municipal) represents approximately $200 billion (13% of gross domestic product) in annual economic activity. Out of this total, federal government spending averages $28 billion per year for goods, services, and construction in support of its operations and the provision of essential public functions, including defence.

Over the past 3 years the department has annually managed $22 billion in procurement on behalf of its client departments. Procurements are generally categorized as:

Authorities, trade agreements, and federal regulations

The Department of Public Works and Government Services Act gives the Minister of Public Services and Procurement exclusive responsibility for the procurement of goods. In accordance with the act and in order to maximize efficiencies, the minister has delegated to other departments the authority to acquire goods under $25,000, such that they are not required to engage with the department for approval. The minister also has the authority to procure goods up to the applicable Treasury Board contracting limits (currently $75 million for competitive processes).

The Defence Production Act outlines the minister’s specific responsibility for military procurement. The act indicates that the minister has the exclusive authority to purchase defence supplies and construct defence projects required by the Department of National Defence. The latter is mainly delivered through Defence Construction Canada, a Crown corporation whose mandate is to provide the environmental and infrastructure needs of National Defence. The act further provides the minister with the responsibility to examine, organize, and mobilize industry for the purpose of the defence of Canada.

The Government Contract Regulations under Treasury Board authority ensure that procurements are conducted competitively and provide some exceptions to this rule (that is, emergencies in the public interest, expenditures below certain thresholds, nature of the work is such that it would not be in the public interest to solicit bids, only one person is capable of performing the contract).

Canada is party to several trade agreements which include government procurement obligations. These obligations include procedural rules based on non-discrimination, national treatment, transparency, and open competition. Each trade agreement specifies certain monetary thresholds; whereby, if a procurement is valued at or above these thresholds, the obligations of the agreement apply.

There are currently 25 modern treaties in effect and 22 contain economic measures with procurement obligations. These 25 modern treaties are located in Yukon (11), Northwest Territories (4), Nunavut (1), Quebec (4), Newfoundland and Labrador (1) and British Columbia (4). No 2 modern treaties are exactly the same, and therefore each treaty has to be read and understood individually to determine the applicable contracting procurement obligations. All federal departments and agencies are subject to modern treaties which can apply to the purchase of goods, services, construction and real property leasing, or any of the above depending on the agreement in question.

Partners and stakeholders

The Government of Canada procurement environment involves a number of key players:

Key considerations

Currently, the program is focused on a number of major activities that include:

Procurement modernization

Mandate

Procurement modernization aims to achieve a world-class accessible procurement system that drives value for money while delivering better results for Canadians. Procurement modernization is an ongoing priority that seeks to transform procurement practices so that they are simpler, less administratively burdensome, deploy modern comptrollership, encourage greater competition and include practices that support government priorities.

Key activities

Procurement is a key enabling activity for advancing government objectives and delivering essential services. Work is underway at the department to leverage opportunities to make federal procurement work better. Below are highlights of some of the initiatives.

Contract Modernization Initiative: The Contract Modernization Initiative was established to address perceived inconsistency and complexity of government contracts from the supplier community and to pursue 2 objectives: (1) modernize and improve consistency in use of contract terms and conditions to reduce complexity and to improve readability, and (2) rethink and revise the structure of government contracts to achieve greater consistency and to align them with commercial best practices. The department is currently developing and testing a new contractual model that is focused on simplifying and restructuring contracts.

Cost and Profit Assurance Program: This program provides auditing and other assurance services on domestic and international contracts, primarily for high-risk defence contracts, to ensure that actual procurement costs and pricing are fair and reasonable. The program is also pivotal in discharging Canada’s international obligations by providing services to the Canadian Commercial Corporation and in meeting international defence auditing requirements in the North Atlantic Treaty Organization agreement for allied partner nations (primarily the United States). Canada has introduced changes to its pricing framework that continues to support the program’s objectives to ensure integrity in pricing and payments.

Vendor Performance Management Policy: The department is developing this policy to establish a standardized approach for assessing vendor performance and informing future bid evaluations. The policy is expected to transform the federal procurement ecosystem and strengthen the relationship Canada has with its suppliers. The policy is being piloted on selected contracts and lessons learned will inform future policy iterations. The full implementation of the policy is expected within the next 2 to 4 years. For Canadians, these efforts will result in strengthened stewardship of resources.

Electronic procurement solution: This is an integrated approach to manage government spending and to provide clients with an easy and web-based access to procurement services. Once fully deployed, the Government of Canada will benefit from this approach through increased efficiency and access to better procurement data and be able to better manage procurement spending. The approach has demonstrated its value by supporting Canada’s response to the COVID-19 pandemic through the procurement of personal protective equipment and other medical equipment.

Policy suite reset: The Treasury Board Directive on the Management of Procurement took effect in May 2021, and Public Services and Procurement Canada has 12 months to complete the transition. It is expected that the implementation of the directive will make procurement activities less prescriptive and more principles-based.

In winter 2022, Public Services and Procurement Canada will launch its new tendering services on CanadaBuys, to replace the Buyandsell tenders web portal. In fall 2022, CanadaBuys will become the single point of access for the federal, provincial and territorial governments, as well as for other municipalities, academic institutions, schools, and hospitals. This transformation initiative will impact both external and internal stakeholders and will represent a significant change for all users. To mitigate risk and impact of this transformation on the different stakeholders, a communications strategy is being developed to promote the transition to the new tendering service.

Partners and stakeholders

Public Services and Procurement Canada maintains close collaboration and ongoing communication with the Treasury Board of Canada Secretariat, which provides directions and guidance.

The governance structure for ensuring effective collaboration and integration across Government of Canada departments includes the deputy ministers’ Committee on Strategic Procurement, the assistant deputy minister advisory Committee on Procurement Modernization, and other sub-committees.

Public Services and Procurement Canada ensures continuous engagement with Canadian suppliers, businesses, and industry associations to inform improvement of procurement operations, policies, and initiatives. It also undertakes outreach activities to provide guidance and support to increase the involvement of Canadian suppliers and businesses and in particular of underrepresented groups.

Key considerations

Procurement modernization represents a significant change, such as adapting to modern, enabling technology while also incorporating new ways of working. This represents a shift for the professional procurement workforce in the capacity, skills and knowledge required to deliver procurement services. Resources and training will be required to support the procurement workforce in adapting to new processes and tools.

For vendor performance management, industry stakeholders may have concerns about fairness, particularly around the consistency of evaluations. This would be mitigated, however, through continued engagement with external stakeholders and by regularly reviewing evaluations for consistency.

Trade obligations

Mandate

The Government of Canada is party to 12 trade agreements that have implications for federal procurement activities. New trade agreements that contain government procurement obligations are also under consideration or in negotiation. If a procurement is covered by a trade agreement, it is subject to the procedural rules of that agreement. Where procurements are covered by more than 1 trade agreement, all applicable agreements must be complied with at the same time when undertaking a procurement. A large share of Public Services and Procurement Canada’s procurements are subject to 1 or more of Canada’s trade agreements.

Trade agreements and procedural rules

A procurement may be subject to a trade agreement if the estimated value in Canadian dollars is equal to or greater than the applicable threshold. Below is a list of the 12 trade agreements that the Government of Canada is currently party to:

Key activities

When undertaking procurements that are covered by one or more of the trade agreements, Public Services and Procurement Canada is responsible for complying with the applicable procedural rules. All of the government’s trade agreements contain obligations based on the principles of non-discrimination, an open and transparent tendering process, and a competitive and fair procurement process. Procedural rules in trade agreements are comprehensive and rigorous, addressing essentially all aspects of the procurement process. Many of the obligations found in the trade agreements also exist under the Government Contracts Regulations, at common law, or in Government of Canada policies, and therefore must be respected even where trade agreements do not apply.

A procurement may be subject to a set-aside (for example, small business set-aside) or an exception (for example, national security exception). Set-asides and exceptions allow for contracting officers to deviate, where necessary, from the procedural rules of the trade agreements in order to serve the purpose for which the exception is being used or the set-aside is being applied.

Partners and stakeholders

Global Affairs Canada is the lead negotiator on Canada’s international trade agreements, including the government procurement obligations, and represents Canada at international government procurement meetings. The Privy Council Office is the lead on the Canadian Free Trade Agreement. Public Services and Procurement Canada supports both of these departments in their efforts. The Treasury Board of Canada Secretariat is responsible for implementing trade agreement obligations across the Government of Canada. Public Services and Procurement Canada ensures that any guidance it releases on trade agreements aligns with that of the Treasury Board of Canada Secretariat.

The Canadian International Trade Tribunal is the mechanism provided to suppliers to bring complaints if they believe Canada has not adhered to its procurement obligations under the trade agreements. Where the trade agreements apply, a potential supplier may file a complaint with the tribunal on the grounds that any aspects of the procurement process contravened the trade agreements. If the tribunal determines that a complaint is valid, it may recommend remedies such as re‑evaluating the bids, terminating the contract, or compensating the complainant for lost profits. The majority of complaints filed against the department’s procurement activities are filed by suppliers who feel they have been unfairly evaluated or unfairly disqualified from a procurement process. The number of complaints filed each year is considered low given that fewer than 100 complaints are typically filed and the Government of Canada conducts thousands of procurements, an annual value of which is approximately $22 billion.

Key considerations

There has been significant interest in using procurement to promote the domestic economy as part of the recovery from COVID-19. However, international trade agreements contain provisions that restrict how government procurement can be used to promote domestic content and support domestic suppliers.

When a procurement is covered by the Canadian Free Trade Agreement only, Canadian content requirements may be applied so long as those requirements do not discriminate between provinces, territories or regions and are applied in a manner consistent with Canadian Free Trade Agreement obligations.

Barring the invocation or application of certain limited exceptions, local preferences and benefits are prohibited by all of Canada’s trade agreements. As a result, Canada’s trade agreements place significant limitations on how and when the department can include domestic content requirements or preferences in procurements.

Indigenous procurement strategy

Mandate

Federal procurement is an important lever for increasing socio-economic benefits for Indigenous businesses and peoples. The Indigenous business sector is also a key driver of wealth in Indigenous communities and in closing the socio-economic gaps between Indigenous peoples and other Canadians.

Key activities

Increasing Indigenous participation in government contracting

Indigenous peoples in Canada comprise approximately 5% of the overall Canadian population; however, they are consistently awarded a disproportionately lower percentage of federal contracts.

Over the past 3 years, the annual average for federal government contracts awarded is $22 billion. On average, during 2018 to 2019 to 2020 to 2021, the department’s Acquisitions Program annually awarded a total of approximately $623 million (about 2.9%) of contracts to Indigenous suppliers. This includes the award of contracts to Indigenous suppliers of approximately $101 million annually (0.5%) via procurement set-asides through the Procurement Strategy for Aboriginal Business Program and $522 million annually (2.4%) to Indigenous suppliers outside of the program, to Indigenous suppliers who are self-identified when registering in the supplier registration information system.

Together, Public Services and Procurement Canada, Indigenous Services Canada and the Treasury Board of Canada Secretariat are implementing new approaches to meet a target of having at least 5% of the value of government contracts go to Indigenous led or owned businesses. This work involves engaging and consulting with Indigenous partners and modern treaty and self-government agreement rights holders, as well as other government departments and agencies.

The department is also exploring innovative approaches to increase the participation of Indigenous businesses in the federal supply chain and deliver socio-economic benefits to Indigenous communities. For instance, the Indigenous participation plans incentivize bidders to submit a plan on how they will involve Indigenous-owned businesses as part of the bidding process.

In response to the COVID-19 pandemic, 38 contracts have been awarded to 30 self‑identified Indigenous businesses, collectively valued at approximately $126 million. These contracts have been for a broad range of services and equipment, including logistics and air charter services, accommodation and cleaning services, information technology, professional services, medical and laboratory supplies, masks, hand sanitizer, and thermometers.

Support to procurement officers regarding modern treaties

There are currently 25 modern treaties and self-government agreements, 22 of which contain procurement obligations. The department provides support to procurement officials involved in procurement projects subject to modern treaties and self‑government agreements to help them meet these obligations.

Implementation of the Treasury Board Directive on government contracts, including real property leases, in the Nunavut settlement area

The directive represents a major shift in Canada’s contracting policy for procurement in the Nunavut Settlement Area. It imposes strong obligations on federal departments and agencies, with new mandatory procedural justification, documentation and reporting requirements.

From December 2019 to March 2021, the department delivered 7 training sessions to over 122 procurement officers from 4 departments. The department continues to leverage its role and expertise as the common service provider for procurement advice, guidance and training on the directive.

Identifying barriers to Indigenous participation

The department is working to address barriers faced by Indigenous businesses in federal procurement, including access to financial resources, remote location and limited access to the internet, which can limit their access to procurement opportunities.

Similarly, the department has been working to decrease barriers faced by small and medium enterprises, including Indigenous businesses, when it comes to meeting contract security requirements.

Procurement strategy for Indigenous business

The Procurement Strategy for Indigenous Business is a recently updated Indigenous Services Canada program, formerly known as the Procurement Strategy for Aboriginal Business. It is the only Government of Canada program for setting aside contracts or portions of contracts for competition among Indigenous businesses exclusively. The department plays a supporting role in this program by providing guidance, publishing necessary solicitation and contract clauses in collaboration with Indigenous Services Canada, and giving advice to the departmental technical and contracting authorities.

Outreach and engagement

The department’s Procurement Assistance Canada (formerly the Office of Small- and Medium Enterprises) helps smaller businesses navigate the federal procurement process through its 6 regional offices, a National InfoLine and their community outreach. It is working to establish and grow partnerships for enhanced collaboration with Indigenous organizations representing the concerns of the Indigenous business community. In 2019 to 2020, they had 3,158 interactions with Indigenous businesses across 112 Indigenous-focused events.

Partners and stakeholders

As the department works with Indigenous Services Canada and the Treasury Board of Canada Secretariat to implement the 5% mandatory target, it is consulting with numerous Indigenous organizations. Indigenous Services Canada leads these consultations, and below are some of the organizations that have been involved in the process:

Key considerations

Increasing Indigenous participation in federal procurement will require significant effort. The Procurement Strategy for Indigenous Business has accounted for approximately 1 to 2% of the total value of annual federal contracts awarded since 1996. The ability for departments and agencies to set aside more procurements under the strategy will be dependent on the capacity of Indigenous businesses registered on the Indigenous Business Directory. It is therefore necessary to increase the number of registrants on the directory, or to find new ways of validating Indigenous ownership of businesses in order to increase their participation in federal procurement.

Social procurement: Supplier diversity action plan

Mandate

Public Services and Procurement Canada has developed a Supplier Diversity Action Plan to help build a more inclusive economy and boost the competitiveness and prosperity of Canadian businesses. The action plan outlines steps designed to increase the participation of businesses owned or led by underrepresented groups in federal procurement.

Underrepresented groups include but are not limited to women, Indigenous peoples, black persons and other visible minorities, persons with disabilities, and persons who identify as lesbian, gay, bisexual, transgender, queer and two-spirit plus (LGBTQ2+).

Key activities

The Supplier Diversity Action Plan has 4 pillars.

Public Services and Procurement Canada’s work to advance social procurement

In addition to several procurement pilot projects initiated since 2018, the department will gather information on entrepreneurs from underrepresented groups through a series of requests for information, including a request seeking input from the Black owned business community which was publicly posted in June 2021. Additional requests for information, seeking information from businesses led by persons with disabilities, the LGBTQ2+ community and women, will be posted in the coming months. These requests for information will enable the department to gather information about businesses owned by underrepresented groups and their experiences with federal procurement in order to inform future initiatives.

Public Services and Procurement Canada’s Policy on Social Procurement

The policy, which came into effect on May 3, 2021, provides a clear statement of direction on the part of the department to leverage the government’s purchasing power to achieve socio-economic objectives and increase supplier diversity. The policy also enables the collection of information—including personal information—on suppliers to develop baselines and effectively carry out social procurement. Finally, the policy permits the department to create programs on social procurement, which will articulate how socio-economic objectives can be incorporated into procurement practices.

Procurement Assistance Canada

Formerly known as the Office of Small and Medium Enterprises, Procurement Assistance Canada has reviewed its organizational mandate to better enable the participation of Canadian business owners in federal procurement and to increase supplier diversity.

Social procurement and supplier diversity data collection

The department will collect and analyze personal information on suppliers (that is, gender information, visible minority groups status, disability status, LGBTQ2+ status, and Indigenous status), in accordance with the Privacy Act.

The department is developing a program on social procurement, which will provide information, details, and standardized language and approaches on how the department will implement the policy on social procurement. The program will outline:

In addition to the Supplier Diversity Action Plan, Public Service and Procurement Canada’s Accessible Procurement Resource Centre, which supports federal departments and agencies with integrating accessibility criteria into federal procurement, has developed a suite of guidance and tools to support procurement officers.

The centre also hosted over 25 awareness and engagement sessions with other government departments, provincial counterparts, non-profit organizations and the disability community. Building on these engagement activities, the centre is developing additional tools and guidance to mainstream accessible procurement practices across the Government of Canada and increase the participation of businesses owned by persons with disabilities in federal procurement.

Partners and stakeholders

Other government departments

Other federal departments, such as the Treasury Board of Canada Secretariat, Innovation, Science and Economic Development Canada, and Women and Gender Equality Canada will play a key role as clients in seeking federal procurements and in providing technical expertise.

Underrepresented groups

The department’s Supplier Diversity Action Plan will seek to bring a positive economic impact for thousands of Canadian small businesses, including those led by Indigenous peoples, black and racialized Canadians, women, LGBTQ2+ Canadians and other groups who are often underrepresented in federal procurement supply chains.

Industry

Throughout the development of the programs on social procurement, the department aims to maintain consistent engagement with representatives of various industries and to learn about the barriers that some businesses face in joining the federal supply chain.

Key considerations

Definition and certification

One of the key considerations to be addressed relates to the specific definitions of ‘disadvantaged groups’ and certification. Groups targeted currently include businesses owned or led by women, Indigenous peoples, Black persons and other visible minorities, persons with disabilities, and persons who identify as LGBTQ2+. Research and data analysis may identify further target groups.

The department’s current approach to identifying underrepresented suppliers is through self‑certification. Several industry organizations are advocating for third-party certification. Noting that such certifications have associated costs or administrative requirements which may pose challenges for smaller businesses, the department will seek feedback on this issue through the engagement and consultations on the draft program on social procurement.

Procurement Assistance Canada

Mandate

Procurement Assistance Canada—formerly the Office of Small and Medium Enterprises and Stakeholder Engagement—works to enable the participation of small and medium enterprises and to increase supplier diversity among disadvantaged or under-represented businesses in federal procurement.

Key activities

Through its 6 regional offices, Procurement Assistiance Canada works to help small and medium enterprises understand and navigate the federal procurement system. It provides education and assistance to businesses on procurement processes, tools and resources available to help them do business with the Government of Canada.

In alignment with commitments made in Budget 2021, Procurement Assistance Canada is focusing significant efforts to support diverse and racialized communities by developing a cross-country network of partners that support under-represented supplier communities.These partnerships are important in providing advice to small and medium enterprises on how to do business with the federal government.

Procurement Assistance Canada also plays an advocacy role in advising on departmental policies, strategies and procurement processes to help reduce barriers faced by small and medium enterprises, including businesses owned or led by Canadians from under‑represented groups. For this advocacy role, we leverage evidence-based data collected through yearly online surveys, research studies and direct feedback to validate and understand the barriers these businesses face.

Procurement Assistance Canada organizes and coordinates the national Supplier Advisory Committee and regional supplier advisory committees. These committees are composed of representatives from leading national industry associations. The minister’s Supplier Advisory Committee is an ongoing consultative body co-chaired by the department’s Assistant Deputy Minister for Procurement and a representative of the private sector. The committee is composed of representatives from leading national industry associations who provide advice to the minister for potential improvements to government procurement. The committee’s mandate is to provide advice and feedback and make recommendations to you concerning procurement issues, including improvement of the procurement process. Issues raised by the committee members are brought forward by the Assistant Deputy Minister for Procurement for consideration in improving procurement initiatives or processes. Records of discussion and other material from the meetings are published on the departmental internet site. You have an open invitation to attend any of the committee’s meetings.

The buyandsell.gc.ca website, maintained by Procurement Assistance Canada, is a central resource for suppliers and the federal procurement community. The website currently hosts the government's electronic tendering service (buyandsell.gc.ca/tenders) as well as open procurement data. Links to Procurement Assistance Canada’s support for small businesses, as well as the toll-free number for the national Infoline, are available on the Procurement Assistance Canada website.

Procurement Assistance Canada also organizes the Client Advisory Board, which is made up of procurement representatives across federal departments and agencies, and is a key tool to disseminate procurement policy and tools. It also has a Client Engagement Directorate which brokers solutions when issues arise between the Public Services and Procurement Canada (PSPC) Procurement Team and client departments and agencies. Feedback is also gathered from client departments and agencies regarding procurement services, and the feedback is disseminated across the Acquisitions Program to guide improvements in service delivery.

The Federal, Provincial, Territorial and International Relations Directorate supports national and international meetings related to procurement. Federal, provincial, territorial and international procurement meetings of senior officials allow for the sharing of best practices and lessons learned.

The Canadian collaborative procurement initiative was undertaken to make the department’s procurement instruments available to provinces and territories. All provinces and territories, with the exception of Quebec, participate in the initiative, as well as more than 200 public sector entities including municipalities, school boards, hospitals, colleges and universities.

Partners and stakeholders

Procurement Assistance Canada has corporate partnerships and memoranda of understanding with a number of organizations representing Indigenous and under-represented supplier communities, including:

Each regional office also builds regional and local networks and partnerships so as to be well connected to the business communities in question.

In addition, Procurement Assistance Canada provides advice to other government departments on how to develop procurement opportunities that include socio-economic considerations to increase the participation of smaller and diverse businesses.

Key considerations

The Office of Small and Medium Enterprises was rebranded to Procurement Assistance Canada to better reflect the work the organization does to help businesses participate in federal procurement. Under its new name, Procurement Assistance Canada will continue its important work supporting smaller businesses, with an increased focus on under-represented groups.

A concerted and wide-reaching communications effort will be required to build awareness with all of Procurement Assistance Canada’s stakeholders, both internally and external to the Government of Canada. Procurement Assistance Canada will inform stakeholders about its name change and increased focus on under-represented groups using a strategic outreach approach. As part of that strategic approach, it will conduct high-touch communications and outreach to the stakeholders with whom it works closest.

While outreach to external stakeholders will be key to the rebrand’s success, the concerted communications effort will also seek to increase awareness of Procurement Assistance Canada’s in-reach services as a resource to support the development of inclusive procurement opportunities within the department and with other federal departments. While Procurement Assistance Canada has successfully supported many individual procurements as well as broader initiatives, it will take time to effect change within the broader federal procurement community.

Ethical procurement: Addressing forced labour in procurement supply chains

Mandate

In September 2019, the Governmnent of Canada launched the National Strategy to Combat Human Trafficking (2019 to 2024), which includes a commitment for Public Services and Procurement Canada to address human trafficking and forced labour in government procurement.

In addition, Canada amended the Customs Tariff and the schedule to the Customs Tariff to include a prohibition on the importation of goods that are mined, manufactured or produced wholly or in part by forced labour in order to implement the Canada–United States–Mexico Agreement Implementation Act. Employment, Skills and Development Canada is responsible for identifying suppliers that may be producing goods using forced labour. Canada Border Services Agency is responsible for enforcing the prohibition at the border.

Key activities

As part of the national strategy, Public Services and Procurement Canada is leading the following suite of initiatives:

The following results have been achieved to date.

Revised Code of Conduct for Procurement

A revised Code of Conduct for Procurement was launched on August 13, 2021. The code aims to ensure that vendors of Public Services and Procurement Canada adhere to international human and labour rights. The new code was informed by a consultation process which took place in January to February 2021 with industry, non-governmental organizations and experts, as well as internal and external stakeholders (including other government departments and like-minded countries).

Risk analysis

A risk analysis of human trafficking, forced labour, and child labour in Public Services and Procurement Canada’s supply chains was completed in May 2021. The risk analysis identified which goods purchased by the department are at the highest risk of having been produced using human trafficking, forced labour and child labour; and summarized the publicly reported efforts by suppliers of high-risk goods to address these risks.

Stakeholder engagement

The department continues to engage a variety of stakeholders on the file. For example, the department worked with companies that produce nitrile gloves in Malaysia by reaching out and reminding them of their human and labour rights obligations. The contractors responded favourably and provided departmental officials with multiple documents to demonstrate the various types of audits and assessments that they conduct of their supply chain. Additionally, as a national strategy partner, the department contributes to the federal Human Trafficking Taskforce aimed at developing a whole-of-government approach to forced labour and human trafficking. The team also participates in a number of Five Eyes (Australia, Canada, New Zealand, United States, United Kingdom) working groups aimed at addressing forced labour in procurement. An ad-hoc Five Eyes Group was also created to address forced labour in medical supply chains (for example, nitrile gloves manufactured in Malaysia).

Ongoing work to develop anti-forced labour contract clauses

The department has also been developing anti-forced labour contract clauses to give Public Services and Procurement Canada the option to terminate a contract if a supplier has been engaged in forced labour and human trafficking. While the clauses are still under development, the forced labour import ban could be one of the triggers for the clauses.

Public reporting

The department contributes to annual reports on the progress of the national strategy which are posted on Public Safety Canada’s website (national strategy lead).

Partners and stakeholders

As previously noted, the department’s work has involved and will continue to involve significant stakeholder engagement. At the federal level, other government departments, particularly partners of the national strategy, will continue to be key in advancing this work. Internationally, partnerships with like-minded countries such as the Five Eyes and others, will continue to be pursued in order to foster information sharing and gather best practices.

Federal government partners include:

Five Eyes countries

In 2018, the governments of Canada, Australia, New Zealand, the United Kingdom and the United States launched the Principles to guide government action to combat human trafficking in global supply chains. Representatives of the 5 countries meet regularly to share information, promote domestic measures, identify common challenges and assess progress against the principles.

Industry

Continued consultation and engagement with industry is required to build on awareness efforts and to develop and roll out the implementation of different measures.

Key considerations

The challenges faced by the department when addressing human trafficking and forced labour in government procurement include a low level of vendor awareness of forced labour/human trafficking risks in their supply chains. This is compounded by a lack of baseline data and lack of information regarding the department’s vendor community. While steps have been taken to address this challenge via the risk analysis, other similar research projects could be explored in the near future.

Continued collaboration with other government departments to ensure a cohesive whole-of-government approach to the issue of forced labour is required.

Benefits delivery modernization

Mandate

The Benefits Delivery Modernization Program is led by Employment and Social Development Canada. The objective is to transform the service delivery of benefit programs such as Employment Insurance, Canada Pension Plan, and Old Age Security which currently serve 8 million clients for an estimated $100 billion in payments annually. This program is estimated to cost over $2.2 billion. The systems will be designed, implemented and maintained over a 10-year period.

A team at Public Services and Procurement Canada is responsible for establishing and administering the contracts and task authorizations (TA) associated with the program.

Key activities

The first tranche of the program is well underway, with the Old Age Security benefit expected to be the first benefit onboarded on the new platform within the next couple of years. The core technology contract has been awarded to IBM Canada Limited and 4 master system integration contracts have been awarded to 4 contractors (Accenture, CGI, Deloitte and Fujitsu) for a total of over $35 million. Additional task authorizations will be competed among the 4 system integrators to ensure the program, and its various elements, continues to advance. The implementation timelines for the program are extremely tight, requiring careful management of the procurement process with client expectations.

Partners and stakeholders

The Benefits Delivery Modernization Program is being delivered through an agile approach whose goal is to optimize procurement outcomes while reducing the impact of failures through early and frequent course corrections. To implement the program, Public Services and Procurement Canada works in close collaboration with Employment and Social Development Canada teams as well as with qualified suppliers, including IBM Canada Limited, Accenture Inc, CGI Information Systems and Management Consultants Inc., Deloitte Inc. and Fujitsu Consulting (Canada) Inc.

The program has established a governance structure where issues are discussed and decisions made based on risk and level of complexity. Public Services and Procurement Canada has also introduced a reporting structure where it provides highlights of progress on the procurement activities to the assistant secretary, Government Operations Sector, and the Treasury Board of Canada Secretariat on a quarterly basis.

Next generation human resources and pay

Overview

In 2018, the Government of Canada announced its intention to move away from the current pay system and identify options for a long-term and sustainable next generation pay system alternative. As a result, the Treasury Board of Canada Secretariat was allocated $16 million over 2 years to examine alternative solutions. This initiative, known as Next Generation human resources (HR) and pay, was transferred from the Treasury Board of Canada Secretariat to the minister of Digital Government through Shared Services Canada on April 1, 2020. In June 2021, an additional $113 million was allocated to this initiative to support the development and testing of a solution.

Public Services and Procurement Canada is the contracting authority.

Mandate

The Next Generation HR and pay initiative is an enterprise initiative with a goal of having the right information required to make informed and appropriate recommendations towards a user-centric, sustainable and efficient digital HR and pay solution.

The scope of the solution will cover various aspects related to human resources, such as time and attendance, performance management, learning and other human resources processes, as well as interoperability with downstream systems such as pension and receiver general. The solution will support the full “hire-to-retire” employee lifecycle, enabling the Government of Canada to better attract, pay, retain and develop its employees.

Key activities

In September 2018, Public Services and Procurement Canada, as the contracting authority, launched an agile procurement process for this important initiative which resulted in the award of 3 contracts on June 21, 2020, to SAP Canada Inc, Workday Canada, and Ceridian Canada.

All work under these contracts is allocated through competitive task authorizations. To date, 2 task authorizations to pilot the HR and pay next generation solution have been issued:

The TA1 exploratory phase was launched in October 2020 and continued through May 2021 under the leadership of the minister of Digital Government through Shared Services Canada. Key findings from the exploratory phase will be used to support the second phase, design and experimentation. A recommendation on whether or not to proceed with the implementation phase will be made to the Treasury Board of Canada Secretariat in 2023.

Partners and stakeholders

As the department responsible for providing enterprise information technology solutions to the Government of Canada, Shared Services Canada is the functional and technical authority responsible for the next generation HR and pay initiative. Shared Services Canada continues to engage and collaborate with partners such as bargaining agents and the larger government community on business transformation activities. For example, Shared Services Canada has completed 128 stakeholder engagement activities with 20 departments as of August 26, 2021.

The Treasury Board of Canada Secretariat (Office of the Chief Human Resources Officer) is the design authority.

Key considerations

The lessons learned from the exploratory phase identified the need to expand testing beyond one department and the need to refine certain aspects of the requirements stated in the initial tender notice for the project.

Public Services and Procurement Canada is continuing to work to ensure the procurement remains fair, open and transparent and abides by the strict rules and regulations while adopting an agile iterative approach which allows for quick realignment, saving time and money for Canadians.

Pandemic response

In this section

Procurement of personal protective equipment and supplies

Mandate

At the outset of the COVID-19 pandemic, the Government of Canada took an aggressive procurement approach to fulfil immediate, emerging and long-term medical supply requirements. Led by the Public Health Agency of Canada, this included collaboration with provinces and territories on an ongoing basis to identify their needs with respect to required equipment, supplies and services.

Key activities

To procure personal protective equipment (PPE) in response to the pandemic, Public Services and Procurement Canada was called upon to leverage existing suppliers, work with Global Affairs Canada to identify international contacts, put out the call to Canadian companies and work with Innovation Science and Economic Development to stand up domestic capacity, and take a more proactive approach to logistics.

An urgent and accelerated timeline for contracting was required in many cases, and solicitation documents were not published on the Government of Canada’s buyandsell website. Public Services and Procurement Canada issued a ‘Call to Industry’ for all interested suppliers to submit their products for review. In addition, Deloitte Canada was hired to help access international markets. As a result of this strategy, Public Services and Procurement Canada secured more than 2.7 billion articles of various personal protective equipment, awarding over 430 contracts for approximately $8.4 billion.

Table 1: Items ordered and received (information as of August 13, 2021)
Item Quantities ordered Quantities received
Face shields 60,324,810 60,324,810
Gloves (pairs) 1,585,780,378 1,091,523,578
Gowns 153,087,049 139,118,511
Hand sanitizer (litres) 20,646,000 20,646,000
N95 respirators 190,640,900 149,763,216
Non-medical masks: face coverings 77,383,284 71,361,484
Non-medical masks: cloth masks 11,020,782 10,621,600
Surgical masks 450,784,520 428,704,070
Ventilators 40,545 27,706

The Government of Canada has returned to the use of competitive bidding processes to secure the goods and services required to meet Canada’s evolving needs in response to COVID-19, where circumstances permit and the needs are not urgent. This approach is in line with the commitment of Public Services and Procurement Canada to open, fair and transparent procurement processes.

Public Services and Procurement Canada has now secured all the currently required personal protective equipment and is now primarily supporting the Public Health Agency of Canada to manage its stockpiles.

Domestic production

As part of the procurement response, the department leveraged domestic supply chains wherever possible. The majority of the total value of contracts for personal protective equipment, medical equipment and supplies have been with Canadian companies that supply and distribute personal protective equipment, accounting for approximately 87%of overall contractual expenditures, of which 40%are domestic production.

This approach helped to fulfill emergent and immediate as well as long-term medical supply requirements of which over 48 million of face shields, 10.3 million litres of hand sanitizer, over 50 million gowns, over 152 million surgical masks and enough reagent kits to conduct 500,000 urgently needed COVID-19 tests per week were produced in Canada by domestic manufacturers.

In addition, based on the advice of panel of experts, Government of Canada officials identified 4 made-in-Canada ventilators, and contracts were subsequently awarded for the purchase of 37,500 ventilators. Public Services and Procurement Canada, on behalf of the Government of Canada, has also awarded long term contracts with Canadian manufacturing firms Medicom and 3M for the domestic production of N95 masks, securing the supply of this key piece of protection into the future.

Essential services contingency reserve

The department stood up the Essential Services Contingency Reserve as a temporary measure. The reserve has been operating since August 3, 2020 to provide access to PPE, non-medical masks and disinfection products to essential service sectors, the social sector and organizations serving Indigenous communities. Overall uptake on the Essential Services Contingency Reserve has been fairly low with only 233 orders being received, accounting for approximately 2.6%of the inventory procured. Given the existing significant inventory levels for the Essential Services Contingency Reserve and the stockpile for federal departments, a staggered approach to divestment that leverages GCSurplus to sell or donate items as needed is being explored.

Logistics

At the beginning of the pandemic, international suppliers were faced with extreme difficulties in arranging transportation of cargo to Canada as the international shipping market faced unprecedented demand for both air and sea transport capacity. Public Services and Procurement Canada promptly engaged 2 major Canadian airlines to provide air charter flights from China or other countries to Canada on an as-and-when-required basis. Additionally, Canada entered into contracts with 2 major international freight forwarding firms that would provide services to receive or collect cargo from international suppliers and coordinate shipment with airlines or sea shipping firms. The coordinated use of the air charter and freight forwarding contracts allowed Canada to deliver massive quantities of PPE in an expedited fashion.

The Public Health Agency of Canada’s National Emergency Stockpile facilities and supporting resources were not adequate to receive, store and distribute the massive volumes of product arriving from both international and domestic suppliers. To address the immediate need for additional domestic storage and distribution capacity to support the stockpile, Public Services and Procurement Canada promptly entered into a series of shorter-term emergency services contracts with known suppliers who provided warehouse space and transportation services for delivery of products to provinces and territories. Subsequently, the department conducted an open, competitive procurement process that resulted in a longer-term and larger-scale contract for warehousing and logistics services.

Key considerations

Of the over 430 contracts put in place for PPE during the pandemic, there have been issues with fewer than 10 contracts/suppliers, which are in different stages of resolution. Of those the department are currently managing, 2 disputes are expected to be resolved through termination or alternate dispute resolution, 1 through an out-of-court settlement and 3 are subject to on-going litigation. Three have already been resolved through the contract termination process.

The Essential Services Contingency Reserve is set to sunset by end of 2021. Public Services and Procurement Canada has been actively reaching out to the community to provide no-cost PPE and ensure that not-for-profit organizations have access to PPE they require as it focuses on distributing all the PPE that it had directly procured through the reserve.

Public Services and Procurement Canada is also helping Innovation, Science and Economic Development to support companies that stood up and re-tooled to supply domestic capacity and to find a sustainable business model. While many companies are now well able to provide PPE domestically, the decrease in demand and the increase in availability is reducing market opportunities. Consequently, both departments, through their respective programs, are examining possibilities to support these companies and provide innovative possibilities to further diversify their market shares including developing PPE that is more sustainable, ecological and recyclable.

Vaccine procurement

Mandate

One of the major pandemic response responsibilities of Public Services and Procurement Canada has been to procure COVID-19 vaccines and provide procurement support for the development of domestic biomanufacturing capacity to respond to current and future health emergencies.

Key activities

On behalf of the Public Health Agency of Canada and based on advice from Canada’s COVID-19 Vaccine Task Force, Public Services and Procurement Canada continues to lead negotiations and finalize agreements with COVID-19 vaccine suppliers. The department is actively managing contract performance to ensure that vaccine deliveries are consistent with emerging requirements.

To date, the department has signed agreements for vaccines and vaccine candidates with Pfizer, Moderna, AstraZeneca, Johnson & Johnson, Medicago, Novavax, and Sanofi-GlaxoSmithKline. The department also continues to work with Innovation, Science and Economic Development Canada and the Public Health Agency of Canada to support the development of domestic biomanufacturing capacity to prepare for future health emergencies.

Public Services and Procurement Canada has negotiated additional agreements with vaccine suppliers, ensuring sufficient doses for 2022 to 2024. This includes agreements with Pfizer and Moderna for a total of up to 290 million doses, including all options in 2022 to 2024. These agreements will enable Canada to buy the latest COVID-19 vaccines offered by these suppliers including boosters and pediatrics formulations currently under development. Canada opted into the COVID-19 Vaccines Global Access (COVAX) initiative to ensure global access to COVID-19 vaccines. Given Canada’s robust COVID-19 vaccine supply, the department is working in cooperation with Global Affairs Canada and the Public Health Agency of Canada to manage the contractual obligations required to donate doses and ensure that Canada meets its commitment to the COVAX initiative.

Partners and stakeholders

Public Services and Procurement Canada continues to work with a number of partners and stakeholders, including the Public Health Agency of Canada, Health Canada, Innovation, Science and Economic Development Canada, Global Affairs Canada, the COVID-19 Vaccine Task Force, and vaccine suppliers.

As the lead client department, the Public Health Agency of Canada is responsible for establishing requirements guided by advice from the COVID-19 Vaccine Task Force and in collaboration with external stakeholders including the provinces and territories. Health Canada, as the regulatory authority for vaccines, must approve all COVID-19 vaccines before they can be used in Canada. Innovation, Science and Economic Development Canada is leading the negotiation for the development of domestic biomanufacturing capacity with vaccine suppliers.

Key considerations

As the COVID-19 pandemic continues, supply chain volatility and uncertainty on how the global situation will evolve remains. Canada continues to maintain a portfolio of vaccines to mitigate these risks. In the longer term, establishing domestic production capacity will further diversify Canada’s vaccine options and capabilities.

Border testing

Mandate

The Government of Canada continues to take unprecedented action to protect the health and safety of Canadians by introducing measures to prevent further introduction and transmission of COVID-19 and new variants of the virus into Canada. Public Services and Procurement Canada issues contracts to support border testing measures.

Key activities

On January 18, 2021, Public Services and Procurement Canada issued a request for proposals to increase the capacity to collect and process polymerase chain reaction tests. Currently, testing is being conducted at all land ports of entry in Yukon, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Nova Scotia and at 4 airports (Toronto, Montréal, Calgary and Vancouver).

Public Services and Procurement Canada has issued contracts with the Toronto, Calgary and Vancouver airport authorities as they requested support from Public Health Agency of Canada to provide services and the necessary testing supplies to arriving international passengers. Services include support for registration of arriving passengers, direction and management of passenger traffic to testing sites in the airports, additional cleaning and support for the testing providers, such as space rental for the testing sites, increased security and police presence and other incidental services such as parking.

Contracts awarded to provide testing services for travellers entering Canada and further testing support for certain defined populations, such as temporary foreign workers, include:

Partners and stakeholders

The Public Health Agency of Canada is responsible for implementing national testing and screening strategies and new border measures.

Key considerations

The border testing program is evolving in line with the pandemic and related travel restrictions. A key challenge is in accurately forecasting traveller volumes and pre-position testing capacity. Testing companies have limited capacity, more acute in some markets, and it takes more than a month to ramp up new services. Testing is further constrained by physical space at airports and land crossings, which can cause long queues for travellers.

The original request for proposals for polymerase chain reaction testing expired on June 30, 2021. Therefore, the department must rely on current suppliers to provide services to new regions which puts a strain on the contract value. The department is also looking at leveraging current testing providers to explore new service models and deliveries for the border testing program.

Testing

Mandate

Public Services and Procurement Canada will continue to work with the Public Health Agency Canada and Health Canada in order to award contracts to secure access and distribution of approved point-of-care tests, rapid tests and self-tests as COVID-19 testing technologies evolve.

Key activities

Since March 2020, Public Services and Procurement Canada has awarded more than 100 contracts to support conventional laboratory testing across Canada. Contracts have been awarded to secure high-demand products including swabs, equipment, reagents, consumables and plastics with major suppliers such as Roche, BioMérieux, Life Technologies, Qiagen and Abbott. These products are required to help provinces and territories meet national testing objectives. The Public Health Agency of Canada’s National Microbiology Laboratory is working to ensure that the network of provincial public laboratories have access to supplies and have leveraged federal laboratories to provide surge capacity. In addition, 4 mobile trucks have been purchased to increase testing capacity in hot spots.

Public Services and Procurement Canada, on behalf of the Public Health Agency of Canada, has purchased over 54 million point-of-care and antigen rapid tests to increase COVID-19 testing capacity with authorized, proven and effective technologies, for which contracts total $965.2 million. To increase national testing and screening capacity with authorized, proven and effective technologies and ensure that the Government of Canada can secure rapid tests for immediate needs without delay, the department has issued a request for standing offer to qualify companies as they are approved for the supply of Health Canada-authorized COVID-19 rapid tests. To date, the department has approved 5 companies, and 14 are at various stages of evaluation.

The industry has also evolved to develop self-tests where the collection of samples does not require observation or assistance of a trained health care professional. The first to receive regulatory approval was the Lucira test, a molecular test. More recently, the Sofia SARS Antigen FIA and Sofia 2 Instrument by Quidel Health, an antigen test, received Health Canada regulatory approval in late August 2021. Public Services and Procurement Canada is supporting Health Canada in the distribution of rapid tests to companies in critical sectors, including assisting with order placement and providing warehousing and logistics services to store test kits and fulfil orders. As of August 23, 2021, the department has shipped approximately:

As of September 1, 2021, Public Services and Procurement Canada has transitioned the distribution of rapid tests to the Public Health Agency of Canada.

Partners and stakeholders

Health Canada regulates the sale and import of medical devices, including commercial testing devices related to COVID-19. Health Canada reviews testing devices to assess their safety, effectiveness and quality before they are authorized for sale in Canada. For a test to be authorized by Health Canada, it must be submitted for review by the manufacturer. To date, Health Canada has authorized over 50 different COVID-19 tests.

The Public Health Agency of Canada distributes rapid tests to the provinces and territories, other government departments and remote, northern and Indigenous communities. The Public Health Agency of Canada is working with the provinces and territories to ensure that testing devices are allocated so as to have the most impact based on existing and future COVID-19 hotspots in Canada. Collaboration continues with other government departments, and provincial and territorial governments, to assess ongoing needs for medical equipment and supplies.

Innovation, Science and Economic Development Canada, through Innovative Solutions Canada, has dedicated funding to help combat current and future outbreaks of COVID-19 and other similar threats. Its program will help support the Government of Canada's fight against COVID-19 by funding research and development and testing prototypes in real-life settings that can help protect Canadians.

Key considerations

Testing technologies are rapidly evolving. With new testing platforms coming online, there are shifts in the use-cases of tests and the demand for specific tests. On the supply side, as new tests come to market, it can take time for production to ramp up and Canada must compete globally to secure allocations of tests.

To date, most tests have required observation or sample collection by a health professional. Health professionals are spread thin due to the overall response to the pandemic, and self-tests present the potential for much wider deployment of tests for screening and surveillance purposes. That said, the expected demand for self-tests is unknown.

Traditionally, the provinces and territories are responsible for testing. However, during the pandemic, Canada has been bulk purchasing tests to secure access. It is not clear when this responsibility will be transitioning back to provinces and territories.

Defence and marine procurement

In this section

Defence and marine procurement overview

Mandate

The Defence and Marine Procurement Branch has approximately 475 staff members (full-time equivalent), including both procurement and policy professionals. The branch has a current budget of $74.4 million, 77% of which comes from cost recovery and the rest from ongoing funding. It is organized to support marine procurement, defence procurement for land and aerospace, and defence and marine procurement interdepartmental governance, and National Shipbuilding Strategy program management. In addition, it supports operations in 2 international offices, one in Washington and the other in Geilenkirchen, Germany.

The branch has 3 accountabilities.

Contracting authority

The Department of Public Works and Government Services Act gives the minister exclusive responsibility for the procurement of goods and outlines the minister’s role in the procurement of services. The Defence Production Act outlines the minister’s specific responsibility for military procurement. The branch conducts contracting in a manner that stands the test of public scrutiny and reflects fairness and sound stewardship in the spending of public funds relating to defence and marine procurements, respects the operational requirements of our strategic partners, and complies with the government’s obligations under the trade agreements.

National Shipbuilding Strategy program management

The branch is responsible for the overall program management of the National Shipbuilding Strategy, including risk and performance management, communications, and management of interdepartmental governance with the shipyards.

Marine and Defence Procurement Strategy governance

The branch leads and coordinates governance committees and monitors performance for over 150 active procurements worth an approximate $200 billion in total value.

Key activities

The overarching priority of the branch is to deliver timely and efficient support for the requirements of the Canadian Armed Forces and the Canadian Coast Guard.

The branch guides and coordinates defence and major Canadian Coast Guard procurements through the ongoing implementation of the Defence Procurement Strategy and supports the implementation of activities such as:

The branch is undertaking numerous initiatives with the goal of:

Washington sector

Public Services and Procurement Canada has an office in Washington that was established in 1951 to act as the single window for Canadian purchases under the United States Foreign Military Sales Program. Foreign Military Sales, a United States Security Assistance Program, allows Canada and other allied foreign governments to acquire defence articles, services and training from the United States Department of Defense. Washington Sector is the only office with delegated authority to undertake procurements under the Foreign Military Sales on behalf of Canada, as per the Defence Production Act. The office provides end-to-end management of over 340 government-to-government agreements, referred to as active cases, currently worth approximately USD$5.8 billion. This includes:

Partners and stakeholders

Canada’s defence policy: Strong, Secure, Engaged and the National Shipbuilding Strategy represent ambitious investments to equip the Canadian Armed Forces and the Canadian Coast Guard. The branch’s key partners and stakeholders include:

Key considerations

The overarching priority for the branch is to deliver on Canada’s defence policy: Strong, Secure, Engaged and the National Shipbuilding Strategy for timely and efficient support of the Canadian Air Force and the Canadian Coast Guard requirements, including the replacement of Canada’s CF-18 fighter aircraft fleet. The branch will continue to guide and coordinate defence and major Canadian Coast Guard procurements through ongoing implementation of the defence policy and support the implementation of government procurement priorities.

Equipping the Canadian Armed Forces and the Canadian Coast Guard represents a challenge of historic proportions for the defence and marine procurement community as business volumes and complexity are significantly increasing, requiring ongoing renewal and development of specialized skills within the workforce. For example, the Canadian surface combatant project is the largest and most complex procurement in Canadian history. In addition, the onset of COVID-19 may result in difficulty in achieving timely project delivery. Opportunities exist for the branch to leverage the defined programs of work for defence and marine procurements to inform planning for procurement resource requirements and ensure long-term sustainability.

National shipbuilding strategy

National shipbuilding strategy overview

The National Shipbuilding Strategy is a long-term commitment to renew the vessel fleets of the Royal Canadian Navy and Canadian Coast Guard, to create a sustainable marine sector in Canada, and to generate economic benefits for Canadians. To date, 2 large vessels for the Department of National Defence and 3 large vessels for the Canadian Coast Guard have been delivered under the strategy and more are under construction.

Mandate

The National Shipbuilding Strategy consists of 3 distinct pillars:

Four departments are central to achieving the defence and marine objectives set out under the strategy.

Public Services and Procurement Canada

Develops the procurement strategy, leads the solicitation process, and manages the resulting contract and vendor performance.

Department of National Defence

Defines requirements, conducts cost and options analysis of defence equipment, obtains Government of Canada policy approval, and manages projects and budgets.

Department of Fisheries and Oceans Canada (responsible for the Canadian Coast Guard)

Defines requirements, conducts cost and options analyses of equipment, obtains Government of Canada policy approval; and, manages projects and budgets

Innovation, Science and Economic Development Canada

Administers the Industrial and Technological Benefits Policy and determines evaluation criteria intended to leverage economic benefits from resulting contracts.

Key activities

As of June 30, 2021, Public Service and Procurement Canada has awarded $20.58 billion in National Shipbuilding Strategy-related contracts to businesses throughout the country (with $6.37 billion to Irving Shipbuilding Inc. and $5.23 billion to Seaspan’s Vancouver Shipyards). As of March 31, 2021, these contracts are estimated to contribute $20.07 billion ($1.82 billion annually) to Canada’s gross domestic product through the marine industry and its Canadian suppliers and consumer spending between 2012 to 2022 and create or maintain 16,931 jobs annually.

Third shipyard process

On October 19, 2011, the government announced the results of the National Shipbuilding Procurement Strategy to build large vessels for Canada over the next 20 to 30 years. Irving Shipbuilding Inc. was the selected shipyard for the combat package and Seaspan's Vancouver Shipyards Co. Ltd was selected for the non-combat package.

To respond to evolving federal shipbuilding requirements, Public Services and Procurement Canada is carrying out a process to select a third strategic partner shipyard. On August 2, 2019, the government issued an invitation to qualify to establish a short list of shipyards that demonstrate they meet the initial, defined requirements to build 6 program icebreakers for the Canadian Coast Guard. The entire process was overseen by an independent fairness monitor.

Chantier Davie has pre-qualified to be eligible to become the third strategic partner. Canada and Chantier Davie are now going through a third-party assessment of the shipyard’s infrastructure, submission of a formal proposal, and a due diligence process to ensure the shipyard is financially capable of performing the work and making any necessary upgrades to its infrastructure.

Subject to successful negotiations, Canada intends to enter into a third yard umbrella agreement by late fall 2021.

Polar icebreaker

Through the National Shipbuiliding Strategy, work is underway to renew of the Canadian Coast Guard fleet through significant investment in new vessels that will bring a modern, flexible approach to Coast Guard program delivery. This investment includes the construction of 2 new polar icebreakers to ensure continued delivery of the Canadian Coast Guard’s Arctic Program. In February 2020, the government issued a request for information, open to all Canadian shipyards, seeking information on domestic shipyard capability and capacity to construct and deliver a polar-class icebreaker. It closed in March 2020 and Public Services and Procurement Canada received 4 responses.

In May 2021, the government announced plans to move forward with the construction of 2 polar icebreakers. Seaspan’s Vancouver Shipyards will engineer and construct 1 vessel while the other will be engineered and constructed at Chantier Davie, pending the successful completion of the ongoing selection process to select it as the third strategic partner for large ships construction under the National Shipbuilding Strategy.

Partners and stakeholders

For large ship construction, Canada currently has strategic relationships with Irving Shipbuilding Inc. (Halifax) and Seaspan’s Vancouver Shipyards. For smaller ship construction (1,000 tonnes or less), Canada sets aside the individual projects for competitive procurements amongst Canadian companies other than the shipyards selected to build the large ships. For ship repair, refit and maintenance, these requirements are met through publicly-announced requests for proposals.

Key considerations

Shipbuilding is highly complex and challenging work. In a recent report on the National Shipbuilding Strategy, published in February 2021, the auditor general noted this challenge and acknowledged that the Government of Canada continued to seek opportunities to improve the Strategy. The report recommended that:

Public Services and Procurement Canada and other government departments welcomed the report and accepted all of its recommendations. Moving forward, the department will continue to work with shipyards and industry to address ongoing challenges, including costs, estimated timelines and productivity.

Canadian surface combatant

Mandate

As part of the National Shipbuilding Strategy, the Canadian surface combatant project is intended to replace the Royal Canadian Navy’s Iroquois-class destroyers and Halifax-class multi-role patrol frigates with a single class of ship capable of meeting multiple threats on both the open ocean and the highly complex coastal environment. At an estimated cost of $56 to 60 billion, the Canadian surface combatant project is Canada’s largest and most complex shipbuilding initiative since the Second World War. Multiple government departments are implicated with a number of suppliers and foreign governments.

Key activities

The Canadian surface combatant project is in the definition phase (the design phase of the project), the contract for which was awarded in February 2019. Requirements reconciliation, the phase of the design process during which the requirements for the starting point ship design were reconciled with Canada requirements, has been completed and the ship is currently in preliminary design, the first of 3 design phases. Work on developing the implementation contract for ship construction continues, including the drafting of a clear statement of work in collaboration with Irving Shipbuilding Inc. The shipyard was successful in the competitive procurement to select the shipyard to build the combat package of ships under the National Shipbuilding Strategy.

The award of the construction contract is expected in 2022 to 2023 with construction of the first Canadian surface combatant vessel expected to begin in the mid-2020s. Delivery of the first ship is expected in the early 2030s.

Partners and stakeholders

Public Services and Procurement Canada, the Department of National Defence, and Innovation, Science, and Economic Development are currently working together with Irving Shipbuilding Inc, Lockheed Martin Canada and BAE (the UK firm which is the warship design subcontractor to Lockheed Martin Canada) to develop the starting point design to meet Canada’s requirements for combat ships.

Arctic and offshore patrol ships

Mandate

The Arctic and offshore patrol ship project is part of the National Shipbuilding Strategy. It is intended to enhance the Royal Canadian Navy’s ability to assert Canadian sovereignty in Arctic and coastal Canadian waters as well as support international operations, as needed. As part of an investment to renew the Canadian Coast Guard fleet, it was announced in May 2019 that 2 additional Arctic and offshore patrol ships (Coast Guard variants) will be constructed and dedicated to a range of critical missions. Among others, these ships will be deployed on Northwest Atlantic Fisheries Organization patrols, and to operate as the primary conservation and protection enforcement vessels on Canada’s east coast. The Arctic and offshore patrol ship was the first project to begin construction under the National Shipbuilding Strategy combat vessel package of work.

Key activities

The project is in the implementation phase and has delivered the first 2 of 6 ships to the Royal Canadian Navy—Her Majesty’s Canadian Ship(HMCS) Harry DeWolf, in July 2020, and the future HMCS Margaret Brooke, in July 2021. The next 3 ships are currently in various stages of construction. The construction of the sixth is expected to begin in 2022.

The 2 Canadian Coast Guard variants are in the definition phase. An engineering design review contract was awarded in November 2019. Implementation project approval and subsequent construction contract award are expected in 2022. Construction is expected to begin in 2023.

Partners and stakeholders
Clients
Prime contractor
Major subcontractors
Partners
Key considerations

The COVID-19 pandemic crisis has impacted the project’s schedule and budget, primarily due to effects on production efficiency and material cost escalation and availability. Construction at the Halifax Shipyard is continuing with health and safety protocols implemented in accordance with public health measures. The impacts related to the ongoing COVID-19 pandemic are being assessed and mitigation strategies developed in areas such as the global supply chain and production. On-site assessments and inspections are also continuing through Halifax-based staff and virtual tools. An evaluation of project costs and timelines is ongoing and will continue as the situation progresses and the full extent of COVID-19 related impacts are better understood.

Non-combat ships

Mandate

As the lead department for the National Shipbuilding Strategy, Public Services and Procurement Canada contracts on behalf of the Department of National Defence and Fisheries and Oceans Canada for the construction of large ships in support of the renewal of their fleets. Under the National Shipbuilding Strategy, Seaspan’s Vancouver Shipyards was selected to construct an initial work package of non-combat ships. Vancouver Shipyards’ current work package consists of 3 offshore fisheries science vessels, an offshore oceanographic science vessel, up to 16 multi-purpose vessels, one polar icebreaker for the Canadian Coast Guard and 2 joint support ships for the Royal Canadian Navy, with an approximate total project budget value of $20 billion.

Key activities
Offshore fisheries science vessels

As of October 2020, all 3 ships have been delivered to and accepted by the Canadian Coast Guard.

Joint support ships

The first ship is currently under construction and is well underway with delivery scheduled for 2023.

Offshore oceanographic science vessel

Construction of the ship began in March 2020 with delivery scheduled for 2024.

Multi-purpose vessels

An initial ancillary contract is in place with Vancouver Shipyards under which the initial design for the ships will be developed. Negotiation of construction engineering and material procurement contracts will begin in the near future. The start of the construction of the first ship is not anticipated until the mid-2020s.

Partners and stakeholders
Clients

Department of National Defence—Royal Canadian Navy; Fisheries and Oceans Canada—Canadian Coast Guard

Other partner

Innovation, Science and Economic Development Canada; Justice Canada

Prime contractor

Seaspan’s Vancouver Shipyards Company Limited

Major subcontractors
Key considerations
Joint support ships

The construction contract provides an opportunity for Vancouver Shipyards to propose a revised target cost for each ship at a certain point in the construction process. In this regard, the proposal for the first ship is due in November 2021. It is anticipated that a good portion of a requested increase will be attributed to COVID-19 but will also reflect realized risks for Vancouver Shipyards that had not been costed into its initial proposal due to the immaturity of the ship’s design at that time. This submission will initiate a number of months of analysis and negotiation, and possibly arbitration, to reach an agreement on a revised target cost. Third-party consultants have been engaged to assist in the analysis of the proposal. Should any agreed increase exceed existing project or contract authorities, it will be necessary to seek revised authorities. In addition, as noted above, the delivery schedule for the first ship will likely be delayed. Vancouver Shipyards and the government will need to work together to mitigate as much as possible the impact of such a delay on this and other projects.

Offshore oceanographic science vessel

Similar to the joint support ships project, the offshore oceanographic science vessel construction contract provides an opportunity for Vancouver Shipyards to propose a revised target cost for the ship. The proposal is due in fall 2021. In addition, as noted above, a delay in the delivery of the first joint support ship may have an impact on this project’s schedule.

Multi-purpose vessels

This project provides Vancouver Shipyards with a long-run of ships and therefore an opportunity to achieve greater efficiencies than had been possible for its previous projects of short-runs, as well as to leverage the lessons learned from previous projects.

Small vessel construction

Mandate

Small vessel construction fits under 1 of the 3 pillars of the National Shipbuilding Strategy. Smaller vessels represent those with less than 1,000 tonnes of displacement. For the construction of these ships, the government has set aside the individual projects for competitive procurements amongst shipyards other than the shipyards selected for large ship construction (Seaspan’s Vancouver Shipyards and Irving Shipbuilding Inc.) and their affiliated companies that are building large vessels. Opportunities are therefore available for Canadian shipyards and businesses across the country for small ship construction.

Key activities

Small vessel construction includes projects such as:

Naval large tugs

The naval large tug project is intended to replace the Royal Canadian Navy's 5 civilian-crewed Glen-class large tugs and the 2 fire-class rescue boats. In April 2019, a contract was awarded to Ocean Industries in Ile aux Coudres, Quebec, for the construction of 4 naval large tugs at an estimated value of $102 million.

Status:

Search and rescue vessels

In 2017, 2 contracts were awarded to both Hike Metal Ltd. of Wheatly, Ontario, and Chantier Naval Forillion of Gaspe, Quebec, to build 20 search and rescue vessels for the Canadian Coast Guard (10 vessels to be built by each yard). These shore-stationed self-righting lifeboats will replace the Canadian Coast Guard’s existing search and rescue vessels and provide key search and rescue services. The lifeboats are used to conduct searches on water, to respond to marine distress calls, and to provide assistance to disabled vessels. The estimated value of the contracts is $160 million.

Status:

Multi-role boats

In 2020, a contract valued at $35 million was awarded to Zodiac Hurricane Technologies of Delta, British Columbia, for the acquisition of 30 new multi-role boats. These new boats will replace the rigid hull inflatable boats currently used on the Royal Canadian Navy’s fleet of Halifax-class frigates with a more modern and operationally flexible design.

Status:

Key considerations

There are no major challenges to report. However, routine project issues, such as technical design, manufacturing, and project management affect implementation. Production impacts associated with the pandemic are still being assessed.

Sustainment pillar

Mandate

Ship repair, refit and maintenance capability is 1 of the 3 pillars of the National Shipbuilding Strategy and is critical in supporting federal fleets. This pillar, known as the sustainment pillar, supports the activities that are required for the maintenance of ships from their inception into service until their disposal, including repair, maintenance, engineering studies, parts acquisition, and technical investigation studies. The contract management and administration for the in-service support contracts for all of the new fleets being constructed under the National Shipbuilding Strategy (both large and small build) are part of the sustainment pillar, as well as the legacy vessels that are being replaced.

Key activities
Halifax class work period contracts

The government awarded contracts to Seaspan’s Victoria Shipyards Limited (British Columbia), Irving Shipbuilding Inc. (Nova Scotia) and Chantier Davie (Quebec) initially totaling $1.5 billion to carry out the maintenance work of Canada’s Halifax-class frigates over the next 5 years. These initial contracts guarantee a minimum of 3 frigates for each shipyard. These contracts are expected to result in up to 400 jobs at the shipyard plus hundreds of related jobs for marine sector suppliers and subcontractors across the country.

Victoria class submarine in-service support contract

The Victoria in-service support contract is a comprehensive, complex service delivery contract to address the maintenance, repair and overhaul, documentation and management of 4 Victoria class submarines. The prime contractor is Babcock Canada Inc., and work is being conducted in the Esquimalt Graving Dock in Victoria, British Columbia. The current Victoria in-service support contract is set to expire in June 2023.

Status:

Victoria in-service support contract II

The current Victoria in-service support contract is set to expire on June 30, 2023. An invitation to qualify in 2019 resulted in 5 pre-qualified bidders. Engagements took place with the pre-qualified bidders in 2020.

Status:

Arctic offshore patrol ships and joint support ships in-service support

In July 2017, the government awarded a contract to Thales Canada to provide in-service support, including refit, repair and maintenance, and training for both the Arctic offshore patrol ships and joint support ships. The contract is for an initial 8 years, with options to extend services up to 35 years. The initial 8-year contract is valued at $800 million, with an overall estimate of $5.2 billion over 35 years.

Status:

Minor warships auxiliary vessels

The minor warship and auxiliary vessel in-service support contract provides long-term in-service support for minor warships and auxiliary vessels including:

Status:

Partners and stakeholders

Partner departments for repair, refit and maintenance are primarily the Royal Canadian Navy and the Canadian Coast Guard, but also Transport Canada, the Royal Canadian Mounted Police, Parks Canada and the Canada Border Services Agency.

Ship repair, refit and maintenance requirements are met through publicly-announced requests for proposals. Unlike large ship construction, suppliers are primarily selected via competition. Opportunities are available for Canadian shipyards and businesses across the country for maintenance repair and refit, including in-service support of federal fleets.

Key considerations

Future fighter capability project

Mandate

Under the future fighter capability project an open and transparent competitive procurement process has been launched for the acquisition of 88 advanced jets and associated equipment and weapons as well as training and sustainment services.

Key activities

On December 12, 2017, the government launched an open and transparent competition to replace Canada’s fighter fleet with 88 advanced jets. The government also announced that the evaluation process would include an assessment of bidder’s impact on Canada’s economic interest. Officials engaged extensively with the eligible suppliers to seek their feedback on Canadian requirements and to maximize competition by creating a level playing field.

In fall 2018, a preliminary security document was shared with the eligible suppliers to provide them insight into some of Canada’s security and interoperability requirements. Canada also released a draft request for proposal and continued its engagement with the suppliers soliciting their input on the draft bid solicitation documents.

On July 23, 2019, the final request for proposal was released and Canada continued to work with the eligible suppliers by assessing and providing feedback on their preliminary security offers, which they submitted as part of the process. The feedback helped suppliers understand the scope of information required to meet Canada’s security requirement and positioned them to submit competitive proposals by the bid closing date.

On July 31, 2020, the bid solicitation phase closed, and 3 required eligible suppliers submitted proposals. During the evaluation phase, bidders will have an opportunity to address non-compliance in their proposals and, once all bids have been evaluated, Canada may enter into dialogue with 2 or more compliant bidders and request revised proposals that deliver greater value.

The government continues to work toward a contract award in 2022 with delivery of aircraft as early as 2025.

Partners and stakeholders

Public Services and Procurement Canada works with the Department of National Defence, the Royal Canada Air Force and Innovation, Science and Economic Development Canada to fulfill this mandate. National Defence is the technical authority and manages the project, the Royal Canadian Air Force is responsible for the requirements of the future fighter and Innovation, Science and Economic Development Canada leads the implementation of the Industrial and Technological Benefits Policy.

Future Aircrew Training Program

Mandate

A procurement process is underway to establish the Future Aircrew Training Program, which will deliver a modernized, agile, and flexible aircrew training system to produce pilots, air combat systems officers, and airborne electronic sensor operators for the Royal Canadian Air Force to meet defence policy tasks.

Key activities

Canada has had ongoing engagement with the 2 qualified suppliers to support finalization of the documentation for the solicitation process such as the evaluation and selection criteria, the basis of payment and the method of payment. The 2 qualified suppliers are:

An industry day is planned with non-qualified suppliers to further support the value proposition and Canadian industry participation. Indigenous engagement is ongoing with the Métis and First Nations of Manitoba and Saskatchewan to further develop the Indigenous Benefits Plan of the program. As a result, the Indigenous content of the new contract will be the equivalent of 5% of the total contract value minus the price of the assets.

Partners and stakeholders

Public Services and Procurement Canada works with the Department of National Defence, the Royal Canadian Air Force, and Innovation, Science and Economic Development Canada on the program. The Royal Canadian Air Force is responsible for the program, National Defence provides technical support, and Innovation, Science and Economic Development Canada leads the implementation of the economic impact assessment and Industrial and Technological Benefits Policy

Key considerations

Public Services and Procurement Canada is planning for release the request for proposal in November 2021 to ensure that the program launches on schedule.

Strategic tanker transport capability project

Mandate

The strategic tanker transport capability project will replace the Canadian Armed Forces’ CC150 Polaris aircraft and increase the capability that the current Royal Canadian Air Force fleet provides to include strategic airlift, air-to-air refueling, aeromedical evacuations and strategic Government of Canada transport.

Key activities

In spring 2021, Public Services and Procurement Canada issued an invitation to qualify for the project. The invitation to qualify, which is the first phase in this procurement process, was used to qualify respondents to participate in subsequent phases of the aircraft procurement process. Airbus Defence and Space SA became the sole qualified supplier.

Public Services and Procurement Canada hosted a virtual industry engagement session last June. Presentations from Airbus and 3 departments—Innovation, Science and Economic Development Canada, Department of National Defence, and Public Services and Procurement Canada—provided information to Canadian industry and other stakeholders on the project.

The project is currently in the second phase of the procurement process: review and refinement of requirements. The objective of this phase is to obtain feedback from Airbus on preliminary requirements, including on draft procurement documents and on various procurement options to meet the government’s requirements.

The government will then release the request for proposal to establish a contract with Airbus for the acquisition of the capability, which includes 5 or 6 aircraft, training devices, support services, engineering support and publications.

Partners and stakeholders

The Department of National Defence and the Royal Canadian Air Force are the key stakeholders. National Defence is the technical authority and manages the project while the Royal Canadian Air Force defines the requirements.

In addition, Innovation, Science and Economic Development Canada oversees the applicability of the Industrial and Technological Benefits Policy and value proposition for the project.

Fixed wing search and rescue project

Mandate

The fixed wing search and rescue aircraft replacement project is replacing the fixed-wing search and rescue capability of the Royal Canadian Air Force. The new fleet will replace the CC-115 Buffalo and CC-130H Hercules fleets and provide the Royal Canadian Air Force with the capability to conduct effective search and rescue response missions.

Key activities

Following a competitive process, the government awarded a contract to Airbus Defence and Space for a value of $2.4 billion. Airbus was selected on a best value approach, based on capability, cost and economic benefits to Canadians. The contractor will deliver 16 CC-295 aircraft; a full training package including a training center in Comox, British Columbia, equipped with simulators; and in-service support for an initial 5-year period. The new training centre will be known as the Canadian Forces School of Search and Rescue.

As part of the request for proposal, Airbus was required to team up with Canadian companies and reinvest 100% of the contract value in Canada, consistent with the government’s Industrial and Technological Benefits Policy. Consequently, Airbus has partnered with Canadian in-service support integrator PAL Aerospace of St-John’s, Newfoundland.

The aircraft will be based in Comox (British Columbia), Winnipeg (Manitoba), Trenton (Ontario), and Greenwood (Nova Scotia). Five aircraft will be based at 19 Wing Comox, 2 of which will be allocated to the Canadian Forces School of Search and Rescue. Three will be based at 17 Wing Winnipeg, 3 at 8 Wing Trenton, and another 3 will operate out of 14 Wing Greenwood. The remaining 2 aircraft will be rotated through the 4 bases to cover periods when aircraft undergo maintenance.

These aircraft will be equipped with a state-of-the-art sensor suite that is expected to reduce search times by making searches more effective in all weather conditions, day and night, and at longer range. The aircraft will also increase interoperability with other search and rescue assets.

The government accepted the first CC-295 on December 18, 2019, and to date, a total of 8 aircraft have been accepted. The final aircraft are expected to be delivered in 2022.

Partners and stakeholders

The Department of National Defence and the Royal Canadian Air Force are the key stakeholders for the project. National Defence is the technical authority and manages the project, while the Royal Canadian Air Force is the operator of the capability.

In addition, Innovation, Science and Economic Development Canada oversees the applicability of the Industrial and Technological Benefits Policy and value proposition for the project.

Remotely piloted aircraft system

Mandate

The remotely piloted aircraft system project will acquire new aircraft, along with ground control stations, in-service support for 25 years, and infrastructure. This will be integrated into a network of intelligence, surveillance and reconnaissance systems to enable near real-time flow of information essential to Canadian Armed Forces operations. The aircraft will be piloted by certified pilots from remote locations and will be capable of carrying and launching precision-guided munitions.

Key activities

The government launched the procurement process on May 2, 2019. An invitation to qualify resulted in 2 qualified suppliers: L3 Technologies MAS Inc., and the United States Government with General Atomics Aeronautical Systems, Inc.

The government has engaged the qualified suppliers to obtain feedback as well as to review and refine the requirements. A draft request for proposal was issued to the qualified suppliers for review on November 16, 2020, and a request for proposal is expected to be released to the qualified suppliers in fall 2021.

Partners and stakeholders

The Department of National Defence and the Royal Canadian Air Force are the key stakeholders. National Defence is the technical authority and manages the project, while the Royal Canadian Air Force defines the requirements.

In addition, Innovation, Science and Economic Development Canada oversees the applicability of the Industrial and Technological Benefits Policy and value proposition for the project.

Logistics vehicle modernization

Mandate

The logistics vehicle modernization project will acquire new fleets of light and heavy logistics vehicles, trailers, vehicle modules, and armour protection kits. These vehicles are used by the Canadian Armed Forces to transport personnel, equipment, and supplies in support of operations at home and abroad. They will also transport modules that can be used for cargo, troop lift, ambulances, workshops, and command posts.

Key activities

The project is in the definition phase and requirements are currently being reviewed and refined. A draft request for proposal was issued in August 2021 with the intention to release the final in late fall 2021 to the 5 qualified suppliers. They are:

The project plans to award an acquisition contract and a 20-year in-service support contract to 1 of the 6 qualified suppliers in early 2023.

Partners and stakeholders

The Department of National Defence and the Canadian Army are the key stakeholders. National Defence is the technical authority and manages the project, while the Canadian Army, which requires the replacement of the existing logistics fleet, defines the requirements.

In addition, Innovation, Science and Economic Development Canada oversees the applicability of the Industrial and Technological Benefits Policy and value proposition for the project.

Armoured combat support vehicles

Mandate

The armoured combat support vehicle project involves the purchase of a fleet of 360 armoured combat support vehicles. This new fleet will replace the current aging fleet of vehicles that have exceeded their original life expectancy.

Key activities

On September 5, 2019, a $2 billion contract was awarded to General Dynamics Lands Systems-Canada based in London, Ontario. The budget covers the purchase of 360 armoured combat support vehicles, initial spare parts, technical manuals and training. This contract will deliver 8 variants as follows:

To date, 23 troop cargo vehicles and one ambulance have received factory acceptance in accordance with the schedule in the contract. Production and delivery of the vehicles will continue until early 2025 with final deliveries of logistic and support kits and close-out activities continuing throughout 2025.

Partners and stakeholders

The Department of National Defense and the Canadian Armed Forces are the key stakeholders. National Defence is the technical authority and manages the project, while the Canadian Armed Forces defines the requirements.

In addition, Innovation, Science and Economic Development Canada oversees the applicability of the Industrial and Technological Benefits Policy and value proposition for the project.

North Warning System sustainment

Mandate

The North Warning System is a chain of remotely operated radar stations within the Arctic that provides aerospace surveillance of Canadian and United States northern approaches. There are 47 radar sites (11 long range radar and 36 short range radar) in Canada extending from the western part of Yukon to the southern coast of Labrador through 3 comprehensive land claim agreement areas. An additional 3 radar sites are located in Alaska and are managed and operated by the US Government.

Following a competitive process, the government awarded Raytheon Canada Limited a 5-year contract from 2014 to 2019 to operate and maintain the 47 radar sites. This contract included 2 options. The first option period was exercised bringing the current contract value to $423.5 million and a contract end date of March 31, 2022.

A second option exists that could extend the contract to March 31, 2024. However, all interested stakeholders have been informed of the intention not to exercise that second option. As a result, the contract was re-tendered.

Key activities

Prior to re-tendering, formal and significant engagements with 3 designated land claim authorities were held from April 2018 to February 2021. The 3 land claims are:

Engagement with industry and Inuit suppliers also took place.

This resulted in an evaluation approach where the overall score of the bids is evaluated based on a combination of: technical merit (45%), price (20%), and Inuit Benefits Criteria (35%) as follows:

The procurement approach was developed to ensure compliance on a wide array of Inuit and Government of Canada obligations. These include the specific legal obligations stemming from the 3 affected comprehensive land claim agreements, and where possible, the policy considerations resulting from the application of the Directive on Government Contracts, including real property leases in the Nunavut settlement area.

A competitive procurement process was initiated to have a new contract in place for April 1, 2022. The request for proposal was posted on the buyandsell.gc.ca portal on March 31, 2021 and closed on July 19, 2021. Bid evaluations are ongoing and are expected to be completed in fall 2021.

A fairness monitor has been engaged to provide an assurance that the activity is conducted in a fair, open and transparent manner.

Partners and stakeholders

The procurement approach was developed through close cooperation among the following departments and institutions:

Submarines

Mandate

The Royal Canadian Navy currently operates a fleet of 4 Victoria class submarines. These submarines were purchased used from the United Kingdom in 1998, and their maintenance, repair and modernization activities fall under the National Shipbuilding Strategy.

Key activities

In 2008, the government awarded the current Victoria class submarines in-service support contract to Babcock Canada Inc. following a competitive process. The contract period is 15 years (ending in June 2023).

Through an open and transparent process, the government began the activities leading up to the renewal of the in-service support contract. An invitation to qualify closed in January 2020 and resulted in 5 prequalified bidders:

These prequalified bidders participated in an industry day in September 2020. The next step will be one-on-one sessions with the prequalified bidders regarding specific project requirements and are expected to take place in late 2021. The renewal of the in-service support contract will extend and sustain the operational life of the Victoria class submarines through to the mid-2030s.

Partners and stakeholders

Public Services and Procurement Canada is responsible for the procurement strategy of the projects, while Innovation, Science and Economic Development Canada manages, analyzes and reports on the economic benefits of these projects.

Babcock Canada Incorporated is the current prime contractor of the contract that expires in June 2023.

Key considerations

The Victoria class submarines are a unique class of vessels that are only in service in Canada. The age of the submarines as well as their limited quantity presents unique challenges when it comes to the availability of the required supply chain.

COVID-19 impact on the defence and marine procurement portfolio

Mandate

Public Services and Procurement Canada acquires defence goods and services, including ships, aircraft and supporting services on behalf of the Canadian Armed Forces, the Canadian Coast Guard and other government departments. The department works with government and industry partners to ensure that Canadian Armed Forces and Canadian Coast Guard members have the equipment they need to carry out their important work, while leveraging economic benefits for all Canadians.

Key activities

Despite the unprecedented disruption and dislocation of government and industry operations caused by the multiple COVID-19 waves, Public Services and Procurement Canada worked with partners to ensure that a “business as usual” approach was maintained in defence and marine procurement as much as possible. Despite timeline delays, procurements progressed, goods and services were delivered, new contracts were signed and new requests for proposal were released.

As the lead organization for the government’s defence procurement governance, Public Services and Procurement Canada adapted nimbly to the evolving situation to ensure that interdepartmental decision makers could continue to meet safely at all levels. A key adjustment was the mainstreaming of virtual meeting tools. The department also actively supported the Defence Industry Advisory Group, a joint Canada-industry forum. As a core member of the group, the department worked with partners to temporarily accelerate the meeting schedule, from quarterly to weekly and then monthly, to ensure that the defence procurement community received common and timely information on the government’s response to the pandemic. These meetings gave industry a platform for presenting needs and concerns to senior officials across the core defence procurement departments. The department also endorsed the expansion of the number of industry participants at the advisory group meetings to expand their opportunity to communicate with public officials.

The department heeded the concerns of supplier community members on cash flow and sought ways to support them. For example, the department took steps to review the standard payment period. In accordance with the Directive on Payments, a 30-day payment term is normally used but, where possible, invoices were processed in fewer than 30 days to ensure payments reached suppliers quickly, while ensuring financial stewardship.

Where appropriate, the department also modified the basis of payment for contracts in place by changing how the payments are distributed. For example, instead of paying amounts at a later stage (end of critical design completion, first article testing), interim progress milestones against closer deliverables were introduced (critical design review or technical information for specific equipment) to allow for faster cash flow.

The department also considered on a case-by-case basis renegotiating rates on an interim basis in contracts that have a basis of payment that uses rates negotiated annually based on the cost of production. This helped suppliers to cover their monthly, indirect expenses. These interim rates would be finalized at the end of the appropriate fiscal period when the suppliers’ financial results would be received and reviewed by the department in accordance with the terms and conditions of each of the applicable contracts.

Additionally, most of Canada’s contracts contain standard “excusable delay” provisions. These are for exceptional and unforeseeable events that prevent the contractor from being able to deliver on time. Such a provision provides a mechanism for the contracting parties to address situations such as COVID-19 and was invoked by multiple suppliers and accepted by the department, across a variety of defence and marine procurements.

Despite the challenges posed by COVID-19, over the past 18 months, the government has awarded a number of defence and marine contracts and key defence and marine procurement milestones have been met. Some highlights include:

Partners and stakeholders

The Department of National Defence defines requirements, conducts cost and options analysis of defence equipment, obtains government policy approval, and manages projects and budgets.

Fisheries and Oceans Canada and the Canadian Coast Guard defines requirements, conducts cost and options analyses of equipment, obtains overnment policy approval, and manages projects and budgets.

Innovation, Science and Economic Development Canada administers the Industrial and Technological Benefits Policy and determines evaluation criteria intended to leverage economic benefits from resulting contracts.

Canadian Association of Defence and Security Industries is the largest industry association for the Canadian defence and security sector representing over 900 companies.

Aerospace Industries Association of Canada is a national organization that promotes and facilitates Canadian competitiveness in the global aerospace industry.

Key considerations

Key considerations related to the impact of COVID-19 on defence and marine procurement include the following:

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