Procurement (including issues and policies): Standing Committee on Government Operations and Estimates—March 22, 2023
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Contracts related to ArriveCAN
Context
The Canada Border Services Agency (CBSA) has identified 45 contracts it used to support the ArriveCAN project. These contracts were identified in CBSA’s response to Order Paper Question (OPQ) 881. Of these 45 contracts, CBSA has confirmed that 30 were awarded by Public Services and Procurement Canada (PSPC) on its behalf.
Suggested response
- PSPC and Shared Services Canada (SSC) are committed to open, fair and transparent procurement processes, while obtaining the best possible value for Canadian taxpayers
- The CBSA had an urgent requirement for professional services to support the development, integration and maintenance of a new secure application to support its response to the COVID-19 pandemic
- PSPC undertook the procurement and worked closely with the CBSA, who is responsible for the management and delivery of the business requirements
- In this case, the requirements were complex and included integrating multiple data sources from across Canada, including passport and public health data
- The CBSA utilized multiple contracts to support the ArriveCAN initiative. These contracts were used, among other things, to support the development, launch and maintenance of ArriveCAN
If pressed on subcontracting:
- Complex information technology (IT) projects often require a diverse number of resources with different expertise and skillsets
- Within the IT industry, it is common for firms to subcontract or collaborate with other suppliers or individuals to address particular IT challenges and solutions. Subcontracting is also commonly observed in other industries and sectors
- In professional services contracts let by PSPC, a contractor may subcontract work unless prohibited by the contract terms. Canada does not have a contractual relationship with any subcontractors
- Subcontracting does not relieve a contractor from any of its obligations under the contract or impose any liability upon Canada to a subcontractor
- All personnel proposed by the contractor to perform the work, including those from its subcontractors, met the security clearance requirements and integrity provisions of the contract prior to commencing work
If pressed on why PSPC will not provide the names of subcontractors:
- For confidentiality reasons, the Government of Canada does not disclose the names of companies who have worked as subcontractors for 1 of its suppliers, as this is considered third-party information
If pressed on SSC’s role with ArriveCAN:
- SSC assists partners department to host their applications in a Data Center or in the cloud
- In support to ArriveCAN, SSC has enabled the cloud connectivity and leveraged its contracting vehicle to allow the application to be securely housed in the cloud
- SSC has an established a list of pre-qualified cloud vendors that meet security requirements who can be leveraged by departments to run their applications
Outsourcing of professional services
Context
There has been recent media attention on federal government spending on professional services contracts, noting a 40% increase between fiscal year 2015 to 2016 and 2020 to 2021. This information was sourced from the Public Accounts of Canada, tabled in the House of Commons on December 14, 2021. The House of Commons Standing Committee on Government Operations and Estimates (OGGO) is currently carrying out a study on this issue.
Suggested response
- PSPC and SSC are committed to open, fair and transparent procurement processes
- As common service provider, it provides procurement tools to support other departments in advancing policy and program objectives and the departments and agencies are responsible for identifying and defining their requirements
- The decision to hire public servants or to pursue professional services contracts is made by departments and agencies based on multiple factors including the nature and duration of the activity and the availability of specialized skills or knowledge
- The vast majority of PSPC contracts for goods and services are for work that cannot and has not been traditionally carried out by public servants such as construction services, renovation work, or ship building
- SSC works to ensure the operation of secure, modern, and reliable government IT infrastructure and systems
- SSC has robust process that involves assessing all potential options for successful delivery, with a focus on best practices, capacity, and existing solutions
If pressed on the growth in expenditures on professional services:
- Over the past decade, government expenditures on professional services have remained consistent relative to both total government expenditures and the total payroll for public servants
If pressed on SSC’s robust process:
- In order to assess options for successful delivery, SSC determines whether:
- the solution can be built and operated in-house
- the use of commercial solutions should be included
- external expertise is needed to achieve the desired outcome
- Accessing some technologies through contracts enables SSC to provide cutting edge products and services that are aligned with global best practices and offer extensive support and functionality to users
- This practice allows SSC to access services or technologies that are best delivered by industry to provide secure and cost-effective solutions to meet the needs and expectations of a digital government
- SSC leverages large-scale investments that industry has made in other public sectors and private markets, to obtain cost-effective, secure and reliable off-the-shelf products and highly specialized solutions
If pressed on management consultants:
- SSC is committed to providing high quality services to Canadians while ensuring the best value for taxpayers. The procurement of professional services, including management consultant services, is, at times, needed to acquire special expertise
- Work performed can be as diverse as:
- providing advice on SSC’s technology roadmaps
- performing a third-party review on a business case, or
- providing additional support to SSC employees in developing processes (playbooks) and supporting tools for SSC enterprise services
- SSC exercises due diligence when contracting for goods or services. All contracts are to be issued in accordance with the Treasury Board’s policies, as well as regulations, guidelines and procedures
If pressed on reasons for “outsourcing” technologies and work:
- As an example, it would be more costly to deliver and manage satellite services with in-house resources. Such a highly specialized domain where industry excels is better delivered by the private sector
- Another example is the contract for the high-power computer that Environment and Climate Change Canada uses to generate environment and weather forecasts, advisories, and warnings. This is a highly specialized domain that would cost more if delivered internally
- SSC uses temporary professional services to support programs and projects that have defined time periods and require surge capacity for delivery
- When needed, SSC will use additional resources from industry to complement its current program and project staff to support the planning and execution of those programs and projects
Integrity in federal procurement during the COVID-19 pandemic
Context
In the fast-paced and constantly evolving marketplace to secure necessary products and supplies to support the Government of Canada’s response to the pandemic, questions may arise as to the measures that PSPC has in place to protect the integrity of the federal procurement system during this period.
Suggested response
- 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
- PSPC has consistently applied the integrity regime to all procurements in a manner consistent with the Ineligibility and Suspension Policy and no contracts have been awarded to a supplier that is ineligible or suspended under the regime
Procurement of vaccines
Context
PSPC is working with the Public Health Agency of Canada (PHAC), Health Canada (HC) and Innovation, Science and Economic Development Canada (ISED), along with the COVID-19 Vaccine Task Force to procure COVID-19 vaccines, therapeutic drugs, and related supplies.
Notes:
- All questions regarding the regulatory review of vaccines should be directed to HC
- All vaccine and therapeutic health-related questions and questions about allocation and distribution should be directed to PHAC
- All questions on donations should be directed to Global Affairs Canada and PHAC
- All questions regarding the domestic manufacturing of vaccines should be directed to ISED
- All questions regarding the regulatory review of vaccines should be directed to HC and PHAC
- All questions regarding Medicago’s organization and the decision to cease Medicago operations in Canada should be directed to the Mitsubishi Chemical Group
- All questions regarding vaccine expiration should be directed to the PHAC
Suggested response
- The Government of Canada is committed to protecting the health and safety of everyone in Canada from COVID-19. Since the beginning of the pandemic, the government has worked closely with vaccine suppliers to secure access to safe and effective vaccines
- Since July 2021, Canada has maintained a steady supply of vaccines for every eligible person who wants 1. As of February 17, 2023, Canada has received 164.3 million vaccine doses
- We continue to work with the PHAC and suppliers to execute an approach to supply management focused on ensuring sufficient supply of vaccines for Canadians and minimizing wastage of vaccine doses
- Our vaccine procurement strategy is also based on the best scientific advice available, which includes working with vaccine suppliers to secure new formulations for variants, boosters and pediatrics as they become available and are approved by HC
If pressed on vaccine contracts and deliveries:
- Canada has agreements with Moderna and Pfizer that provide access to a range of products, including pediatrics and boosters and the latest approved adaptations of vaccines
- Canada currently has supply of bivalent vaccines from both Pfizer and Moderna that are effective against multiple COVID-19 variants
If pressed on delivery of pediatric doses:
- As of February 17, 2023, Canada has a supply of 1.9 million doses of Moderna vaccine that can be used for both adults (12 years and above) or for children aged 5 to 11 years, based on their respective approved dose volumes
- Canada also has a supply of 2.1 million doses of Pfizer pediatric and bivalent BA.4/5 vaccines that can be used as a primary series or a booster for children aged 5 to 11 years
- In addition, Canada also has a supply of 1.6 million pediatric doses of Pfizer’s vaccine and 0.4 million doses of Moderna’s vaccine for children aged 6 months to 5 years old. Supplies are expected to be sufficient to meet needs
- Pfizer will deliver 16 million doses in 2023, and 14 million doses in 2024
- Moderna will deliver 18.5 million doses in 2023
If pressed on future Novavax supply and domestic delivery:
- PSPC has an agreement with Novavax to supply vaccines and Canada secured an order of 52 million doses from 2022 to 2024, with options for 24 million additional doses. Of these, 9.7 million doses have been delivered. We are working closely with the PHAC and Novavax to plan the schedule for deliveries of remaining doses
- In February 2021, the Government of Canada announced it had signed a memorandum of understanding with Novavax to pursue the production of its COVID-19 vaccine at the National Research Council of Canada’s Biologics Manufacturing Centre in Montréal. The existing supply agreement enables the government to pursue opportunities for Novavax to produce their COVID-19 vaccine at this facility once it is operational
If pressed on Novavax potentially going out of business:
- Our government’s main priority continues to be keeping Canadians safe. We will continue to monitor the situation regarding Novavax
If pressed on future Medicago supply:
- Canada and Medicago had already launched discussions to terminate the advance purchase agreement (APA) by mutual consent prior to the recent announcement by Mitsubishi as a result of changes in Canada’s needs for vaccine supply, as well as delays to the delivery of the Covifenz® doses. PSPC is proceeding with this mutual termination of the APA with Medicago, which will cease any further or future financial responsibilities
If pressed on future Sanofi supply:
- Sanofi and Canada are formalizing an agreement to terminate the contract by mutual consent. There will be no Sanofi doses delivered to Canada
If pressed on the release of vaccine contracts:
- The Government of Canada is committed to transparency and accountability, and has publicly disclosed contracting information to the fullest extent possible that is permitted by contract and law
- This includes working with vaccine suppliers to try to secure their agreement on publicly releasable versions of Canada’s vaccine contracts, while respecting our confidentiality agreements and protecting our negotiating position
If pressed on the details of advance purchase agreements:
- We continue to seek opportunities to be as transparent as possible about our procurements in support of Canada’s COVID-19 response, while respecting confidentiality agreements and protecting our negotiating position
- Every contract is different as they reflect specific requests and requirements put forth by the supplier
- PSPC has worked with its vaccine suppliers to secure their agreement on publicly releasable versions of Canada’s vaccine contracts
- These documents fully respect the Access to Information Act, therefore information that is commercially confidential or that could impact Canada’s ability to negotiate future contracts has been protected
- As we have throughout the pandemic, PSPC will continue to openly communicate with Canadians about the work we are doing to support Canada’s pandemic response
Contracts awarded to McKinsey & Company
Note: All questions related to McKinsey’s work on robotic process automation and accelerator services are in a separate question period note (Phoenix IBM and pay stabilization).
Context
There has been recent media and Parliamentary attention related to contracts awarded to McKinsey & Company, and outsourcing more broadly.
Suggested response
- PSPC is committed to open, fair and transparent procurement processes, while obtaining the best possible value for Canadian taxpayers
- As central purchaser for Canada, PSPC has awarded 24 contracts to McKinsey & Company since 2011, with a total value of $104.6 million
- Half of the total value of the contracts awarded to McKinsey & Company were awarded through competitive processes. More than 40% of the total value was under a standing offer for specialized services
- The decision to procure professional services to meet operational requirements rests with client departments, which can then request PSPC’s procurement services or departments can award contracts within their own authorities
If pressed on various reviews of contracts to McKinsey & Company:
- As you are aware, on January 11, 2023, the prime minister tasked the President of the Treasury Board and me to undertake a review of contracts awarded to McKinsey & Company
- The review is examining whether the integrity of the procurement process was maintained and complied with government policies and control frameworks
- An external review is also taking place through the Comptroller General of Canada
- Internally at PSPC, the Office of the Chief Audit, Evaluation and Risk Executive, is also conducting a review of all contracts awarded to McKinsey by the department, including those awarded on behalf of client departments as a common service provider
- In addition, as you are aware, I have written to the Procurement Ombudsman to ask him to undertake a review the procurement processes associated with the award of contracts to McKinsey & Company by all federal departments and agencies
- I welcome these reviews, particularly the upcoming work of the Procurement Ombudsman and the Auditor General, as they may help determine what further adjustments or refinements should be undertaken to continue to strengthen the fairness, openness and transparency of federal procurement practices
If pressed on PSPC issued contracts:
- Of the 24 services contracts awarded by PSPC, 3 contracts were awarded through competition,19 were undertaken as call-ups against a non-competitive standing offer that was established for McKinsey & Company’s benchmarking services, and 2 other sole source contracts, of low dollar value, were awarded outside the standing offer
- All 24 contracts were awarded in 2018 or later. The 3 competitive contracts represent more than half (53%) of the total value of contracts awarded to McKinsey & Company
If pressed on open-ended supply arrangements:
- PSPC establishes supply arrangements and standing offers instruments to facilitate access to, and accelerate the procurement of, various goods and services by establishing qualified suppliers. These instruments are not legally binding contracts and do not involve any guarantee of work to suppliers:
- the year 2100 is commonly used for these types of arrangements so that our IT system does not inadvertently end the supply arrangement
- the lists of qualified suppliers are refreshed through regular intake processes. supplier compliance is confirmed on a quarterly basis. In addition, supply arrangements themselves are reviewed on a regular basis, with the most recent review launched in 2019 as part of procurement modernization
- I have asked my officials to change how we reflect this kind of arrangement in the future so that it is more clear
If pressed on the allegations around tax fraud and actions abroad that McKinsey is facing:
- PSPC is aware of the adverse information related to McKinsey & Company and its affiliates. The company’s status under the integrity regime remains unchanged at this time
- Under the Government of Canada’s integrity regime, if a supplier is charged or convicted of 1 of the offences listed in the Ineligibility and Suspension Policy, the supplier may be suspended or determined to be ineligible to be awarded a contract. A suspension or determination of ineligibility would also be triggered by a foreign offence that is similar to one of the listed offences
If pressed on the allegations around McKinsey conducting lobbying activities with PSPC without registering as a lobbyist group:
- McKinsey & Company, like many suppliers, reached out to PSPC at the onset of the pandemic emergency to offer its assistance
- Companies are responsible for understanding and complying with their obligations under the Lobbying Act
Designated quarantine facilities
Context
A media article published on January 31 2023, focused on spending on COVID-19 quarantine facilities in the Calgary area, including hotels and related services, stating that the Government spent $6.8 million to quarantine 15 travelers at the Westin Calgary Airport Hotel. The hotel was designated quarantine facility by the Minister of Health, under section 7 of the Quarantine Act, and paid compensation by the PHAC under the minister’s statutory authority. PSPC’s role was to put in place cleaning and sanitation services contracts at designated quarantine facilities.
The article was published shortly following release of an OPQ 998 answered by PHAC. This OPQ was not tasked to PSPC.
Suggested response
- PSPC did not put in place the contracts for the hotels in the Calgary area
- Nonetheless, the department provided assistance to the PHAC and other departments to support measures related to travel across international borders
- One example of this assistance is the cleaning and sanitation services contracts that were put in place in support of the repatriation of Canadians housed at designated quarantine facilities under the Quarantine Act
- In establishing these contracts, PSPC built in flexibilities wherever possible to be able to scale contracts as requirements changed
Labour exploitation in contracting and procurement
Context
The global nature of supply chains puts procurements at the potential risk of the goods having been produced using forced labour, human trafficking and child labour.
Note: All questions regarding the import prohibition of goods that are mined, manufactured or produced by forced labour should be directed to the Minister of Public Safety, as the minister responsible for the CBSA.
Suggested response
- The Government of Canada is committed to addressing the risk of forced labour and human trafficking in federal procurement supply chains through the National Strategy to Combat Human Trafficking
- In line with our commitments under the National Strategy to Combat Human Trafficking, PSPC updated the Code of conduct for procurement in August 2021 to clearly outline Canada’s expectations for suppliers and their sub-contractors regarding human and labour rights
- We have also developed anti-forced labour contract clauses that enable the department to terminate contracts where there is credible information that goods have been produced using forced labour and human trafficking
- SSC has been including the new anti-forced labour clauses since they were introduced in the standard acquisitions clauses and conditions in early 2022
- PSPC is currently conducting research to map international due diligence obligations for businesses to report on actions taken to address the risks of forced labour and human rights violations. This research will inform the development of due diligence tools and resources targeted at safeguarding federal procurement supply chains
- As a compliment to these activities, and in keeping with commitments under the National Strategy to Combat Human Trafficking, PSPC initiated a series of industry engagement sessions, with a focus on high-risk goods. The sessions facilitated a discussion on experiences and best practices with suppliers, industry representatives, and non-governmental organizations in relation to addressing forced labour in supply chains
If pressed on possible allegations of forced labour with suppliers:
- Forced labour is a significant and unacceptable problem in global supply chains and we take all allegations of such conduct very seriously
- The Government of Canada is committed to ensuring that it does not do business with companies that employ unethical practices, either directly or within their supply chains
If pressed on risks of goods procured by PSPC and SSC:
- A risk assessment of forced labour in goods procured by PSPC has been undertaken
- We are identifying next steps to further protect procurement supply chains from exposure to forced labour, human trafficking and child labour, and will continue to work with partners and stakeholders to reduce the risks
- SSC incorporates anti-forced labour clauses when undertaking goods procurements for low dollar value, medium and high complexity requirements
- SSC also requires bidders to adhere to the Code of conduct for procurement when submitting a bid. In accordance with that code, vendors and their sub-contractors are expected to respect their workers’ workplace rights, take steps to mitigate human trafficking risks, and monitor compliance of labour and human rights in their supply chains
If pressed on global supply chains:
- The labour chapter of the Canada-United States-Mexico Agreement established an obligation to prohibit the importation of goods that have been produced in whole or in part by forced labour
- Goods that are mined, manufactured or produced by forced labour are prohibited from entering Canada pursuant to the Customs tariff
- This import prohibition, which is under the purview of the CBSA, applies to all goods regardless of their country of origin, and is an additional tool at Canada’s disposal to combat forced labour in global supply chains
If pressed on lack of compliance monitoring for existing measures:
- Human trafficking and forced labour are clandestine crimes, often hard to detect as they tend to occur beyond tier 1 suppliers in the supply chain
- The global context in which most companies operate makes it challenging to directly monitor compliance with local laws and international human and labour rights in other countries
- 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
Document navigation for "Standing Committee on Government Operations and Estimates: March 22, 2023"
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