Amazon: Standing Committee on Government Operations and Estimates—June 10, 2022
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Business with Amazon
Key messages
- Fulfilling an urgent need in April 2020, the Government of Canada signed a contract with Amazon to access its easy-to-use online interface, which allowed multiple provincial and territorial health establishments to order personal protective equipment (PPE) directly from the Public Health Agency of Canada (PHAC). Under this contract, Canada Post and Purolator were delivering the equipment to provinces and territories as subcontractors of Amazon
- This contract was to get life-saving medical equipment into the hands of Canada’s frontline workers as quickly as possible at the onset of the COVID-19 pandemic
- In total, 12.5 million PPE items were delivered across Canada under the Amazon contract. Amazon provided their services at cost, without profit. The majority of the cost spent under the contract—which was approximately $200,000—was for delivery through Canada Post and Purolator
- As the COVID-19 pandemic evolved, a longer-term end-to-end logistics, storage and distribution solution was required. This was due to the fact that provinces and territories started requesting deliveries of PPE to centralized locations, instead of to individual health establishments
- As such, the contract with Amazon was last leveraged in June 2020, and the contract expired on March 31, 2021
Key data points
- Not applicable
Background
On April 1, 2020, Public Services and Procurement Canada (PSPC), on behalf of PHAC, signed a 1-year $5 million contract with Amazon to get health care professionals the PPE and supplies they need to protect themselves and continue caring for Canadians during the COVID-19 pandemic. Canada Post and Purolator were delivering the equipment to provinces and territories as subcontractors of Amazon.
At the time, PHAC needed a robust technology solution to facilitate the ordering of PPE by multiple provincial and territorial health establishments. The Amazon technology, with its easy-to-use interface, was well-suited for such work.
Following the signature of the contract, the Government of Canada significantly increased the volume of supplies purchased, both internationally and domestically. In addition, the provinces and territories requested a more centralized distribution of PPE, where PHAC distributes supplies directly to each province and territory rather than to multiple individual health establishments. This change in approach therefore negated the main benefits that Amazon and its technology were providing.
As PHAC needs had evolved, the agency required a major logistics service provider to increase its capacity and establish a longer term end-to-end logistics, storage and distribution network.
As Amazon was not able, at that time, to manage the import, receipt and handling of PPE prior to order fulfillment, the Government of Canada and Amazon agreed to suspend the contract. In June 2020, the Government of Canada and Amazon mutually agreed to keep the contract in place without activity and costs until its expiry date of March 31, 2021. Overall, approximately $200,000 was spent under this contract, with the vast majority going to Canada Post and Purolator for deliveries.
Note that PSPC has no record of any additional contracts that the department has put in place with Amazon, as a common service provider or as a department. Of note, departmental officials will place orders for lower dollar items using departmental acquisition cards, however it is not possible to aggregate data on these decentralized purchases by vendors.
Amazon web services and Canada Post
Key messages
- Amazon Web Services (AWS) is one of 8 cloud service providers that are part of the Government of Canada's cloud framework agreements, through which federal and provincial departments and agencies can purchase secure and reliable cloud services
- These are separate and distinct from general distribution, shipping, or warehousing services offered by companies such as Amazon, and are not services offered by Canada Post
- Public cloud services provide the Government of Canada with improved security, as cloud service providers, including Amazon web services, offer robust security features and internationally recognized certifications that would be a challenge for any one organization to deliver on its own
- Its service offerings can build and manage global infrastructure at scale, and by doing so, allows for greater value to the Government of Canada
- As workload rapidly changes, as it did during the COVID-19 Pandemic, AWS cloud infrastructure allows for instant deployment of new applications as required to cater to immediate needs
- In addition, public cloud promotes innovation and agility. New features are being deployed continually and rapid access is available to government resources at the required capacity to carry out projects from planning to full operation
- The Government of Canada benefits from the flexibility provided by public cloud, as commoditized services can grow and shrink with the level of demand; we pay only for what we need, when we need it
Key data points
- Over the last 3 fiscal years, the value of cloud services consumed through the Cloud Framework Agreement, per provider, is as follows:
- 2019 to 2020 (Total: $1,395,709)
- Amazon web services: $95,091
- Microsoft: $1,300,617
- 2020 to 2021 (Total: $47,720,557)
- Amazon web services: $5,210,305
- Microsoft: $29,913,620
- Salesforce: $12,123,329
- ServiceNow: $343,248
- ThinkOn: $15,948
- Google: $48,925
- IBM: $64,108
- Oracle: $1,070
- 2022 to 2021 (Total: $103,817,992)
- Amazon web services: $18,454,124
- Microsoft: $65,740,231
- Salesforce: $16,027,224
- ServiceNow: $727,952
- ThinkOn: $383,108
- Google: $1,079,807
- IBM: $1,304,864
- Oracle: $100,678
- 2019 to 2020 (Total: $1,395,709)
Background
On April 1, 2022, TVA shared a news report, stating that expenditures related to Amazon web services increased, both for the Government of Canada and the Government of Québec. It states that, across the federal government, over the last year, the federal government spent $24.6 million on services provided by AWS.
At Government Operations Committee, on April 29, 2022, member of Parliament Julie Vignola (Bloc Québécois) asked Minister Tassi the following question:
“Last year alone, the federal government signed contracts totalling $24.6 million with Amazon web services, which is about $2.4 million more than the annual amount it invests in Canada Post. That's not counting other contracts from 2011 to 2020 and those with the Canada Border Services Agency.
Is it normal for the federal government and its agencies to do business with American companies instead of a Crown corporation? Doesn't this send the message that the Crown corporation is not even competitive enough to serve the government properly?”
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