Transparency: Standing Committee on Government Operations and Estimates—June 9, 2020
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Use of national security exception
In general, the national security exception (NSE) is invoked to remove procurements from the obligations of Canada’s trade agreements for reasons of national security. The procurement itself must either be indispensable for national security or indispensable for national defence purposes. The rationale for the need to invoke any NSE is considered on a case-by-case basis and is documented in the exchange of letters which, in accordance with the Canadian International Trade Tribunal Procurement Inquiry Regulations, occurs at the assistant deputy minister (ADM) level.
In the case of COVID-19, after the World Health Organization (WHO) declared the pandemic, Public Health Agency of Canada (PHAC) made a request on behalf of the federal government that Public Services and Procurement Canada (PSPC) invoke the NSE with respect to the acquisition of goods and services required in order to respond to the COVID-19 pandemic. That invocation is time-limited and applies only until the WHO no longer declares the COVID-19 pandemic a public health emergency of international concern. It covers a broad range of goods and services and includes but is not limited to:
- personal protection equipment (such as sanitizer, respirator masks, ventilation masks, and gloves)
- ventilators and laboratory equipment
- health care providers and other health related services
- accommodations, including leases (for example, for Canadians under quarantine, as well as for health care providers
- real property services
- food services
- cleaning and laundry services
- information technology (IT) support services
- communications and telecommunications services
- food
- clothing and personal items
- transportation, such as the flights that have already brought Canadians home from China
- guard and security services
PHAC and PSPC considered it necessary to remove these procurements from the application of the trade agreements for the following reasons:
- there may be some work that PSPC requires to be performed in Canada. The need to access goods and services domestically, in light of the demand across the world for the same types of goods and services, was considered necessary to respond to the pandemic. Also, further border closures mean that, in some cases, contracting with foreign suppliers might ultimately mean having to cancel a contract and re-procure, thus impacting Canadians with further delays to access such supplies. Domestic sourcing also reduces transportation problems and shipment delays
- in almost all cases, the acquisitions of these goods and services is urgent. Normal procurement procedures, including publication, posting periods (40 days under the North American Free Trade Agreement (NAFTA)), and formal questions and answers exchanges, would interfere with the real-time contracting required in order to respond to the pandemic
Once invoked, no further decision is required on whether or not to apply the invocation to a specific procurement as it applies to all procurements required in order to respond to the COVID-19 pandemic. However, even when the NSE has been invoked, contracting officers generally try to adhere to the disciplines of the trade agreements to the extent possible and particularly to the fundamental principles of the trade agreements of fairness, transparency and openness. Many of the obligations Canada has undertaken under the trade agreements are also obligations at common law, and PSPC must continue to fulfill those obligations.
This general invocation regarding COVID-19 applies only to procurements conducted by PSPC, and not to procurements conducted by other departments under their own authorities.
To date, there are 2 other NSE invocations related to the COVID-19 pandemic that PSPC concluded required a separate invocation:
- at the request of PHAC, PSPC invoked the NSE with respect to a contract for a long-term, strategic, domestic supply of personal protective equipment, including surgical masks and respiratory masks. The NSE was invoked separately with respect to this procurement because the long-term nature of the contract goes beyond what is necessary to respond to the current pandemic, but was still considered necessary for national security purposes over the longer term
- at the request of Economic and Social Development Canada (ESDC), PSPC invoked the NSE with respect to acquisitions related to its various programs, benefits and services for Canadians during the COVID-19 national crisis. Because the need to provide benefits relating to unemployment, for example, is not a direct response to COVID-19, PSPC determined that the NSE should be invoked separately
Proactive disclosure of COVID-19-related contracts
Issue
As part of its response to COVID-19, PSPC is aggressively procuring supplies and equipment in the global marketplace, while facing the risks posed by fragile supply chains, the fluidity of the current situation, and a surge in demand. The global nature of this pandemic and demand for supplies has meant that it faces severe competition for goods and a highly volatile supply chain. The government is exercising caution at this time about divulging procurement information that could compromise its negotiating position.
Key messages
- The Government of Canada is engaged in an unprecedented effort to acquire supplies and equipment to ensure that front-line healthcare workers and Canadians stay safe and healthy
- In order to protect the integrity of procurement processes, as well as the integrity of global supply chains, PSPC needs to exercise caution at this time about divulging procurement information
- PSPC is nevertheless posting some solicitation documents for COVID-19 related procurements on Buy and Sell, particularly where the timeline to secure the particular good or service allows for more flexibility
- Several contracts have also been publicly announced over the past few weeks and PSPC is posting details about orders and deliveries of personal protective equipment, online
Background
PSPC is procuring significant amounts of protective equipment and medical supplies on behalf of the PHAC. In response to the current COVID-19 emergency response, the vast majority of contracts PSPC has put in place have included an NSE.
The application of an NSE removes the obligation for tenders to stay open for a set period of time, thereby maximizing the speed with which urgent procurements can be completed.
NSE application also means that the government is not required to publicly post tender notices, which is important given the volatility of the marketplace and the intense world-wide competition to secure needed personal protective equipment and other supplies. In this environment, the disclosure of procurement information, such as supplier name and contract value, could jeopardize orders and compromise Canada’s negotiating position, in particular in international markets. Consequently, while some general information has been released regarding Canada’s COVID-19 purchases, most contract information has not been disclosed to date.
The application of an NSE does not absolve a department of its obligation to proactively disclose contracts; however, the Access to Information Act contains provisions that provide heads of organizations discretion around disclosure.
Specifically section 18 (b) of the act states that “the head of a government institution may refuse to disclose any record requested under this Part that contains information the disclosure of which could reasonably be expected to prejudice the competitive position of a government institution or to interfere with contractual or other negotiations of a government institution”.
These risks are expected to continue until supplies and equipment become less difficult to secure. Additional information will be made publicly available as soon as PSPC’s competitive position is no longer prejudiced so that transparency is maximized.
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