A controversial decision to give the federal government’s procurement department the power to sole-source contracts worth up to $500 million was — and remains — a core element of the “bold, aggressive action” that procurement minister Anita Anand was encouraged to take earlier this spring in response to the COVID-19 pandemic, even as she was warned of significant risk.
The ability of Public Services and Procurement Canada (PSPC) to enter into contracts worth up to $500 million for pandemic-related goods and services — with no competitive bids or tendering — was quietly put into place at the end of March with an expiration date of Sept. 30. On Oct. 1, the government renewed that capability, this time with no fixed expiry date.
Additionally, the government gave itself an “unlimited emergency contracting limit for the research, development, acquisition and deployment of vaccines.”
That power remains in place in the wake of Monday’s Fall Economic Statement which outlined billions more in pandemic-related spending.
Previously, PSPC was limited to sole-source contracts in emergency situations with a value no higher than $15 million and there were no circumstances under which it had unlimited, sole-source spending authority for any item.
Giving itself those extraordinary powers to spend government funds with no competition and with relatively little scrutiny ahead of time was one of the key elements in a strategy Anand’s deputy minister, Bill Matthews, laid out in an April 1 memo to the minister, a first-time politician who had not been in cabinet even six months at the time and who had no prior experience in government.
“We are entering territory beyond the typical operating scope of the Department,” Matthews wrote. “These are extraordinary times.”
A censored version of the six-page memo, titled “Impact of evolving role of Public Services and Procurement Canada in COVID-19 crisis” was part of a 580-page document dump PSPC provided to MPs on a House of Commons committee last June. The full, uncensored version of the memo was recently obtained by Global News through an Access to Information Act request.
Anand would draw fire from opposition politicians over the ensuing months for sole-source contracts provided to, for example, Air Canada and CargoJet to bring personal protective equipment (PPE) to Canada from foreign supplies and, in the spring, for awarding a 10-year, sole-source contract worth $381.7 million to procure millions of N95 and level 3 surgical masks from AMD Medicom Inc. of Pointe Claire, Que.
Moreover, Anand and others in cabinet, including Prime Minister Justin Trudeau, continue to draw criticism from opposition MPs for failing to release details of contracts the government entered into with vaccine manufacturers.
Anand, though, has defended what she described in mid-November as “the aggressive procurement stream that we have undertaken over the last number of months in the interest of the health and safety of Canadians.” She told reporters on Nov. 10 that, “through our procurement, we have ensured that we will allow Canadians access to a minimum of 194 million doses and a maximum thus far of 414 million doses if you include the options that we have negotiated.”
In March, as the government and much of the country was going into its first pandemic-caused lockdown, the challenge for a veteran of government bureaucracy like Matthews was indeed extraordinary, particularly for a department like PSPC, which would be at the heart of the federal government’s response to dealing with the public health crisis.
It would also test Anand, who had been tapped after the October 2019 election to lead Matthews’ department.
Prior to her election as MP for the Ontario riding of Oakville, Anand had been working as a law professor at the University of Toronto, specializing in corporate governance and financial market regulation.
Anand has said that she has drawn on that training and experience as she and her department negotiated sole-source contracts, particularly with vaccine makers.
“As a former professor of contract law, I can assure you that we put in place contracts with Pfizer and Moderna and the other suppliers that indicated once we have Health Canada approval, deliveries will start as soon as possible,” Anand told reporters Friday.
PSPC’s key role in the crisis has been to act as the entire country’s lead purchaser of personal protective equipment (PPE), buying tens of millions of items of gear on behalf of the provinces and public health agencies.
Matthews, in the April 1 memo, provided Anand with a broad road map of how he expected the government’s procurement process would have to radically change to meet the crisis.
“I have instructed the Department to take risks in purchasing PPE,” Matthews said. “The situation we face requires bold, aggressive action. However, moving decisively and quickly does carry certain risks.”
Matthews would also warn Anand that she and cabinet may have to make difficult and politically risky decisions about which province or region would get what, if demand exceeded supply, a warning which almost certainly continues to exist in the context of future decisions about vaccine distribution.
“Arbitrating decisions about which entities get what quantity will be a very risky role for the Government to play. Management of expectations and transparency around risk and decision making will be important,” Matthews said.
Matthews also noted last April that Canada was participating in a global marketplace frantic to secure more access to PPE. The global demand for PPE would lead to some countries cutting corners and sometimes sidelining rival countries. The market also filled with suppliers ready to drop one customer for another ready to pay higher prices.
“It is important to note that we are operating in a very dynamic and volatile context. In recent days, we are seeing signs of intense competition as countries compete to purchase limited supply,” Matthews said. “We are also receiving offers from numerous suppliers with whom the Government has not previously transacted and we are aware that there has been a proliferation of unauthorized dealers in the market.”
Global News filed the request for Matthews’ memo in June and, though the federal Access to Information Act required the department to respond within 30 days to that request, it failed to do so, taking more than 120 days to release the uncensored six-page memo.
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