Procurement (including issues and policies): Standing Committee on Government Operations and Estimates—November 24, 2022
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E-procurement
Key messages
- On September 19, 2022, CanadaBuys replaced Buyandsell as the official source for tender and award notices for the Government of Canada and also became the single point of access providing access to bidding opportunities for the broader Canadian public sector (federal, provincial, territorial and municipal governments, crown corporations, administrative institutions, schools, and hospitals)
- Supplier onboarding began in March 2020. To date, more than 20,000 suppliers have registered for an account, and more than 1,500 contracts have been awarded (totalling $1.1 billion). At least 40% of the accounts belong to small-and-medium enterprises (SMEs)
- Public Services and Procurement Canada (PSPC) is seeking access to $17.4 million (vote 1—operating expenditures) for 2022 to 2023 to continue supporting the electronic procurement solution (EPS) project
- Funding profile: Funding for the e-procurement solution in fiscal year 2022 to 2023—$17.4 million
- The $17.4 million in funding is required to support the electronic procurement solution project activities, which aims to establish operations including a new service/help desk, enable supplier registration, launch the contract management functionality, integrate the PSPC financial system to SAP Ariba and onboard remaining PSPC branches to the electronic procurement solution
- The $17.4 million is sourced from previous year's unused funds. The lapse was mainly due to an approximate 18-month delay caused by COVID-19 and the complexity of integrating the electronic procurement solution with PSPC's financial system
- CanadaBuys will provide benefits for suppliers of goods and services who do business with the Government of Canada (GC) by providing:
- a clearer and more simplified format for tender and award notices such as new title blocks, countdowns to closing date and descriptions tabs
- an improved search functionality and filters
- the ability to express an interest in partnering on specific opportunities which enables greater competition
- direct access to the SAP Ariba platform
- access to a single location for businesses to view major opportunities across all levels of government and public sector entities
- reducing search times for government procurement opportunities and simpler bidding processes
- The electronic capture of procurement data will also be a benefit to GC efforts to promote social procurement and improve supplier diversity. For example, EPS allows the ability to track government initiatives surrounding social procurement (for example, Indigenous participation, 5% mandatory target)
Key data points
- PSPC is the largest buyer of goods and services in Canada; it manages more than 75% of all GC procurement spending
- PSPC ensures timely acquisition and delivery of approximately $22 billion
- $22 billion is split into:
- goods (43%—$9.46 billion)
- services (49%—$10.78 billion)
- construction (8%—$1.76 billion)
Background
As part of the Government of Canada’s efforts to modernize procurement, in July 2018, following a competitive procurement process, Public Services and Procurement Canada awarded a contract to Infosys Public Services, Inc. to implement and manage an electronic procurement solution. Phase 1 of the EPS project will be completed in June 2023. The project has [Redacted] in funding through a special purpose allotment and capital funding.
The implementation of the EPS cloud-based service has followed a pragmatic and progressive approach. This approach has provided opportunities to take stock of progress and make adjustments to the delivery of an ecosystem that incorporates key enabling technologies such as:
- SAP Ariba and Fieldglass for core procurement functions
- ServiceNow for helpdesk functionality
- the CanadaBuys portal that offers suppliers with the ability to view procurement opportunities across governments and self identify as part of an underrepresented group
Another important key enabler was the integration of the ecosystem with PSPC departmental financial management systems (known as SIGMA) to support the management of procurements by PSPC for PSPC (such as where the department is the client).
On September 19, 2022, CanadaBuys replaced Buyandsell as the official source for tender and award notices for the Government of Canada (federal, provincial, territorial) and the single point of access for broader Canadian public sector (municipal governments, crown corporations, administrative institutions, schools, and hospitals).
Based on lessons learned from other large scale information technology (IT) transformation initiatives, PSPC has ensured that legacy systems run in parallel to EPS until such time as EPS has reached full operating capacity and the adoption of the new way of doing business is well established.
Procurement of vaccines
Context
Public Services and Procurement Canada is working with the Public Health Agency of Canada (PHAC), Health Canada and Innovation, Science and Economic Development Canada, along with the COVID-19 Vaccine Task Force to procure COVID-19 vaccines, therapeutic drugs, and related supplies.
Note
- All questions regarding the regulatory review of vaccines should be directed to Health Canada
- All vaccine and therapeutic health-related questions and questions about allocation and distribution should be directed to Public Health Agency of Canada
- All questions on donations should be directed to Global Affairs Canada and Public Health Agency of Canada
- All questions regarding the domestic manufacturing of vaccines should be directed to Innovation, Science and Economic Development Canada
- All questions regarding the rejection of Medicago by World Health Organization (WHO) should be directed to Health Canada and Public Health Agency of Canada
- All questions regarding vaccine expiration should be directed to the Public Health Agency of Canada
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 one. As of October 28, 2022, Canada has received 157.6 million vaccine doses, including providing access to the latest formulations
- We continue to work with the Public Health Agency of Canada and suppliers on delivery schedules to maintain a steady and sufficient supply of vaccines
- We are continuing to evolve our vaccine procurement strategy 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 Health Canada
If pressed on vaccine contracts and deliveries:
- Canada has secured future supply with Moderna and Pfizer that will provide access to a range of products as required, including pediatrics and boosters and the latest approved adaptations of vaccines
- Canada currently has supply of bivalent vaccines from both Pfizer and Moderna, which are effective against multiple COVID-19 variants
- we have secured access to 12 million doses of BA.1 bivalent vaccine from Moderna, which received approval on September 1, 2022, as a booster dose for those ages 18 years and above. Deliveries of 10.5 million were received in September, with the remaining doses expected to be delivered starting November at the earliest, subject to approval
- Pfizer’s bivalent BA.4/BA.5 vaccine was approved on October 7, 2022 and the BA.1 vaccine was approved on October 21, 2022 as a booster dose for those ages 12 years and above. Canada has secured a supply of 12.6 million doses of BA.4/BA.5 for delivery in 2022. Approximately 7.8 million bivalent doses have been delivered to Canada
If pressed on additional pediatric vaccines:
- Health Canada has provided regulatory approval for pediatric vaccines for Pfizer for children ages 5 to 11 years old as well as 6 months to 4 years old, and for Moderna for children ages 6 to 11 years old as well as 6 months to 5 years old
- additionally, Health Canada has authorized Pfizer’s pediatric vaccine as a first booster for children ages 5 to 11 years
If pressed on additional adolescent vaccines:
- Health Canada is currently reviewing Novavax’s submission for its adolescent vaccine for children ages 12 to 17 years, and Moderna’s submission for its adolescent booster vaccine for children ages 12 to 17 years
- Pfizer’s submission for its bivalent BA.4/BA.5 vaccine for use in those ages 5 to 11 years is under review
If pressed on delivery of pediatric doses:
- Canada has received a supply of 1 million doses of Moderna vaccine for children ages 6 months to 5 years. Supplies are expected to be more than sufficient to meet needs
- Canada has a supply of 3.3 million doses of Moderna vaccine as of October 28, 2022, that can be used for both adults (12 years and above) or for children ages 5 to 11 years based on their respective approved dose volumes. Supplies are expected to be more than sufficient to meet needs
- Canada has a supply of 621,000 doses of Pfizer pediatric vaccine as of October 28, 2022, that can be used as a primary series or a first booster for children ages 5 to 11 years. Supplies are expected to be more than sufficient to meet needs
- Canada has a supply of approximately 1.7 million doses of Pfizer’s pediatric vaccine as of October 28, 2022, for children ages 6 months to 5 years old
If pressed on Pfizer supply:
- Public Services and Procurement Canada has an agreement with Pfizer to supply vaccines, which has been updated since October 2020 as requirements evolved, to best meet the needs of Canadians
- in 2021, 55 million doses were delivered to Canada. Canada updated the agreement for supply to continue for 2022 and 2023, for a total order of 65 million doses for these years. Of these 65 million doses, 32.5 million have already been delivered
- the current agreement also includes options for additional dose purchases, for up to 30 million additional doses for 2022, up to 30 million additional doses in 2023, and to extend the supply into 2024 for up to 60 million additional doses, if required
- to date, Canada has exercised options for 3 million additional doses in 2022, with 27 million optional doses remaining. The remaining options for 2023 and 2024 have not been exercised, but are available should the need arise
- this agreement will ensure that Canada has access to future supply of a range of products, including pediatrics and boosters and latest approved vaccine adaptations
If pressed on Moderna supply:
- Public Services and Procurement Canada has an agreement with Moderna to supply vaccines, which has been updated since July 2020 as requirements evolved, to best meet the needs of Canadians
- in 2021, 34.9 million doses were delivered to Canada. Canada updated the agreement for supply to continue for 2022 and 2023, for a total order of 40 million doses for these years. Of these 40 million doses, approximately 24 million have been delivered
- the current agreement also includes options for additional dose purchases, for up to 15 million additional doses for 2022, up to 15 million additional doses in 2023, and to extend the supply into 2024 for up to 35 million additional doses
- to date, Canada has exercised options for 4.5 million additional doses in 2022, with 10.5 million optional doses remaining. The remaining options for 2023 and 2024 have not been exercised, but are available should the need arise
- this agreement will ensure that Canada has access to future supply of a range of products, including pediatrics and boosters and latest approved adaptations
If pressed on future Novavax supply and domestic delivery:
- Public Services and Procurement Canada has an agreement with Novavax to supply vaccines, which has been updated since January 2021 as requirements evolved, to best meet the needs of Canadians
- through this agreement, Canada secured an order of 52 million doses for 2022, 2023 and 2024, with options for 24 million additional doses. Of these, 9.7 million doses have been delivered. We are working closely with PHAC and Novavax to plan the schedule for deliveries of remaining doses for 2022
- 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 future Medicago supply:
- Public Services and Procurement Canada has an agreement with Medicago to supply 20 million doses in 2022, with options for 28 million doses in 2023 and 28 million doses in 2024. No doses have yet been delivered to Canada and the delivery schedule is currently being reviewed
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 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
- Public Services and Procurement Canada 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, Public Services and Procurement Canada will continue to openly communicate with Canadians about the work we are doing to support Canada’s pandemic response
Background
Overall, the federal government has allocated over $9 billion for vaccine, therapeutic and prophylactic procurement. The Public Health Agency of Canada is responsible for managing this funding.
Pfizer, Moderna, Novavax, Medicago, AstraZeneca, and Johnson & Johnson (Janssen) vaccines have been approved to prevent COVID-19. Sanofi started the regulatory submission process for its primary COVID-19 vaccine.
The Government of Canada has signed agreements with the following companies to access their vaccines and vaccine candidates:
- Pfizer, supplied 55 million doses of its mRNA vaccine Comirnaty in 2020 and 2021, which included 4 million pediatric doses. Agreement is in place for further supply of up to 181 million doses, including options, from 2022 to 2024, with 32.5 million delivered and 1.5 million remaining for 2022
- Moderna supplied 34.9 million doses of its mRNA vaccine Spikevax in 2021. Agreement is in place for further supply of up to 105 million doses, including options, from 2022 to 2024, with 24 million delivered and 1.5 million remaining for 2022
- Novavax agreement in place for supply of its protein subunit vaccine Nuvaxovid®, for up to 76 million doses, including options, between 2022 and 2024, with 9.7 million delivered and 6.5 million remaining for 2022
- Medicago, for a firm order of 20 million doses, plus options for up to 52 million between 2022 and 2024 of its plant-derived Coronavirus Virus-Like Particle vaccine
- AstraZeneca agreement for 20 million doses of the viral vector vaccine Vaxzevria. In 2021, Canada received 3.8 million doses and no additional orders are planned at this time. The remaining surplus doses have been offered for donation through COVAX or are now expiring as no recipient countries were found
- Johnson & Johnson (Janssen) agreement for up to 10 million doses of its viral vector vaccine Jcovden. In 2021, Canada received 188,000 doses, and additional orders are not planned at this time. The remaining 9.8 million doses are stored with the manufacturer and have been offered for donation through COVAX
- Sanofi and GSK agreement for 6.2 million doses of their protein subunit vaccine candidate, subject to regulatory approval
- Serum Institute of India/Verity Pharmaceuticals, which supplied 500,000 doses of the Oxford-AstraZeneca vaccine produced under license and marketed as COVISHIELD. This agreement is now completed and additional orders are not planned
Donations
Canada’s 7 main agreements with vaccine suppliers allow for donations to be made when doses are deemed surplus in-country. PSPC supports Global Affairs Canada and Public Health Agency of Canada on the donation of surplus doses through its agreements with suppliers through direct donations and the COVAX Facility.
Canada signed an agreement on September 18, 2020, to participate in the COVAX Facility, which supports equitable global access to safe, effective, and affordable COVID-19 vaccines. Through this agreement Canada has committed to being a global leader in supporting equitable global access to safe, effective, and affordable COVID-19 vaccines. We have committed to donating the equivalent of at least 200 million doses to COVAX by the end of 2022, comprised of financial contributions and surplus doses. As of October 1, 2022, over 26.2 million surplus doses have been donated to COVAX for delivery to other countries, or have been donated through direct, bilateral agreements.
Domestic production
As part of the Government of Canada’s efforts to build domestic biomanufacturing capacity in Canada in the long-term, the government announced in 2022 that Canada established 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 vaccine supply agreement with Novavax will support the ability to produce vaccines at this facility once ready.
Intellectual property
The default position of the Government of Canada in all its procurement contracts is that title to intellectual property remains with the contractor, which is set out in the Treasury Board Policy on Title to Intellectual Property Arising Under Crown Procurement Contracts. In the advance purchase agreements that Canada negotiated with vaccine manufacturers, the manufacturers retain the title to intellectual property and do not grant a license for Canada to use the intellectual property nor give Canada a right to use the intellectual property.
Procurement of COVID-19 therapeutics
Context
Public Services and Procurement Canada is working with the Public Health Agency of Canada, Health Canada and Innovation, Science and Economic Development Canada, along with the COVID-19 Vaccine Task Force to procure COVID-19 vaccines, therapeutic drugs, and related supplies.
Note
- For all therapeutic solutions, questions about allocation and distribution should be directed to Public Health Agency of Canada
- For all therapeutic solutions, questions about regulatory approval should be directed to Health Canada
- All questions on donations should be referred to Global Affairs Canada and Public Health Agency of Canada
Suggested response
- While vaccination remains the best way to protect the public from COVID-19, therapeutics provide a variety of additional tools to our health care providers
- Nine therapeutics have been procured and several deployed by the Public Health Agency of Canada to provinces and territories for use in health care systems
- As of October 2022, PSPC has been able to secure orders for more than 2.27 million treatment courses for use in Canada of 9 different therapeutics
- Given strong global demand for some of these therapeutics, Public Services and Procurement Canada and the Public Health Agency of Canada have taken a very proactive approach, which has been very successful in securing the products for use in Canada
- The Government of Canada also recognizes the outstanding achievements of the pharmaceutical industry in identifying, developing and producing promising therapeutics to treat COVID-19, and for their continued cooperation to help Canada make these products available for our citizens
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. Regulatory approval was obtained on January 17, 2022, and a contract amendment was issued on February 23, 2022, to exercise the option for 500,000 additional treatments.
On December 3, 2021, Canada awarded a contract to Merck for 501,120 courses of its Molnupiravir oral antiviral therapeutic for the treatment of COVID-19 symptoms, which is pending regulatory approval.
To date, Canada has distributed 757,472 treatment courses of Paxlovid to provinces and territories, and is expecting an additional 742,528 treatment courses to be delivered before the end of December. Further delivery schedules for Paxlovid are being confirmed, with the intent of bringing treatment courses into Canada as quickly as possible. 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.
Injection treatments
On October 14, 2020, Canada awarded a contract with McKesson/Gilead for the Remdesivir therapeutic drug for 24,825 treatment courses. An amendment for an additional 16,667 treatments was issued in February 2022 and a subsequent amendment for an additional 50,000 treatments was issued in April 2022. As of mid-October, 62,898 treatments have been delivered.
On November 22, 2020, Canada awarded a contract of up to 26,000 doses of Eli Lilly’s antibody treatment, Bamlanivimab. Of those, as of mid-August, 17,000 have been delivered. 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 finalized an agreement with Roche Canada for the supplemental supply of Tocilizumab for the treatment of COVID-19 symptoms for a total potential order of up to 14,551 treatment courses (assuming 800mg per treatment). As of mid-October, 12,943 (800mg) treatment courses have been delivered, with 1,608 additional treatments expected by end of December. Roche is managing supply to ensure that there is sufficient stock for both on-label and off-label use in Canada and other countries. Health Canada approved Tocilizumab on October 13, 2022, for the treatment of adult patients hospitalized due to COVID-19 who are receiving systemic corticosteroids and require supplemental oxygen or mechanical ventilation.
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 2021, the Government of Canada awarded a contract to GlaxoSmithKline which was later amended to add additional quantities, for the purchase of the monoclonal antibody, Sotrovimab, for the treatment of COVID-19. Total orders of 35,070 doses have been delivered.
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, which is pending regulatory approval. The delivery and payment are contingent on first obtaining regulatory approval by Health Canada. As regulatory approval has not been granted, zero have been delivered.
On February 11, 2022, Canada awarded a contract to Sanofi for its Sarilumab drug for 1,000 treatments and all have been delivered.
On February 14, 2022, Canada awarded a contract to AstraZeneca to acquire 100,000 treatments of the Evusheld drug, which received regulatory approval on April 14, 2022, as a prophylaxis for the prevention of COVID-19. So far 68,517 treatment courses have been received in Canada with 33,272 delivered to provinces and territories and federal partners. An additional 11,483 treatments are expected later this year. On October 18, 2022, Health Canada approved Evusheld for the treatment of mild to moderate COVID-19 in adults and children (12 years of age and older, weighing at least 40 kg).
Integrity in federal procurement during the COVID-19 pandemic
Key messages
- A government-wide Integrity Regime is in place to help ensure the Government of Canada does business with ethical suppliers
- The Integrity Regime holds suppliers accountable for their misconduct, and also encourages them to cooperate with law enforcement and take corrective action
- The Ineligibility and Suspension Policy, under the government-wide Integrity Regime, sets out the circumstances that can render a supplier ineligible from contracting with the Government of Canada, or that can lead to a suspension
- Public Services and Procurement Canada has consistently applied the Integrity Regime to all procurements in accordance with the Ineligibility and Suspension Policy and no contracts have been awarded to a supplier that is ineligible or suspended under the regime
- We know that effectively addressing corporate wrongdoing protects the integrity of markets, addresses barriers to economic growth and promotes competition to ensure job growth
If pressed on Lafarge:
- Public Services and Procurement Canada is aware of the guilty plea of Lafarge S.A. in the United States
- the offence to which the Lafarge S.A. pleaded guilty is not similar to one of the offences listed under the Ineligibility and Suspension Policy, and as such, Lafarge’s status under the Integrity Regime remains unchanged at this time
Key data points
- Under the Integrity Regime, 3 companies are currently ineligible to do business with the Government of Canada due to convictions for a listed offence:
- Les Entreprises Chatel Inc
- R.M. Belanger Limited
- Les Industries Garanties Limitée
- Currently there are 2 active administrative agreements with suppliers: one agreement is with SNC-Lavalin in lieu of suspension following the resolution of criminal charges in Quebec by way of a remediation agreement; the other administrative agreement is with Hickey Construction Ltd who had their period of ineligibility reduced to 5 years
Background
The Government of Canada has a framework of laws, regulations and policies in place to protect the integrity of the federal procurement system. Public Services and Procurement Canada 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, the supplier, 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.
Status of SNC-Lavalin
Key messages
- The government-wide Integrity Regime holds suppliers accountable for their misconduct, deters wrongdoing, and encourages suppliers to cooperate with law enforcement and take corrective action
- Following approval of a remediation agreement with Quebec prosecutors relating to criminal charges filed in September 2021, the registrar of ineligibility and suspension signed an administrative agreement with the company under the Integrity Regime, which is consistent with the compliance objectives of the remediation agreement
- The administrative agreement lays out conditions that must be met for SNC-Lavalin to continue to do business with the Government of Canada
Key data point
Nil.
Background
Integrity Regime
Under the Integrity Regime, a supplier may be suspended or declared ineligible to do business with the government if, in the previous 3 years, the supplier, 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 similar offences abroad. A supplier can be suspended for a period of 18 months and subject to extension pending final disposition of the charges.
Pursuant to the Ineligibility and Suspension Policy, an administrative agreement is an instrument that allows the federal government to seek greater assurances from a supplier to further mitigate the risk of doing business with them. Administrative agreements stipulate the terms and conditions that a supplier must meet in order to maintain its status to contract with the Government of Canada. The existence of an administrative agreement is made public and listed on the Integrity Regime’s website. Among other things, such agreements generally include requirements associated with necessary remedial measures, compliance programs, and regular reporting by an independent third party.
SNC-Lavalin
SNC-Lavalin provides various architecture and engineering services in support of Public Services and Procurement Canada’s real property projects. Contracts have been awarded either through open requests for proposals or via call-ups using standing Offers on which the company is pre-qualified.
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 of Canada:
- forgery (366/367 Criminal Code
- conspiracy to commit forgery (465/366/367 Criminal Code)
- fraud (380 Criminal Code)
- conspiracy to commit fraud (465/380 Criminal Code)
- fraud on the government (121 Criminal Code)
- conspiracy to commit fraud against the government (465/121 Criminal Code)
The charges related to s. 121, 366, and 380 of the Criminal Code (when against His Majesty) are listed offences under the Integrity Regime that can lead to suspension and, if convicted, ineligibility to participate in the federal procurement system.
In response to the criminal charges, on September 23, 2021, the registrar of ineligibility and suspension entered into discussions with SNC Lavalin regarding its status under the Ineligibility and Suspension Policy. On May 11, 2022, the Quebec court approved a remediation agreement negotiated between the company and Quebec prosecutors, this effectively stayed all charges. The registrar of ineligibility and suspension subsequently signed an administrative agreement with the company under the Integrity Regime. This agreement maintains the supplier’s status to participate in the federal procurement system pursuant to the regime so long as its terms and conditions are met.
2015 criminal charges against SNC-Lavalin
In 2015, SNC-Lavalin Group Inc., SNC-Lavalin Construction Inc., and SNC-Lavalin International Inc. were charged with one count of corruption and one 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. pleaded guilty in the Court of Quebec to one 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. As the fraud was not against His Majesty, debarment under the Integrity Regime was not triggered. 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.
Contracts related to ArriveCAN
Key messages
- Public Services and Procurement Canada is committed to an open, fair and transparent procurement process, while obtaining the best possible value for Canadian taxpayers
- The Canada Border Services Agency (CBSA) had urgent requirements for professional services and software products to support the development, integration and maintenance of a new secure application to support their response to the COVID-19 pandemic
- The requirements were complex and included integrating multiple data sources from across Canada, including passport and public health data
- PSPC supported CBSA with access to various existing IT professional services methods of supply, including contracts with task authorizations and supply arrangements, and by awarding new contracts to meet CBSA’s urgent needs
- SSC’s mandate is to provide certain services related to email, data centres, networks and end-user technology devices to 45 partner departments, including SSC itself. Use of Shared Services Canada (SSC) services are required for specified government departments. However, other departments and agencies may also choose to use these services
- The application itself was developed in a collaboration between the Public Health Agency of Canada and the Canada Border Services Agency
- To do so, SSC supported the implementation of a number of networking changes to:
- enable the application to exchange information between the cloud solution and Government of Canada data centres
- ensure the connections are secure, and that the information of Canadians is protected
- Cloud connectivity was “soft-launched” on July 14, followed by a national Go-Live on July 20, 2020
- SSC costs related to cloud provisioning were recovered from CBSA via recovery agreements
Key data points
- On November 19, 2022, CBSA identified 29 contracts used by the ArriveCAN initiative in whole or in part to support development, launch and maintenance of the application. PSPC awarded 21 of these on CBSA’s behalf
- Not all of these contracts were used exclusively for ArriveCAN. As most of the professional services contracts were task-based contracts, CBSA was able to issue task authorizations for work specific to ArriveCAN, in addition to task authorizations for work on other projects and initiatives
- The 21 contracts that PSPC awarded were mainly for the provision of professional services, and also included 4 contracts for the provision of software subscriptions and associated maintenance and support
- 13 of 21 PSPC contracts were competitively sourced and 8 were awarded non-competitively. Of the 8 non-competitive contracts:
- 5 were awarded under national security exception and emergency contracting authorities
- 3 of the contracts were sole-sourced due to intellectual property rights
- The use of the national security exception and emergency contracting authorities enabled PSPC to provide effective and timely support to our clients’ needs in face of a rapidly-evolving global pandemic
- 4 contracts were awarded to GCStrategies, 1 through competitive means and the other 3 sole-source contracts, at the request of CBSA, using NSE and emergency contracting authorities, The 3 contracts amounted to a combined value of $30.9 million, of which approximately $9 million was allocated for professional services to support ArriveCAN
- the first contract was awarded on April 8, 2020, and was for the provision of professional services to support the development of the ArriveCAN application
- the second contract was awarded on June 29, 2020 for the provision of IT services to support CBSA on remote border crossing capabilities, a portion of which includes the ArriveCAN application among other border service tools
- the third contract was awarded on December 18, 2020, and was to improve the accessibility of the ArriveCAN application and to ensure compliance with the Accessible Canada Act
- GCStrategies Inc. is an IT staffing firm that is pre-qualified under the government’s Task-Based Informatics Professional Services (TBIPS) and Solutions-Based Informatics Professional Services (SBIPS) method of supply. They were already working on other CBSA mobile applications when they were selected to help develop ArriveCAN
- As an IT staffing firm, GCStrategies Inc. subcontracts work to IT consultants, which is customary in the IT industry; Canada does not have a contractual relationship with any of these IT consultants. All IT consultants proposed by GCStrategies Inc. to perform the work must comply with the requirements of the contract, including security and integrity provisions
- On May 16, 2022, Public Services and Procurement Canada awarded a competitively procured 3-year contract to GCStrategies Inc., in part to maintain and support ArriveCAN, along with other information management/information technology (IM/IT) needs
Background
- Public Services and Procurement Canada procures goods and services on behalf of departments and agencies throughout government. The department buys some $22 billion worth of goods, services and construction each year from nearly 10,000 suppliers
- PSPC maintains and uses a variety of procurement vehicles, such as standing offers, supply arrangements and contracts, to help departments to react to emerging priorities and remain agile in meeting their identified requirements, including providing surge capacity to ramp up quickly in urgent circumstances and then scale back down following the completion of projects
- In response to pressing emergencies where there is significant human and/or financial risks, PSPC may enter into non-competitive contracts under exceptional emergency contracting authorities under the Government Contracts Regulations and in accordance with the Directive on the Management of Procurement
- In order to support the execution of an effective and rapid government response to the COVID-19 global pandemic, Treasury Board approved time limited increases to those emergency contracting authority limits, referred to as exceptional COVID-19 emergency contracting authorities
- The national security exception allows Canada to exclude procurement(s) from the obligations stemming from the trade agreements, where Canada considers it necessary to do so in order to protect its national security interests. On March 14, 2020, at the request of the Public Health Agency of Canada, PSPC invoked the national security exception for all its procurements for the acquisition of goods and services required in order to respond to the COVID-19 pandemic
- ArriveCAN was developed on an urgent basis at the beginning of the pandemic to track and trace travellers as they crossed the border. The need for the app arose when it became impractical for the Public Health Agency of Canada to manage a manual, paper-based process to pass information to provinces and territories and carry out compliance and enforcement activities in a timely way
- The app was downloaded more than 18 million times and was used for more than 60 million travellers. It was available via 3 different platforms (website, Android and iOS) and it went through over 70 releases to update the app and website as the COVID-19 border measures evolved
- The cumulative budget allocated for ArriveCAN through Main and Supplementary Estimates and as identified in other parliamentary reports was $54 million to March 31, 2023. As of October 31, 2022, CBSA has spent $41.3 million
The budget included the following elements:
- $8.8 million (16%) for more than 70 releases of the application and website
- $7.5 million (14%) for the Service Canada Call Centre
- $5.2 million (10%) for both CBSA and PHAC data management
- $4.9 million (9%) in indirect costs associated with the project, including employee benefits, accommodations and transfers to Shared Services
- $4.6 million (9%) to develop a proof of vaccination credential
- $4.6 million (9%) for data storage and cloud services
- $4.5 million (8%) on IT support for airlines, airports and travellers
- $4.5 million (8%) on other CBSA IT systems that were built, modified and maintained to support the border health measures
- $2.3 million (4%) on cyber security
- $1.7 million (3%) on accessibility
- $1.6 million (3%) for program and project management costs
- $3.8 million (7%) for contingency
Cisco procurement
Key messages
- When SSC was created in 2011 a significant percentage of the networking infrastructure the department inherited came from one vendor: Cisco
- To maintain existing infrastructure and maximize the value of its existing investments it is essential to acquire equipment that is compatible with existing network equipment, including Cisco equipment
- To be clear: these practices are related to the procurement of goods and equipment needed for public servants to do their work and serve Canadians, and is unrelated to the contracting-out of work
- As we move forward with network modernization, SSC is moving to compatible and more generic technologies where possible and will continue to seek competitive solutions from industry leaders
- SSC has and will continue to make information available to industry regarding network modernization initiatives on an ongoing basis through the Canada.ca website
If pressed on sole sourcing:
- controls are in place to ensure that sole source contract or equipment specific procurement are based on objective operational requirements
- 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
If pressed on The Logic article—Procurement officer conversation with Cisco:
- Shared Services Canada conducts transparent and fair procurement processes, as per the Government of Canada’s Rescinded [2022-05-13] - Contracting Policy
- Controls are in place to ensure that sole source contract or equipment specific procurement are based on objective operational requirements
- SSC takes very seriously all allegations related to its practices and undertakes independent investigations as required
- In this particular case, a close examination of the procurement process was undertaken, and SSC can confirm the process was not compromised by the actions of the employee, which were found to be a result of human error, and not intentionally inappropriate
Table 1: Non-competitive contracts awarded for networking equipment in fiscal year 2022 to 2023 (up to 31 August 2022)
- Total non-competitive contracts: 114
- Total dollar value (pre-tax): $708K
- Total non-competitive Cisco contracts: 55
- Total dollar value (pre-tax): $376K
Table 2: Competitive contracts awarded for networking equipment through generic open competitive processes on buyandsell.gc.ca - Buyandsell.gc.ca in fiscal year 2022 to 2023 (up to 31 August 2022)
- Total contracts: 6
- Total dollar value (pre-tax): $53M
- Total contracts to Cisco: 2
- Total dollar value (pre-tax): $22M
Table 3: Competitive contracts awarded for networking equipment directed to original equipment manufacturers through limited tendering to resellers in fiscal year 2022 to 2023 (up to 31 August 2022)
- Total contracts all original equipment manufacturers: 91
- Total dollar value (pre-tax): $72M
- Total contracts Cisco: 49
- Total dollar value (pre-tax): $47M
Background
On February 15, 2021, SSC published the Network Modernization Way Forward document on Canada.ca to communicate our strategy and gather feedback from external parties. In the document, SSC stated that it would balance open and competitive procurements to standardize and simplify the Government of Canada network, which reduces the risk associated with maintaining, updating and building on overly complex systems.
Procurement activities undertaken where Cisco products were acquired are consistent with that strategy. SSC continues to limit tenders for Cisco products in specific instances, like growing the footprint in enterprise data centres where a common network fabric must be maintained. However, open and competitive procurements are also done for many networking categories including Local Area Networks (LAN) and Wide Area Networks (WAN).
Some open and competitive procurements are awarded to resellers who propose Cisco solutions, while others are not.
Looking forward, SSC plans to openly compete requirements in the following categories:
- LAN
- Enterprise wireless (Wi-Fi)
- WAN provider and provider edge routing
- Data centre networks (DCN) enclaves
Additionally, SSC has established the information technology infrastructure review board, a review committee to improve oversight of all directed procurements. This committee reviews all brand-specific requirements over $1M to ensure alignment with departmental priorities and the network modernization way forward, and includes independent third-party consultation.
Document navigation for "Standing Committee on Government Operations and Estimates: November 24, 2022"
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