Transparency: Standing Committee on Government Operations and Estimates—June 9, 2020

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Use of national security exception

In general, the national security exception (NSE) is invoked to remove procurements from the obligations of Canada’s trade agreements for reasons of national security. The procurement itself must either be indispensable for national security or indispensable for national defence purposes. The rationale for the need to invoke any NSE is considered on a case-by-case basis and is documented in the exchange of letters which, in accordance with the Canadian International Trade Tribunal Procurement Inquiry Regulations, occurs at the assistant deputy minister (ADM) level.

In the case of COVID-19, after the World Health Organization (WHO) declared the pandemic, Public Health Agency of Canada (PHAC) made a request on behalf of the federal government that Public Services and Procurement Canada (PSPC) invoke the NSE with respect to the acquisition of goods and services required in order to respond to the COVID-19 pandemic. That invocation is time-limited and applies only until the WHO no longer declares the COVID-19 pandemic a public health emergency of international concern. It covers a broad range of goods and services and includes but is not limited to:

PHAC and PSPC considered it necessary to remove these procurements from the application of the trade agreements for the following reasons:

Once invoked, no further decision is required on whether or not to apply the invocation to a specific procurement as it applies to all procurements required in order to respond to the COVID-19 pandemic. However, even when the NSE has been invoked, contracting officers generally try to adhere to the disciplines of the trade agreements to the extent possible and particularly to the fundamental principles of the trade agreements of fairness, transparency and openness. Many of the obligations Canada has undertaken under the trade agreements are also obligations at common law, and PSPC must continue to fulfill those obligations.

This general invocation regarding COVID-19 applies only to procurements conducted by PSPC, and not to procurements conducted by other departments under their own authorities.

To date, there are 2 other NSE invocations related to the COVID-19 pandemic that PSPC concluded required a separate invocation:

Proactive disclosure of COVID-19-related contracts

Issue

As part of its response to COVID-19, PSPC is aggressively procuring supplies and equipment in the global marketplace, while facing the risks posed by fragile supply chains, the fluidity of the current situation, and a surge in demand. The global nature of this pandemic and demand for supplies has meant that it faces severe competition for goods and a highly volatile supply chain. The government is exercising caution at this time about divulging procurement information that could compromise its negotiating position.

Key messages

Background

PSPC is procuring significant amounts of protective equipment and medical supplies on behalf of the PHAC. In response to the current COVID-19 emergency response, the vast majority of contracts PSPC has put in place have included an NSE.

The application of an NSE removes the obligation for tenders to stay open for a set period of time, thereby maximizing the speed with which urgent procurements can be completed.

NSE application also means that the government is not required to publicly post tender notices, which is important given the volatility of the marketplace and the intense world-wide competition to secure needed personal protective equipment and other supplies. In this environment, the disclosure of procurement information, such as supplier name and contract value, could jeopardize orders and compromise Canada’s negotiating position, in particular in international markets. Consequently, while some general information has been released regarding Canada’s COVID-19 purchases, most contract information has not been disclosed to date.

The application of an NSE does not absolve a department of its obligation to proactively disclose contracts; however, the Access to Information Act contains provisions that provide heads of organizations discretion around disclosure.

Specifically section 18 (b) of the act states that “the head of a government institution may refuse to disclose any record requested under this Part that contains information the disclosure of which could reasonably be expected to prejudice the competitive position of a government institution or to interfere with contractual or other negotiations of a government institution”.

These risks are expected to continue until supplies and equipment become less difficult to secure. Additional information will be made publicly available as soon as PSPC’s competitive position is no longer prejudiced so that transparency is maximized.

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