Procurement (including issues and policies): Standing Committee on Government Operations and Estimates—April 29, 2022
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Vaccines
Key messages
- As of April 1, 2022, Canada has received 121.8 million vaccine doses
- There is sufficient mRNA vaccine available in Canada to administer vaccines to the unvaccinated as well to offer a third and fourth dose (booster) to all eligible Canadians
- As well, Canada has secured future supply with Moderna and Pfizer that will provide access to a range of products as required, including the latest formulations
- Canada has also amended its contracts with Novavax and Medicago to secure supply in 2022
- Canada is also working with Vaccine Global Access (COVAX) and bilateral agreements to donate any vaccine surplus
Key data points
- Pfizer will supply 35 million doses for 2022, 30 million doses for 2023, with options for an additional 30 million doses in each of these years
- Moderna will supply 20 million doses with options for up to 15 million additional doses for both 2022 and 2023
- Novavax will supply 26 million doses in 2022 and 2023 respectively
- Medicago is contracted to supply up to 20 million doses in 2022 and Public Services and Procurement Canada (PSPC) is working with Public Health Agency of Canada (PHAC) and the supplier on a delivery schedule
- $9 billion has been allocated for vaccine procurement
Background
Currently, Pfizer, Moderna, AstraZeneca, Johnson & Johnson, Novavax and Medicago have been approved to prevent COVID-19. Sanofi started the regulatory submission process for its primary COVID-19 vaccine. Through this process, Health Canada will review the evidence of safety, efficacy, and manufacturing quality for each vaccine to determine whether individual vaccines will be approved for use in Canada.
The Government of Canada has signed agreements in principle with the following companies to obtain access to their vaccines and vaccine candidates:
- AstraZeneca agreement was for 20 million doses and, in 2021, Canada received 3.8 million doses of the vaccine for use in Canada. The remaining doses have been donated or are now expiring as no recipient countries were found
- Sanofi and GSK have an agreement to supply up to 72 million doses of their vaccine candidate once approved. Deliveries are to be confirmed once approval is received
- Johnson & Johnson agreement is for 10 million doses and, in 2021, Canada received 188,000 doses of its vaccine.
- The remaining doses are being donated through COVAX Novavax, which will supply up to 76 million doses of its protein subunit vaccine NVX-CoV2373 between 2022 and 2024
- Pfizer, supplied 51 million doses of its mRNA vaccine and 4 million pediatric doses in 2021. Agreement is in place for future supply of up to 185 million doses from 2022 to 2024
- Moderna supplied 34.9 million doses of its mRNA vaccine in 2021. While 10M have been deferred to early 2022, agreement is in place for future supply of up to 95 million doses from 2022 to 2024
- Medicago, which will supply up to 76 million doses of its vaccine (CoVLP) between 2022 and 2024
- Serum Institute of India/Verity Pharmaceuticals, which supplied 500,000 doses of the Oxford-AstraZeneca
Rapid testing
In this section
Key messages
- Public Services and Procurement Canada is supporting Canada’s COVID-19 response by procuring testing supplies, test kits, testing services, and warehousing and logistics services
- Public Services and Procurement Canada is working with Health Canada on a procurement strategy to address Canada’s continuing needs for rapid tests for 2022
- Overall, Public Services and Procurement Canada has procured and received 603.4M rapid tests including 497.5M since the beginning of December
Key data points
- As of April 8, 2022, more than 603.4 million rapid tests have been procured and received from 15 suppliers at a total cost of $4.09 billion. Of these, 593 million have been delivered to provinces and territoires and the National Emergency Strategic Stockpile
- We have 23 qualified suppliers on the competitive standing offer
- Of these 23 suppliers, BTNX is a Toronto-based supplier (importer) of tests, Artron is a British Columbia (BC)-based test manufacturer and Biolytical Laboratories is our second BC-based test manufacturer
Background
Public Services and Procurement Canada supports testing strategies and initiatives by procuring testing supplies, test kits, testing services, and warehousing and logistics services on behalf of Health Canada (HC) and the Public Health Agency of Canada. In support of HC’s role to provide test kits to provinces and territories, PSPC has procured over 603 million rapid tests. To date, over 593 million tests have been shipped to provinces and territories to enable the reopening of the economy, schools and other industries.
PSPC published a request for standing offer on March 16, 2021, for the purchase of additional antigen and molecular rapid tests, so that suppliers can submit an offer as soon as their test obtains approval from HC and allowed Canada to procure rapid tests through a competitive process.
PSPC has also been supporting provinces and territories and Indigenous Services Canada by procuring laboratory supplies for the general population testing programs: swabs, reagents, lab equipment as well as testing devices that can be used for northern remote and isolated communities. Examples of these devices are Cepheid tests used on GenXpert machine, bMx Biofire.
Supporting border testing
Key messages
- Since February 2021, border testing for travellers entering Canada has been conducted and will continue to evolve based on public health requirements
- PSPC has put in place over 50 contracts for services such as testing, accommodations, guards, humanitarian support, transportation, information technology (IT) applications, and a call centre
- We will continue to work closely with PHAC to provide as much clarity as possible on the future of border testing to support the transition evolution of border testing and program surveillance
Key data points
- Over 50 contracts in place to support:
- Public Health Agency of Canada
- Canada Border Services Agency (CBSA)
- Immigration, Refugee and Citizenship Canada (IRCC)
- Employment and Social Development Canada (ESDC)
- Of those 50 contracts, 4 border testing and supplemental testing services contracts and 10 airport service contracts were awarded for a combined value of $1.2 billion
Background
PSPC has awarded over 50 contracts to more than 40 suppliers in the amount of $2 billion in support of PHAC, CBSA, IRCC, ESDC to assist efforts in managing travellers crossing Canadian borders, including for services related to testing, accommodations, guards, humanitarian support, transportation, IT applications, and a call centre.
Following a request for proposals (RFP), PSPC initially awarded 3 contracts in February 2021 to secure the services from testing providers to collect and process polymerase chain reaction (PCR) test specimens from travellers entering Canada. On September 21, 2021, PSPC posted a new competitive RFP to meet the demand of the evolving Border Testing Program. From this competitive RFP, PSPC awarded 3 contracts (Dynacare, Lifelabs and Biron). An existing contract with Switch Health remains in place.
Effective March 1, there was a shift from mitigating importation of cases to a surveillance approach for all vaccinated travellers.
Switch Health Holdings Inc.
A contract was awarded to Switch Health Holdings Inc. on February 20, 2021, for dedicated support services in French and English on day 1 and day 8 testing for travellers arriving by air or land borders in Ontario, Alberta and the Atlantic region.
The contract was then amended in April 2021 to include additional testing in Ontario for temporary foreign workers, asylum seekers, those in isolation at designated quarantine facilities, and other individuals entering Canada for whom specimen self-collection may not be possible. Switch will provide mobile units as well as telehealth appointments to conduct on-site specimen collection, on-site observed specimen collection and virtual observed specimen collection. The contract was amended on October 30, 2021, to extend it to November 30, 2021. The contract was amended again from December 1, 2021, to extend it to May 31, 2022.
Dynacare
A contract was awarded to Dynacare on April 26, 2021, for day 8 testing for temporary foreign workers in Quebec. This included dedicated support services in French and English for appointment booking, test administration and results management, as well as mobile services for on-site specimen collection. The contract was amended on July 30, 2021, to extend the contract until August 15, 2021 and add additional testing services for land and air ports of entry for Manitoba and Quebec. The contract was amended again on August 14, 2021 to extend the contract until October 31, 2021 and add additional on-site testing for airports in Manitoba and Quebec. The contract was amended again on October 30, 2021, to extend it to December 31, 2021. Following the new RFP, Dynacare was awarded a new contract effective January 1, 2022, for day1 and day 8 testing of travellers entering Canada in the region of Manitoba and Quebec, at select airports and land border crossing, as well as temporary foreign workers. This includes dedicated support services in French and English for appointment booking, test administration and results management, as well as mobile services for on-site and virtual specimen collection. The contract will expire on April 30, 2022.
Lifelabs
A contract was awarded to LifeLabs on June 23, 2021, for day 1 testing of all travellers arriving at Vancouver Airport and day 1 and day 8 testing for all travellers crossing land borders in British Columbia, Saskatchewan and Yukon. The contract was amended on June 30, 2021, to add day 8 testing for travellers arriving at Vancouver Airport. The contract expired on January 31, 2022. Following the new RFP, LifeLabs was awarded a new contract effective February 1, 2022 for travellers crossing land borders in British Columbia, Saskatchewan and Yukon and select airports. This includes dedicated support services in French and English for appointment booking, test administration and results management, as well as mobile services for on-site and virtual specimen collection. The contract will expire on April 30, 2022.
Biron Laboratoires Santé
Following the new RFP, Biron was awarded a contract effective December 21, 2021, for the Quebec Region for Day 1 and Day 8 testing of travellers entering Canada at the airports and several land border crossings, including the testing of refugees and asylum seekers entering Canada at Roxham Road. This includes dedicated support services in French and English for appointment booking, test administration and results management, as well as mobile services for on-site and virtual specimen collection. Biron Groupe Santé will continue their ramp-up in the coming weeks and will become fully operational by mid-February 2022. The contract will expire on April 30, 2022.
Therapeutics
Key messages
- Given strong global demand for some of these therapeutics, Public Services and Procurement Canada has taken a very proactive approach, which has been successful in securing the products for use in Canada
- As of March 2022, PSPC has been able to secure orders for more than 1.7 million treatment courses for use in Canada of 9 different therapeutics
- We continue to work actively with suppliers on planned deliveries and pursue actions to accelerate delivery schedules, reducing repackaging requirements, offering to facilitate logistics both overseas increasing warehousing as needed and facilitating border clearance process
Key data points (as of April, 2022)
- Paxlovid—Pifzer: Contract for 1,500,000 treatment courses, 290,027 delivered
- Remdesivir—McKesson/Gilead: Original contract for 24,825 treatment courses, all delivered. Amendment for additional 16,667 treatments issued February 2022 and all delivered
- Bamlanivimab—Eli Lilly: Original contract for up to 26,000 treatments courses, 17,000 delivered
- Tocilizumab—Roche Canada: Contract awarded March, 2021 and subsequently amended, for a total potential order of up to 14,551 treatment courses (assuming 800mg per treatment), 11,419 (800mg) treatment courses delivered
- Regeneron—Roche Canada: Contract for 9,000 treatments, all treatments delivered
- Sotrovimab—GlaxoSmithKline: Original contract for 10,006 doses, and amendment for additional 20,064 doses, 30,070 delivered
- Molnupiravir—Merck: Original contract for 501,120 treatment courses, pending regulatory approval, 0 delivered
- Evusheld—AstraZeneca: Contract for 100,000 doses, approved by Health Canada on April 14, 2022,29, 400 delivered
- Sarilumab—Sanofi: Contract for 1,000 treatments, 1,000 delivered
Background
Oral antiviral treatments
On January 7, 2022, Canada signed a contract with Pfizer for 1 million treatment courses of Pfizer’s COVID-19 oral antiviral therapeutic Paxlovid, for the treatment of COVID-19 symptoms. To date, Canada has received 290,027 treatment courses of Paxlovid and is expecting an additional 184,973 treatment courses to be delivered before the end of June. Further delivery schedules are being confirmed, with the intent of bringing treatment courses into Canada as quickly as possible. A contract amendment was awarded on February 23, 2022 for 500,000 additional treatments. A total of 1.5 million treatment courses of Paxlovid have been ordered and will be made available as soon as possible to help protect the health of Canadians.
On December 1, 2021, Canada awarded a contract to Merck for 501,120 courses of its Molnupiravir oral antiviral therapeutic for the treatment of COVID-19 symptoms, pending regulatory approval.
Injection treatments
On October 20, 2020, Canada awarded a contract with McKesson/Gilead for the Remdesivir therapeutic drug for 24,825 treatments courses. An amendment was issued in February 2022 to procure an additional 16,667 treatment courses. A total of 41,492 treatment course have been delivered.
On November 22, 2020, Canada awarded a contract of up to 26,000 treatment courses of Eli Lilly’s antibody treatment, Bamlanivimab. The treatment was developed in partnership with Canadian company AbCellera, combining its advanced antibody therapy discovery platform with Eli Lilly’s manufacturing and distribution capability.
On March 12, 2021, Canada awarded a contract to Roche Canada for Tocilizumab for the treatment of COVID-19 symptoms, and the contract was subsequently amended to increase the potential for orders for up to 14,551 treatment courses (assuming 800mg per treatment). To date, 11,419 treatment courses (800mg) have been delivered.
On June 11, 2021, Canada awarded a contract with Roche for its Regeneron therapeutic drug for 9,000 treatments, and all deliveries have been received.
In October 1, 2021, Canada awarded a contract to GlaxoSmithKline which has later been amended to add additional quantities, for the purchase Sotrovimab for the treatment of COVID-19. Total orders are now for 30,070 doses. All treatments have been delivered.
On February 11, 2022, Canada awarded a contract to Sanofi for its Sarilumab drug for 1,000 treatments. All treatments have been delivered.
On February 14, 2022 Canada awarded a contract to AstraZeneca for its Evusheld drug for 100,000 treatments, and 29,400 treatments have been delivered.
Procurement of personal protective equipment (foreign and domestic procurement)
Key messages
- Our goal is to ensure Canada has supplies on hand to meet current and future needs as identified by the provinces and territories, through the Public Health Agency of Canada
- The Government of Canada took an aggressive procurement approach to fulfil immediate, emerging and long-term medical supply requirements
- Since the beginning of this pandemic the Government of Canada has looked to Canadian industry for pandemic-response supplies and the industry has responded. Moreover, our investments in Canadian industries have helped secure domestic capacity for the production of personal protective equipment (PPE), now and into the future
Key data points
- More than 2.7 billion articles of various PPE has been purchased
- Over 40%of expenditures are associated with products manufactured in Canada or services delivered by Canadian companies
- The Government of Canada now has contracts with 2 Canadian producers of NIOSH certified masks, who produce 4.2 million a month in Canada
Background
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.
Since the beginning of the pandemic, Public Services and Procurement Canada awarded 191 contracts for PPE to 120 unique suppliers for a total of 2.7 billion articles of various PPE.
Excluding long term contracts (3M and AMD Medicom), 99% of the total quantity of PPE ordered has been delivered.
Domestic procurement of personal protective equipment
Of all contracting handled by PSPC to combat COVID-19 excluding vaccines, more than 40 percent of expenditures are associated with products manufactured in Canada or services delivered by Canadian companies.
Medicom
PSPC awarded a 10-year contract to Medicom for domestic production and distribution of surgical masks and N95 respirators for PHAC.
Under the terms of its federal contract, Medicom is producing millions of N95 respirators and surgical masks annually at its new purpose-built Montréal manufacturing facility.
3M
PSPC entered into a contract directly with 3M Canada to purchase domestically-produced N95 masks.
Under the contract, 3M will provide 38.3 million N95 masks in year 1 and 25 million annually in years 2, 3, 4 and 5 (April 2021 to March 2026). Canada has also reserved the right to extend the contract by up to 5 optional years.
Indigenous suppliers
As of January 12, 2022, in response to the COVID-19 pandemic, PSPC, as a common service provider, has awarded 42 contracts on behalf of client departments to self-identified Indigenous businesses, collectively worth approximately $198 million including for logistics and air charter services, accommodation and cleaning services, IT professional services, medical and laboratory supplies, masks, hand sanitizer and thermometers.
Request for proposal for non-medical face coverings
On June 4, 2020, PSPC launched a request for proposal to solicit interest strictly from Indigenous businesses to provide disposable non-medical face coverings.
As a result of this RFP in August 2020 PSPC signed contracts with 7 Indigenous firms that met the established criteria worth approximately $3 million for a total of 15 million non-medical disposable masks.
In October 2020, PSPC amended one of the contracts to exercise the option to procure an additional 20 million non-medical disposable masks for an additional $2.94 million.
Mobile health units
Key messages
- As part of its early response to the pandemic, the Government of Canada secured supplies and equipment to ensure Canada would be prepared for worst-case scenarios. To this end, PSPC proactively procured mobile health units so that if hospital capacity became overwhelmed, we would be ready to immediately provide assistance
- To date, mobile health units (MHUs) have been deployed to and returned from 2 locations in Ontario (Sunnybrook Health Sciences in Toronto and Hamilton Health Sciences) and the oxygen concentration system of 1 MHU has been deployed to Stanton Territorial Hospital in Yellowknife, where it was recently sold to the Government of the Northwest Territories to support the ongoing operations of the hospital
- Extra medical equipment and consumables procured for the MHUs have been given to Public Health Agency of Canada for distribution to provinces as requested through the National Emergency Strategic Stockpile with some medical equipment and consumables also being given to the Department of National Defence
Key data points
- Approximately $126.9 million (including taxes) has been paid to Weatherhaven Global Solutions
- Approximately $84.5 million (including taxes) has been paid to SNC-Lavalin PAE
Background
What is a Mobile Hospital Unit
An MHU is a fully self-sufficient unit that can provide targeted care for persons with acute respiratory disease and distress. It was designed with the capability of providing a triage area, short stay evaluation area, 2 resuscitation bays, up to an 80 bed in-patient ward, up to a 20 bed intensive care unit, diagnostic imaging (portable x-ray), laboratory, pharmacy, and a separate low-risk zone which includes central supply and office space.
How were the contractors selected
The joint venture SNC-Lavalin PAE Inc. was identified due to their existing and past contracts in providing logistical support for building and maintaining military camps during military deployments (for example Kandahar, Afghanistan). Weatherhaven Global Resources Ltd. was selected because of its existing contract to provide similar types of structures to the Department of National Defence for mobile headquarters and for Weatherhaven’s association with ATCO Ltd. and its strong logistics capabilities.
A limited tendering process between the 2 firms was initiated in order to move quickly during the initial stages of the pandemic. To ensure maximum flexibility, obtain different designs and guarantee back-up capacity, contracts were issued to both proponents.
Contract summary
Under the task-based contracts, the 2 contractors developed designs, organized project management offices, bought medical equipment and consumables and maintained readiness for operations which included doing required maintenance to keep the equipment ready for operations, warehousing of the equipment and structures, etc. Weatherhaven will now continue the maintenance of the MHU program until March 31, 2023.
To date, invoices totalling approximately $126.9 million (including taxes) have been paid to Weatherhaven Global Solutions and approximately $84.5 million (including taxes) to SNC-Lavalin PAE.
Status
Weatherhaven was originally requested to provide 2 MHUs. As these were being deployed to Ontario, Public Safety Canada asked PSPC to order a third Weatherhaven MHU. This MHU model is completely self-sufficient and can be used within a host building or independently. At the same time that Public Safety Canada asked PSPC to order a third Weatherhaven MHU, it also asked PSPC to order a SNC-Lavalin PAE MHU to be available for deployment inside of an existing building (for example convention centre, arena).
Now that the 2 MHUs have been returned from Ontario, Canada has 4 MHUs ready for deployment. The oxygen concentration system of one MHU was deployed to the Stanton Territorial Hospital in Yellowknife. This oxygen concentration system was recently sold to the Government of the Northwest Territories where it continues to support the operations of the hospital. There was early interest from Quebec and Alberta in deploying the federal MHUs but these provinces were able to address their needs in other ways.
Medical equipment and consumables for additional MHUs were initially bought and warehoused, which have since been made available to the Public Health Agency of Canada and the Department of National Defence for use as needs have evolved.
On April 1, 2022, Canada consolidated the 2 contracts into only 1 with Weatherhaven for the warehousing and management of the existing mobile health units infrastructure, equipment and consumables, which will provide ongoing efficiencies.
Security and contracting
Key messages
- Public Services and Procurement Canada’s Contract Security Program is committed to safeguarding protected and classified information assets, and securing sites associated with Government of Canada contracts
- Public Services and Procurement Canada provides guidance to departments when our department is the contracting authority and provides the appropriate security clauses to be included in each contract based on the information provided by the client department
- The Contract Security Program then ensures that contractors comply with the security requirements provided by the client department for safeguarding, transmitting, disclosing, destroying, removing and modifying government sensitive information/assets
Key data points
Not applicable.
Background
The Treasury Board Policy on Government Security provides the framework for departments to effectively manage government security controls in support of the delivery of Government of Canada programs and services and in support of the protection of information, individuals and assets. A key objective of the Policy on Government Security, as it pertains to contracting, is to ensure that sensitive information and assets of the government are properly protected when entrusted to industry.
Each federal department is responsible for protecting sensitive information and assets under its control not only in its own operations but also throughout the bidding, negotiating, awarding, carrying out, and terminating of any contracts it manages. Federal departments are also responsible for identifying security concerns associated with their procurements and determining if their suppliers will require access to protected and/or classified information and assets or to secure sites.
Before entering into a contractual agreement with a private sector organization, government departments must identify any contract security requirements (such as, determine whether the supplier will require access to protected or classified information, assets, or sites).
If the contract has security requirements and is being awarded by PSPC, the government department is required to make use of PSPC’s Contract Security Program to ensure that the supplier and their personnel receive the appropriate security clearances before accessing sensitive information/assets and/or secure sites.
In fall 2020 there was media attention over the security role of Public Services and Procurement Canada on Global Affairs Canada’s (GAC) procurement of security screening equipment for use in non-operational areas in Canadian missions abroad. PSPC issued 2 national master standing offers (NMSOs) for x-ray machines and walk-through metal detectors that did not include a security requirement. A NMSO for x-ray machines was initially issued to Nuctech Company Limited of Beijing, China.
Client departments are responsible for identifying security requirements that need to be considered as part of the definition for the good, service or construction procurement requirement. No call ups have been made against the NMSO to date, and the NMSO remains active until March 31, 2023. PSPC initiated new procurements for walk-through metal detectors and x-ray machines. An invitation to qualify was issued to solicit interested parties to pre-qualify. Companies are being assessed by the Contract Security Program and a supply chain integrity verification process has been included in the procurement.
Integrity in federal procurement
Key messages
- To help ensure the Government of Canada does business with ethical suppliers, a government-wide Integrity Regime is in place. This regime holds suppliers accountable for their misconduct, and also encourages them to cooperate with law enforcement and take corrective action
- Under the regime, a supplier may be suspended or declared ineligible to do business with the government if it, members of its board of directors or its affiliates, have been charged with or convicted in the previous 3 years of one of the offences listed in the Ineligibility and Suspension Policy in Canada, or similar offences abroad
- Public Services and Procurement Canada consistently applies the Integrity Regime to procurements and no contracts have been awarded to suppliers ineligible or suspended under the Integrity Regime
If pressed on recent articles that describe the Integrity Regime as arbitrary, punitive and opaque and uses SNC-Lavalin as a case study:
- the Government of Canada recognizes that it takes sustained efforts to bolster its procurement policies and better mitigate emerging procurement risks stemming from rapidly changing market dynamics and evolving supply chain realities
- it also understands that public procurement can be a key contributor to supporting other federal priorities and reinforcing Canadian values
- the Government of Canada is committed to exploring and implementing policy measures that ensure that it holds its suppliers to the highest ethical standards and effectively combats corporate misconduct in an evolving marketplace
- we will take this feedback under advisement as we seek to improve our approach to better address corporate wrongdoing and strengthen corporate compliance within the federal procurement system
If pressed on the relationship between administrative agreements and remediation agreements:
- administrative agreements are available under the Integrity Regime and are negotiated between the Registrar of Ineligibility and Suspension and affected suppliers. These agreements allow the supplier to continue to do business with the Government of Canada while protecting the integrity of the federal procurement system. Common terms in administrative agreements include improvements to corporate compliance programs as well as independent oversight and reporting on progress. Administrative agreements are also subject to termination by PSPC should terms and conditions not be met, or if the circumstances surrounding the agreement change
- remediation agreements are available under Canadian criminal law and are used to address criminal charges. Specific questions about the use, negotiation and effect of remediation agreements should be put to the Department of Justice
- while the 2 instruments have similarities, they have effect in distinct areas. If a remediation agreement were to be signed between prosecutors and an accused entity to deal with the criminal law implications of alleged misconduct, an administrative agreement with the registrar would still be required with respect to their status under the Integrity Regime
Key data points
- Under the current regime, 3 companies are ineligible to do business with the Government of Canada due to convictions for a listed offence (Les Entreprises Chatel Inc., R.M. Belanger Limited and Les Industries Garanties Limitée)
- Currently there is 1 active administrative agreement with a supplier who had their period of ineligibility reduced to 5 years (Hickey Construction Ltd)
Background
The Government of Canada has a framework of laws, regulations and policies in place to protect the integrity of the federal procurement system. PSPC administers several programs under this framework, including the government-wide Integrity Regime, the federal contracting fraud tip line, and increased oversight for the detection of bid-rigging.
The Integrity Regime is designed to help ensure that the government does business with ethical suppliers and incentivizes suppliers to ensure strong ethics and compliance frameworks. Under the regime, a supplier may be suspended or declared ineligible to do business with the government if, in the previous 3 years, it, members of its board of directors or its affiliates, have been charged with or convicted of one of the offences listed in the Ineligibility and Suspension Policy in Canada or a similar offence abroad.
In 2018, the government announced its plans to enhance the Integrity Regime by increasing the number of triggers for debarment, broadening the scope of business ethics covered by the regime, and integrating greater flexibility within the debarment process. Following this announcement, there was considerable public discourse around corporate wrongdoing as well as governments’ response to such misconduct. As a result, the government announced that it was taking additional time to reassess elements of the proposed regime and potential next steps.
In the interim, the current Ineligibility and Suspension Policy remains in effect.
Recent articles: Integrity Regime as “Grim Reaper”
An article from the George Washington International Law Review entitled Canada’s Integrity Regime: The Corporate Grim Reaper was published on April 19, 2022. The article was also referenced in a Foreign Corrupt Practices Act (FCPA) log, which publishes news and commentary about white collar crime, enforcement and compliance. Using SNC-Lavalin as a case study, the authors describe the Integrity Regime as “draconian” and a disproportionally “punitive approach to debarment” given it’s mandatory debarment periods. The article further opines that the regime does not effectively protect the government’s interests, and fails to adequately encourage companies’ efforts to address compliance issues.
The authors recommend modifications to the Integrity Regime, including increasing discretion of decision makers around debarment decisions. These recommendations are consistent with the proposed enhancements that were put forward in 2018.
Status of SNC-Lavalin
Key messages
- Since 2015, the Government of Canada has applied the Integrity Regime to its dealings with SNC-Lavalin pursuant to the Ineligibility and Suspension Policy
- The department is aware of recent charges of wrongdoing by SNC-Lavalin as well as the invitation by the Quebec prosecutors to negotiate a remediation agreement
- We are assessing the impact of the circumstances on the supplier’s status under the Integrity Regime
- Discussions between the supplier and the registrar are ongoing
- At this time, SNC-Lavalin’s status remains unchanged pending the outcome of the assessment
- With regards to its earlier charges of misconduct in Libya, an administrative agreement was imposed on the supplier in 2015 in order to protect the integrity of our dealings with them. The administrative agreement concluded in 2020 following resolution of these charges
Key data points
Not applicable.
Background
2021 Criminal charges against SNC-Lavalin
On September 23, 2021 SNC-Lavalin Inc., and SNC-Lavalin International Inc. were each charged with the following offences under the Criminal Code (C.C.) of Canada:
- Forgery (366 C.C.)
- Conspiracy to commit forgery (465/366 C.C.)
- Fraud (380 C.C.)
- Conspiracy to commit fraud (465/380 C.C.)
- Fraud on the government (121 C.C.)
- Conspiracy to commit fraud against the government (465/121 C.C.)
The charges related to s. 121, 366, and 380 are listed offences under the Integrity Regime that can lead to suspension and if convicted, a supplier would be ineligible to participate in the federal procurement system.
The Quebec Directeur des poursuites criminelles et pénales invited SNC-Lavalin Inc. and SNC-Lavalin International Inc. to negotiate a remediation agreement to resolve the above identified charges.
2015 Criminal charges against SNC-Lavalin
In 2015, SNC-Lavalin Group Inc., SNC-Lavalin Construction Inc., and SNC-Lavalin International Inc. were charged with 1 count of corruption and 1 count of fraud for alleged improper payments to officials in Libya.
On December 9, 2015, pursuant to the Ineligibility and Suspension Policy, PSPC entered into an administrative agreement with SNC-Lavalin with respect to the above noted charges. The agreement permitted SNC-Lavalin to contract with the government while criminal proceedings were underway and on condition that certain corporate compliance conditions were met.
On December 18, 2019, SNC-Lavalin Construction Inc. plead guilty in the Court of Quebec to 1 count of fraud contrary to paragraph 380(1)(a) of the Criminal Code, which is not a listed offence under the Ineligibility and Suspension Policy. The remaining charges were stayed against all 3 defendants as a result of the resolution. In accordance with its terms and conditions, the administrative agreement between PSPC and SNC-Lavalin concluded 12 months following the stay of the charges, on December 18, 2020.
Labour exploitation in procurement
Key messages
- Public Services and Procurement Canada is addressing the risk of forced labour and human trafficking in federal procurement supply chains through a range of actions
- As of November 2021, all PSPC goods contracts include anti-forced labour clauses. This means that contracts can be terminated where there is credible information that goods have been produced using forced labour or human trafficking
- PSPC has updated the code of conduct for procurement to clearly outline Canada’s expectations for suppliers and their sub-contractors regarding human and labour rights
- We have also undertaken a risk assessment of forced labour in goods procured by Public Services and Procurement Canada, and are identifying next steps to further protect procurement supply chains from exposure to forced labour, human trafficking, and child labour
- The Government of Canada recognizes that addressing the risks of human trafficking and forced labour in our supply chains requires sustained effort, and we are working on a number of additional measures to enhance the integrity of our procurement system
Key data points
- July 2020: clauses on ‘Ethical Procurement’ and ‘Origin of Work’ were added in new PPE contracts and in all newly issued request for proposals for PPE
- August 2021: updated code of conduct for procurement that outlines Canada’s expectations for suppliers and their sub-contractors regarding human and labour rights is launched
- November 2021: anti-forced labour clauses are included in all goods contracts issued on or after November 4, 2021
- In January 2022, contracts between Canada and Supermax Healthcare Canada were terminated by mutual consent
Background
In September 2019, the Government of Canada announced a new National Strategy to Combat Human Trafficking. The national strategy includes a commitment that PSPC will enhance federal procurement supply chains with the goal of ensuring that they are free from human trafficking and labour exploitation.
In July 2020, clauses on ‘Ethical Procurement’ and ‘Origin of Work’ were added in new PPE contracts and in all newly issued request for proposals for personal protective equipment. The ‘Origin of Work’ clause requires bidders to provide the name, address and country of manufacturers of the item, including subcontractors. The ‘Ethical Procurement’ clause, requires bidders to certify that they and their first-tier subcontractors comply with the same human rights and labour standards set out in the Policy on Ethical Procurement of Apparel.
In May 2021, Rights Lab provided its risk assessment report to Public Service and Procurement Canada. Rights Lab is a multidisciplinary group with expertise in human trafficking, based in the University of Nottingham, in the United Kingdom. The report contained recommendations that are informing the development of an evidence-based approach to addressing labour exploitation in federal procurement supply chains.
As part of planned actions under the National Strategy to Combat Human Trafficking, PSPC will also create information resources for suppliers to become better aware of potential risks in their supply chains (2021 to 2022); and create requirements for suppliers of high-risk goods to address risks in their supply chain (2022 to 2023).
In November 2021, PSPC implemented new anti-forced labour contract clauses to ensure that it can terminate contracts where there is credible information that goods have been produced in whole or in part by forced labour or human trafficking. These clauses protect the department from financial liability if imported goods are not released at the border because their importation is prohibited under the forced labour prohibition in the Customs Tariff Act.
In February 2022, Public Services and Procurement Canada posted a request for proposals to map human rights due diligence and compliance monitoring. The request will examine international due diligence obligations for businesses to report on actions taken to address the risks of forced labour, human trafficking and human rights violations. Commonalities across different reporting requirements, including among governments and international organizations, will be identified. In addition, promising practices for monitoring compliance with due diligence reporting requirements will be examined. This request for proposals builds upon findings and recommendations from the May 2021 risk assessment, and will inform the subsequent development of an ethical procurement policy and a human rights due diligence framework.
Supermax Healthcare Canada
In December 2020, it was brought to PSPC’s attention that there were possible forced labour issues with suppliers in Malaysia, including Supermax. In January 2021, after reminding the nitrile glove suppliers of their obligation with regard to ethical practices, PSPC issued a communication to contracted suppliers, including Supermax Healthcare Canada, to provide attestation of actions against forced labour. In the same month, Supermax Healthcare Canada provided their attestation confirming their commitment to ethical working conditions to PSPC.
On October 21, 2021, PSPC learned that the United States Customs and Border Protection had issued an order that prohibits imports from Supermax based on reasonable information that indicated the use of forced labour in the company's manufacturing operations in Malaysia. In light of this new allegation, PSPC requested Supermax Healthcare Canada to suspend all future deliveries until Canada was satisfied that its contracted gloves were produced without forced labor.
On December 16, 2021, Supermax Healthcare Canada provided Canada a summary response to the findings of the first of a series of 4 audit reports. This audit was conducted at the Malaysian sites by an independent firm. Canada reviewed the report and did not believe it had sufficient information to fully assess the matter. Rather than waiting for the full audit report, which is due in April 2022, Canada and Supermax Healthcare Canada mutually agreed to terminate their contracts, which were executed on January 17, 2022.
Sinopharm
Sinopharm International Corporation was awarded a contract for nitrile gloves in April 2020, and the contract was further amended in June and December 2020 for additional quantities. In December 2020, it was brought to PSPC’s attention that there were possible forced labour issues with suppliers in Malaysia. In January 2021, after reminding the nitrile glove suppliers of their obligation with regard to ethical practices, PSPC issued a communication to contracted suppliers, including Sinopharm International Corporation, to provide attestation of actions against forced labour.
Sinopharm International Corporation’s manufacturer, INTCO, located in China, was not part of the January 2021 ethical concerns in regard to forced labour in large manufacturing plants. INTCO signed and provided to PSPC a declaration of no forced labour on April 12, 2021. INTCO also has the international certification ISO13485, the internationally agreed standard that sets out the requirements for a quality management system specific to the medical devices industry.
Sinopharm International Corporation completed final contract delivery requirements in December 2021. There are no outstanding contract requirements to be fulfilled.
Shared Services Canada procurement
Key messages
- In fulfilling its role to stabilize, maintain, and enhance digital capacity across government, Shared Services Canada (SSC) ensures that supplied goods are of high quality, procured at the best value and provided in a timely fashion
- SSC conducts fair, open and transparent procurement processes in compliance with domestic and international trade agreements and within the government’s procurement policy framework
- Whenever possible, SSC uses competition to get the best value for Canadians, and adheres to open government principles by proactively disclosing all contracts over $10,000
- As government IT service delivery is modernized, the Government of Canada is making procurement more agile, collaborative and inclusive to promote social values, as well as environmental sustainability
If pressed on sole sourcing:
- Occasionally it is necessary for SSC to issue a non-competitive contract where equipment must be compatible with existing IT infrastructure, but such contracts are avoided wherever possible
Key data points
- In fiscal year 2020 to 2021, SSC funded and awarded 2,451 contracts, of these:
- 79% of contracts awarded (value), representing 1,376 contracts, were issued through the use of open, fair and transparent competitive processes, for a total spend of roughly $795 million
- In fiscal year 2020 to 2021, 73% of contracts funded and awarded (volume), representing 1,796 contracts, by SSC went to small and medium enterprises
Background
SSC is mandated with providing services related to email, data centres, networks, and end-user information technologies to its mandatory and optional clients.
In all instances where bids are not solicited, the legal authority to use an exception to soliciting bids must be fully justified with a reference to the applicable exception to competitive bidding which may apply under the Government Contracts Regulations.
With respect to procurements subject to one or more trade agreements, SSC may award a contract without soliciting bids only if one or more of the limited tendering reasons stated in each applicable trade agreement can be applied.
SSC also considers the provisions under comprehensive land claim agreements.
While work is already in motion to modernize procurement so that it is more agile, collaborative and inclusive, there are significant opportunities to continue to ‘buy better’ and transform how IT procurement and service delivery is done within Canada:
- diversity and inclusion: establishing a model for IT procurements and service delivery to drive fair and inclusive business practices in Canada, level the playing field for small-and-medium enterprises as well as Indigenous and underrepresented groups, and vendors operating across Canada, including in rural and remote communities, and broaden participation in IT service design and delivery
- Greening Government Strategy: sending strong market signals that government is serious about protecting the environment, incentivize an accelerated transition to greening and circularity for the IT sector and beyond by setting ambitious greening targets and requirements, and take action to ensure new private sector accountabilities
- innovation, growth and digital enablement: strategically establishing SSC as a convener of IT innovators and service providers, a first-in-class adopter of emerging technology and IT infrastructure, and a catalyst for the digital enablement of all Canadians
Document navigation for "Standing Committee on Government Operations and Estimates: April 29, 2022"
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