Company specific notes: Standing Committee on Government Operations and Estimates—November 16, 2020
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Medicom N95: Information on deliveries
Context
Public Services and Procurement Canada (PSPC) entered into a contract with Medicom on April 26 2020 to supply Canada with 20 million N95 masks annually, to be manufactured in Canada. Medicom has commenced production of masks but delivery was contingent on 2 approvals: first, receiving Health Canada interim order approval, and secondly, receiving respirator quality assessment testing approval from the Public Health Agency of Canada (PHAC). On October 30 2020, Medicom confirmed to PSPC that Health Canada had approved their interim order application for their N95 respirators. On November 13 2020, Medicom received quality assessment testing approval from PHAC.
Suggested response
- The health and safety of Canadians is our number one priority
- The Government of Canada is working closely with our partners to ensure front line workers have access to the supplies and personal protective equipment (PPE) they need to stay safe and healthy in response to COVID-19
- In order to provide front line workers with much needed PPE, Public Services and Procurement Canada began work to establish domestic production of PPE with partners like Medicom, who has started production of N95 respirators in Canada
- There were 2 steps required before a delivery schedule of Medicom N95 respirators could be confirmed:
- an interim order application
- quality assessment testing
- Medicom has confirmed that Health Canada has approved its interim order application for N95 respirators and that the Public Health Agency of Canada has approved their N95 respirator through quality assessment testing on November 13
- For the week of November 16, Medicom will be delivering a quantity of 3 million N95 respirators going to PHAC with an additional shipment of 97,000 units going to Manitoba by November 18, 2020
- Quality assessment testing was required to confirm the masks met the mandatory 95% filtration standard for N95 respirators. This testing process was being performed by the National Research Council on behalf of the Public Health Agency of Canada and takes 7 to 10 business days depending on the number of sample masks being tested
- Medicom has provided PSPC with a delivery schedule for the N95 respirators, with deliveries beginning in late November
If pressed on the delivery schedule for surgical masks
- Production ramp-up for surgical masks began in July 2020, and deliveries began in August 2020. As of November 4, 2020, Canada has received approximately 4 million surgical masks from Medicom
Background
PSPC awarded a 10-year contract to Medicom for domestic production and distribution of surgical masks and N95 respirators for the Public Health Agency of Canada.
Production ramp-up for N95 respirators began in August 2020. Medicom applied for Health Canada’s interim order (IO) certification. Health Canada approval was obtained on October 30.
Medicom has also received quality assessment testing approval from the PHAC on their N95 respirator.
Quality assessment testing is a standard requirement to confirm the masks meet the mandatory 95% filtration standard for N95 respirators. This quality assessment testing process was performed by the National Research Council, on behalf of the PHAC. The National Research Council performed the testing using the filtration testing machine TSI8130A, which is the same machine used by the National Institute for Occupational Safety and Health. Quality assessment testing typically takes 7 to 10 business days depending on the number of sample masks being tested.
While Medicom was finalizing quality assessment testing, they provided 700,000 FFP2 (N95 equivalent) from Europe. Medicom has provided PSPC with a delivery schedule for the N95 respirators, with deliveries beginning in late November.
Deloitte fact sheet
Deloitte is one of the largest consulting/accounting firms in the world. Deloitte Canada has more than 12,330 employees.
Supplier:
Deloitte 1600-100 Queen St Ottawa ON Canada
Contract total value: $ 12,887,500.00
Given urgent needs, Public Services and Procurement Canada (PSPC) issued a sole sourced task-based contract to Deloitte on April 10, 2020 to provide professional services related to the acquisition and supply of materials in support of the Government of Canada’s response to COVID-19.
The initial contract period was 6 months, from April 10, 2020 to October 10, 2020. On October 6, 2020, a 3 month option period was exercised to extend the contract until January 9, 2021.
The professional services include, but are not limited to, the following areas:
- establish an integrated control tower to track and manage logistics, allocation fulfillment and order tracking. This includes, but is not be limited to, the following:
- acquire pandemic response supplies from global market
- develop and maintain demand and supply forecasts for pandemic supplies, and associated inventory allocation models
- create screening and qualification process(es) for alternative (not previously qualified) suppliers
- additional services and tasking may be required as the COVID-19 situation and Government of Canada requirements evolve
Currently, Deloitte has received 6 tasks from the Government of Canada under this contract:
- task 1 from PSPC: Strategic sourcing—Control tower and materials tracking
- task 2 from the Public Health Agency of Canada (PHAC): Control tower and China logistics
- task 3 from Health Canada (HC): Demand forecasting
- task 4 from Innovation, Science and Economic Development Canada: N95 respirators market analysis
- task 5 from HC: Supply and demand modelling for drug shortages
- task 6 from PHAC: Conduct a risk assessment comprised of a review of physical and information security with respect to logistics
General Motors of Canada company fact sheet
General Motors of Canada (GM) is a company that was referred via a letter of intent (LOI). To help Canada meet the need for surgical masks for health care professionals and for other Canadians, GM Canada has retooled its Oshawa plant to produce surgical masks. More than 50 GM employees have been recalled for this task.
Supplier:
General Motors of Canada Company 1908 Colonel Sam Dr Oshawa ON L1H 8P7
Contract total value: $10,847,507.32.
The contract period is May 21, 2020 to May 20, 2021.
The contract was issued on May 21, 2020 to manufacture 10,000,000 masks, of which 3,000,000 were to be face coverings and 7,000,000 were to be level 1 surgical masks. The original contract value was $10,870,600.
A contract amendment issued on September 17, 2020 increased the quantity of face coverings to 3,340,600 and decreased the quantity of level 1 surgical masks to 6,659,400. The contract value was decreased to $10,847,507.32.
During the contract negotiation, GM requested some exceptions to Public Services and Procurement Canada’s standard contract terms and conditions:
- indemnification: Canada agreed to indemnify GM against any claims up to an amount of $10,000,000
- limitation of liability: Canada agreed to limit GM liability up to the contract value of $10,870,600.00 CAD
Spartan Bioscience fact sheet
Spartan Bioscience is an Ottawa based company that was referred via a letter of interest (LOI). Spartan, founded in 2005, has grown into a leading biotechnology company that has developed the world's smallest DNA analyzer.
Supplier:
Spartan Bioscience Inc. 500-2934 Baseline Rd Ottawa ON K2H 1B2
An initial contract was issued on March 25, 2020 for the purchase of 100 Spartan COVID-19 testing platforms (Cube) and 1,020,000 test kits. 40,000 test kits were to be delivered monthly from April to June, ramping up to 100,000 test kits per month from July to March.
A contract amendment was issued on April 9, 2020 to purchase 600 additional testing platforms, and 900,000 additional test kits. 100,000 test kits were to be delivered monthly from July to March.
On May 1, 2020, the National Microbiology Laboratory provided Health Canada with a final report of clinical testing performed. This report identified that the Spartan Cube had performance issues related to the swabs, which may not successfully collect appropriate mucosal material for the test.
On May 4, 2020 Spartan announced that it would be voluntarily recalling its COVID-19 product and performing additional clinical studies to assess the sampling method and proprietary swab.
Since the recall, Spartan is believed to have developed a fix for the swab issue; enhanced performance has been demonstrated utilizing banked COVID-19 patient specimens.
Spartan has received Health Canada (HC) investigational testing authorization (ITA) to run clinical studies at the Ottawa Hospital and Toronto's Humber River Hospital to evaluate the fix in COVID-19 patients in real-time.
On October 29, 2020, Spartan received HC investigational testing authorization to conduct a clinical trial on their point of care test and generic swab, to obtain data to support its effectiveness.
Spartan continues to work with its contract manufacturing partner so that it will be in position to produce the necessary quantities of tests once HC approval is obtained.
Fluid Energy Group fact sheet
Fluid Energy Group is a company that was referred via a letter of interest (LOI). The Calgary-based chemical processing and manufacturing firm has experienced rapid growth. In the current events of COVID-19, the company has retooled their production line to be able to produce hand sanitizer.
Supplier:
Fluid Energy Group 1500-140 – 10 Ave SE Calgary AB Canada
Contract total value: $105,236,328.
The contract was issued on April 6, 2020 for the production of 10 million litres of hand sanitizers. As of October 14, 2020, all 10 million litres were delivered.
Fluid Energy Group received its license to produce hand sanitizer from Health Canada (HC) on March 23, 2020.
The Province of Ontario raised concerns with the hand sanitizer produced by Fluid Energy Group, specifically with respect to labelling. Labels were not getting to the end-users in hospitals as they were included as inserts as opposed to directly on the containers.
Fluid Energy Group Ltd. distributed units of Triton hand sanitizer that contained technical-grade ethanol, which HC recently authorized on a temporary basis for use in hand sanitizers in Canada to help address the increased demand in response to COVID-19. It did so without the required risk information on the label; however, the approval process for use of technical-grade ethanol was not in place at the time of distribution.
Fluid Energy Group Ltd. sought a no objection letter from HC for the use of technical-grade ethanol, which was issued on May 1, 2020. Required labelling was implemented following the issuance of the no objection letter, and Fluid Energy Group Ltd. has worked closely with Health Canada to address the labelling issues for hand sanitizer containing technical-grade ethanol that was previously distributed.
The company has contacted all of its customers and has corrected the labelling issue for any remaining product in stock. The company has also updated risk information posted on its website.
HC recently conducted an assessment of the risks and benefits of using specific sources of technical-grade ethanol in hand sanitizers. The department determined that, when used as directed and for a limited period, the public health benefits of using hand sanitizers containing approved sources of technical-grade ethanol to limit the spread of COVID-19 outweigh the risks.
The federal government has purchased 10 million litres of hand sanitizer from Fluid Energy Group Ltd. made with technical-grade ethanol. Distribution of the inventory is being discussed to find potential users such as the Department of National Defence, the Royal Canadian Mounted Police, the Red Cross and emergency response workers.
Logistics fact sheet
CargoJet
On April 2, 2020, Public Services and Procurement Canada (PSPC) entered into a task-based emergency services contract with CargoJet for charter airline services. The contract provides for the transport of personal protective equipment (PPE) and related supplies to Canada from Asia.
As of November 5, 2020, CargoJet has flown a total of 96 chartered flights carrying PPE to Canada.
CargoJet offers reliable, regular flights and good value in comparison to prices available from international carriers.
Air Canada
On April 2, 2020, PSPC entered into a task-based emergency services contract with Air Canada for charter airline services. The contract provides for the transport of PPE and related supplies to Canada from Asia.
As of November 5, 2020, Air Canada has flown 23 chartered flights carrying PPE to Canada.
Air Canada continues to offer a consistent and reliable source of supply and good value in comparison to prices available from international carriers.
Bolloré
At the end of March, PSPC entered into a contract with Bolloré Logistics Canada Inc. using established emergency contracting authorities to provide urgent logistics and transportation services related to the procurement of PPE and medical supplies from Asia.
Bolloré Logistics Canada Inc. is on a standing offer with the Government of Canada for freight and cargo services and was selected due to its previous experience providing logistics services to Canada and its significant footprint in China. The decision was based on minimizing risks and on the urgency of the requirement.
The Bolloré contract has a term to April 30, 2021 and includes 1, 6-month extension option.
For details of Bolloré’s warehousing capacity and current product storage details refer to fact sheet “15) Public Health Agency of Canada additional warehouse space”.
Overseas Express Consolidators
In June 2020, PSPC issued a competitive contract to Overseas Express Consolidators (OEC) Montreal Inc. as our second third-party logistics provider. This contract provides additional capacity and contingency, when required, for the same suite of services currently being provided by Bolloré Logistics Canada Inc.
The OEC contract has a term to April 30, 2021 and includes 1, 6-month extension option.
For details of O.C.s warehousing capacity and current product storage details refer to fact sheet “15) Public Health Agency of Canada additional warehouse space”.
Amazon
On April 1, 2020, PSPC signed, on behalf of the Public Health Agency of Canada (PHAC), a 1-year contract with Amazon to use their on-line technology for provinces to order material directly. Canada Post and Purolator were delivering the equipment to provinces and territories as a subcontractor of Amazon. To date, only $200,000 has been spent under this contract.
This agreement was primarily put in place for Amazon’s easy-to use online interface which allowed individual health establishments to order supplies directly from PHAC. As provinces and territories requested for PHAC to deliver the supplies directly rather than awaiting for orders from them, the requirement for getting PPE to the provinces and territories evolved beyond what was covered in the Amazon agreement. As a result, the contract with Amazon was suspended mid-July 2020.
To support this contract, a separate agreement between PHAC and Canada Post allowed for the warehousing of the PPE at Maritime Ontario, a key on-going subcontractor of Canada Post.
Purolator
Purolator was previously used by PHAC to transport PPE from CargoJet or Air Canada airport facilities to various warehouses used by PHAC or its partners, as well as to deliver PPE to provinces and territories.
Contracts with Purolator have been issued directly by PHAC as call-ups against the PSPC carrier and freight services standing offer.
Groupe Robert
On June 13, 2020. PSPC awarded a 6-month contract to Groupe Robert Inc for inventorying, transportation and warehousing in the Greater Toronto Area and the Greater Montreal Area. Groupe Robert was identified as the best firm for this work based on their response to the letter of intent (LOI)/request for information (RFI) for a long-term multimodal logistics solution for PHAC. The warehousing space available under this contract reached its capacity in late July. Work is now under way to transfer the PPE out of such warehouses as they are gradually coming to an end from now until the end of December.
On July 31, PSPC entered into a 2-year contract with Groupe Robert Inc to provide PHAC with logistic services to manage and equip a 350,000 square feet warehouse that PHAC has separately leased.
For details of Groupe Robert Inc’s warehousing capacity, refer to fact sheet “15) Public Health Agency of Canada additional warehouse space”.
Metro Logistics Inc.
On September 11, PSPC awarded a 2-year competitive contract to Metro Logistics Inc. of Montreal, as a long-term multimodal logistics solution for PHAC, to inventory, warehouse and distribute PPE to provinces and territories. The contract also has an additional 1-year option period.
Under this contract, Metro is responsible for handling receipt of PPE supplies via all modes of transportation, stocktaking, warehousing in the Greater Toronto Area, Greater Montreal Area, and Alberta as well as preparing and delivering PPE to all provinces and territories.
For details of Metro’s warehousing capacity refer to fact sheet “15) Public Health Agency of Canada additional warehouse space”.
Procurement of medical gowns from Proline Advantage Inc.
Context
Public Services and Procurement Canada (PSPC) has been working aggressively with domestic and international suppliers to procure medical gowns. A high volume contract was awarded to Proline Advantage Inc. for the supply of medical gowns based on the company’s capacity to source and deliver gowns in a very aggressive timeframe at a reasonable price.
Suggested response
- We remain steadfast in our efforts to get safe and effective supplies of personal protective equipment such as N95 respirators, gloves, surgical masks and gowns to provinces and territories as quickly as possible to protect our front line medical workers
- Good progress is being made, despite challenges posed by a highly competitive market and constrained supply chains
- In March and April, contracts for medical gowns were awarded to suppliers based on their capacity to source and deliver gowns in a very aggressive timeframe at a reasonable price
- PSPC continues to ramp up procurement efforts domestically and abroad to diversify its supplier base. As we enter the next phase of the response for COVID-19 related procurements, the priority is to revert to competitive procurement processes and post solicitation documents on the Buy and Sell web page
- All products we are buying continue to be subject to stringent controls at various points in the process, including technical evaluation and testing of the proposed equipment, evaluation of the financial assessment of the suppliers, an integrity check and insuring that the supplier has a valid medical device establishment license
If pressed about the selection of Proline Advantage Inc.:
- Proline Advantage Inc. has been in the medical/supplement supply field since 2008. It has many years of experience with an international supply chain, and has access to several personal protective equipment (PPE) manufacturers in China
- the company responded to the call to suppliers posted on BuyandSell.gc.ca in March 2020
- Proline’s proposed gowns were assessed and approved by the Public Health Agency of Canada (PHAC). Proline had a medical device establishment license, available quantities, integrity compliance and could meet the delivery timeline
- PSPC received numerous proposals from suppliers, however very few were able to meet the required delivery timeframes
- the initial requirement from the PHAC was to purchase 130 million gowns. Proline Advantage Inc. was one of the suppliers who sourced and delivered an important amount of level 1 and level 3 gowns of the overall requirement. The contract value is $371,318,000.00
If pressed on the volume of gowns procured from Proline Advantage Inc.:
- PSPC awarded 26 contracts to 23 suppliers for the supply of medical gowns of which 16 contracts are with domestic manufacturers
- PSPC wanted to diversify its supplier base to efficiently manage risk of late or non-delivery. The quantity of gowns awarded to suppliers was determined by their capacity to source and deliver gowns in a very aggressive timeframe at a reasonable price
If pressed on the supplier’s pricing:
- Proline Advantage Inc. offered pricing that was comparable to other contractual arrangements awarded at the time
If pressed on the supplier’s performance:
- by late August, all gowns had been delivered to the PHAC warehouses and Proline Advantage Inc. had fulfilled all its obligations under their contract
- on May 18, May 21 and June 4, Proline delivered a total of 1,486,000 gowns by plane to Mirabel Airport
If pressed on advance payment made to Proline Advantage Inc.:
- from March until the end of June, the pressure on the medical gown market was very high. In order to facilitate procurement, suppliers had to make security deposits in order to secure a spot on the manufacturers' production line
- PSPC and the PHAC decided to include clauses in the contracts allowing advance payment under certain circumstances. Proline Advantage Inc. received an advanced payment of $216,435,171.00 for the gowns contract in order to secure production
- a financial risk assessment was performed and Proline Advantage Inc. was considered a financially viable company
If pressed on material shortages:
- the global demand for medical gowns is high and there is a worldwide shortage in disposal gown material
- we have identified Canadian textile manufacturers for the domestic supply of medical gowns using alternative materials, including Canadian manufactured house wrap and air bag materials
If pressed on domestic suppliers:
- PSPC has awarded contracts to 16 domestic suppliers for the production of gowns and, through Innovative, Science and Economic Development Canada, have connected these domestic suppliers with 2 domestic alternative material manufacturers
- delivery of domestically-made gowns started in early May
If pressed on the general request for proposal process:
- industry and suppliers have responded positively to the call to action. More than 26,000 submissions were received, including nearly 17,000 domestic submissions
- we contacted nearly all domestic companies who submitted forms, and continue to reach out to those submitting forms
- as PSPC enters the next phase of the response for COVID-19 related procurements, the priority is to revert to competitive procurement processes and post solicitation documents on the Buy and Sell webpage, particularly where the timeline to secure a particular good or service allows for more flexibility or the search for information or sources of supply needs to be broadened
- a competitive request for proposal (RFP) for the purchase of estimated quantity of 50 million gowns is currently posted on buyandsell.gc.ca. This RFP closing on November 20 is limited to Canadian manufacturers of gowns
Background
The surge in global demand for PPE and medical supplies due to the pandemic has resulted in a highly competitive marketplace and volatile supply chains. An urgent and accelerated timeline for contracting has been required in many cases, and when solicitation documents were not being published on the Government of Canada’s Buy and Sell website, PSPC engaged the domestic and international supply communities through other means.
Notably, a call to action was posted on the Buy and Sell web page from March 12 to July 10, 2020, to seek information on the ability of suppliers to provide emergency products and services. More than 26,000 unique responses were received, including nearly 17,000 from Canadian suppliers. PSPC has signed nearly 150 contracts with companies around the world as a result of the call to action; the majority of these were awarded to Canadian suppliers.
There is a very high demand for gowns globally. Material usually used for the production of gowns is being diverted to the production of masks. Manufacturers are proposing alternative material for the production of gowns in Canada. On the domestic front, there is also great competition amongst the suppliers for the same resources, resulting in an impact on the price.
Product compliance is reviewed against the technical specifications released by the World Health Organization (WHO). All proposed gowns are reviewed by the PHAC technical team. PHAC has implemented a robust quality assurance program. For domestic suppliers, samples are being assessed before production begins and then again once they are delivered to PHAC and prior to distribution to provinces and territories.
As PSPC enters the next phase of the response for COVID-19 related procurements, the priority is to revert to competitive procurement processes and post solicitation documents on the Buy and Sell web page, particularly where the timeline to secure a particular good or service allows for more flexibility or the search for information or sources of supply needs to be broadened. For example, recent competitive procurements for goods such as non-medical masks and face shields have received hundreds of bids. New content has been published on the Buy and Sell website to help suppliers find COVID-19 related competitive procurement opportunities. This includes support for suppliers who may be new to federal procurement.
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