N95 masks and other personal protective equipment: Standing Committee on Health—January 18, 2022
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Procurement of personal protective equipment
Context
The government is ensuring that suppliers are providing the personal protective equipment (PPE) that Canada requires and that sources of supply are free of unethical practices.
Suggested response
- The government is committed to continuing to protect Canadians from COVID-19
- We have secured more than 2.7 billion articles of various personal protective equipment of which the majority have been received
- We are also continuing to leverage domestic supply chains wherever possible, with more than 40% of the total value of personal protective equipment contracts going to domestic companies
- In particular, Canada now has 2 producers of NIOSH certified masks—who produce 4.2 million a month in Canada
- Our goal is to ensure Canada has more than sufficient supplies on hand in anticipation of future needs for our provinces, territories, frontline, and health workers
If pressed on the house domestic personal protective equipment motion (to note: Public Services and Procurement Canada (PSPC) does not supply masks to Parliament):
- since the beginning of this pandemic the Government of Canada has looked to Canadian industry for pandemic-response supplies and the industry has responded
- we continuing to leverage domestic supply chains wherever possible, with more than 40% of the total value of personal protective equipment contracts going to domestic companies
- this growth in domestic supply provides a robust source of PPE for all Canadians
If pressed on TCG Medical:
- the Government of Canada expects that suppliers meet their contractual obligations and because TCG Medical failed to deliver N95 respirators as per their agreement, Public Services and Procurement Canada terminated the contract on February 12, 2021
- the Government of Canada is currently pursuing legal recourse against TCG Medical to recover the advance payment made to the supplier, which was common during the early response to COVID-19
- due to ongoing active litigation, we are unable to provide further details at this time
If pressed on Tango Communications:
- the Government of Canada expects that suppliers meet their contractual obligations and Tango Communications was unable to deliver respirators that met performance and quality standards, so Public Services and Procurement Canada terminated 3 KN95 respirator contracts with the company on May 3, 2021
- the Government of Canada is currently pursuing legal recourse against Tango Communications to recover advance payments made to the supplier, which were common during the early response to COVID-19
- no KN95 respirators received from Tango that failed to meet Public Health Agency of Canada quality standards were distributed for medical use
- due to ongoing active litigation, we are unable to provide further details at this time
If pressed on Harbour Technologies due to gown delivery delays:
- in February 2021, Harbour Technologies was awarded a contract via a competitive process for the production of 4.5 million gowns for delivery by September 30, 2021
- the company requested and was given a first extension to December 30, 2021, and a further extension was provided until March 31, 2022, based on excusable delays due to weather and transportation complications in British Columbia in that period
If pressed on Supermax Healthcare Canada allegations of forced labour practices (covered in detail in the forced labour card):
- Canada is aware of the steps taken recently by the US Government against glove maker Supermax Corp, of Malaysia, following allegations of forced labour practices
- on December 22, 2021, Canada and Supermax Healthcare Canada agreed to proceed with a termination of contracts by mutual consent in lieu of waiting for full reporting in April 2022
If pressed on La Presse article on masks manufactured in China:
- at the onset of the COVID-19 pandemic there were no domestic Canadian manufacturers of N95 respirators so we had to purchase foreign-made respirators in order to protect Canadians
- in addition to immediately purchasing N95 respirators to fill the urgent need, Canada sought to establish domestic manufacturing of N95 respirators in an expedited manner
- although 3M and AMD Medicom are multinational corporations, we established domestic manufacturing contracts directly with their Canadian subsidiaries to ensure all products manufactured were produced in Canada, by Canadians
Background
TCG Medical
On May 6, 2020, Public Services and Procurement Canada issued a contract to TCG Medical. The contract value was approx. [Redacted] CDN for the provision of [Redacted] N95 respirators. As per the contract, all goods were to be delivered on or before June 30, 2020.
By the fall of 2020, the supplier had failed to deliver the goods. In an effort to fulfill the contract, the government began working with the supplier to seek a resolution. Despite these efforts, the supplier was unable to provide an acceptable solution to fulfill the contract. As a result, PSPC terminated the N95 respirator contracts with the company for default, effective February 12, 2021.
On May 5, 2021, The Department of Justice, on behalf of PSPC, filed the Government of Canada’s statement of claim against TCG Medical in Ontario Superior Court seeking to fully recover all of the advanced payment plus legal costs for failure to fulfill the contract.
On July 28, 2021, TCG Medical filed their statement of defence and counter claim.
[Redacted]
Tango Communications
In March 2020, PSPC awarded 3 contracts to Tango Communications totalling approximately $111 million for 37 million KN95 respirators, through emergency authorities within the department.
A significant percentage of the approximately 11 million KN95 respirators initially received in Canada from the supplier in April 2020 did not meet the mandatory technical requirements set out in the contracts.
As a result, in early May 2020, Canada took steps to suspend further shipments of KN95 respirators from the supplier.
Following the suspension of shipments, the government began working with the supplier to seek a resolution. Despite these efforts, the supplier was unable to consistently provide respirators that met the technical requirements of the contracts. As a result, PSPC terminated the 3 KN95 respirator contracts with the supplier for default, effective May 3, 2021.
On May 6, 2021, the Department of Justice, on behalf of PSPC, filed the Government of Canada’s statement of claim against Tango in Ontario Superior Court seeking to fully recover the advanced payment plus legal costs for failure to fulfill the contract.
On August 13, 2021, Tango Communications filed their statement of defence and counter claim.
[Redacted]
Harbour Technologies
Harbour Technologies signalled to PSPC in late July 2021 various supply chain issues they were encountering and followed up in August 2021 with official request for contract delivery extension up until March 2022.
An extension to November 30, 2021 was granted consistent with the approach to other gown suppliers extension approvals granted based on contract excusable delay clauses. Harbour Technologies agreed on September 24, 2021. PSPC did provide the opportunity to the supplier if they wished to terminate by mutual consent.
On October 28, 2021, the Department of Justice of Canada was served with an application for judicial review in the Federal Court by Harbour Technologies for the Court to compel Canada to re-consider a reasonable period of extension for the delivery under the contract based on the specific circumstances affecting the applicant and request to have a hearing before a judge before the December 30, 2021, delivery expiry date.
However, based on unpredictable environmental events and the subsequent transportation complications within the province of British Columbia, on December 13, 2021, Public Health Agency of Canada (PHAC) and PSPC approved a further delay in delivery of contracted goods up until March 31, 2022.
[Redacted]
Medicom
PSPC awarded a 10-year contract to Medicom for domestic production and distribution of surgical masks and N95 respirators for PHAC.
Production ramp up for N95 respirators began in August 2020. Medicom applied for Health Canada’s International Organization for Standardization (ISO) certification. Health Canada approval was obtained on October 30.
Medicom has also received quality assessment testing approval from PHAC on their N95 respirator.
Quality assessment testing is a standard requirement to confirm the masks meet the mandatory 95% filtration standard for N95 respirators. This quality assessment testing process was performed by the National Research Council (NRC), on behalf of PHAC.
NRC performed the testing using the filtration testing machine TSI8130A, which is the same machine used by the National Institute for Occupational Safety and Health (NIOSH) in the United States. Quality assessment testing typically takes 7 to 10 business days depending on the number of sample masks being tested. There is an extension for NIOSH approval until the end of June 2021.
While Medicom was finalizing quality assessment testing, they provided 700,000 FFP2 masks (N95 equivalent) from Europe. Medicom has provided PSPC with a delivery schedule for the N95 respirators. Deliveries began in November 2020.
3M
PSPC entered into a contract directly with 3M Canada to purchase domestically-produced N95 masks. 3M had responded to a ‘call to industry’ posted by Innovation, Science and Economic Development Canada (ISED) seeking industry engagement on establishing domestic manufacturing of N95 masks in Canada. Five proposals were received, and the 3M proposal was selected as the best value to Canada.
Under the contract, 3M will provide 25 million N95 masks annually over an initial 5-year period (April 2021 to March 2026). Canada has also reserved the right to extend the contract by up to 5 optional years. 3M had notified PSPC that they had an additional 5 million masks that they could supply in the first year, which PSPC then purchased, bringing the year one deliveries to 30 million masks total.
Essential Services Contingency Reserve
Context
The Government of Canada created the Essential Services Contingency Reserve (ESCR) to provide access to personal protective equipment, non-medical masks and disinfection products to essential service sectors, the social sector, as well as organizations serving Indigenous communities.
Suggested response
- The health and safety of Canadians is our number one priority
- The Government of Canada created the Essential Services Contingency Reserve to provide access to personal protective equipment, non-medical masks and disinfection products to essential service sectors, the social sector, as well as organizations serving Indigenous communities
- Since the Essential Services Contingency Reserve was introduced, a number of organizations have registered to access the inventory and orders have been placed in a variety of essential services sectors
- Given the current state of the pandemic, the escalating public health advice and the steady need for personal protective equipment, Public Services and Procurement Canada is proposing to optimize the use of the existing Essential Services Contingency Reserve inventory by increasing the visibility and making the remaining personal protective equipment inventory more accessible
If pressed on logistics and distribution:
- we have entered into an agreement with Canadian supplier SCI to provide warehousing and order fulfillment across Canada for the Essential Services Contingency Reserve, including in northern and remote communities
- SCI is part of the Canada Post network, offering seamless integration with Purolator and Canada Post for shipping orders to businesses and organizations across essential services sectors
If pressed on cost-recovery:
- currently, items are being provided at cost to essential service sectors and at no cost to organizations serving Indigenous communities and social service sectors
- for essential service sectors, the cost of goods is established based on current personal protective equipment market pricing and does not include overheard costs to acquire and warehouse the inventory
- costs are reviewed on a regular basis and updated accordingly
- shipping costs are applied to purchases from the Essential Services Contingency Reserve
If pressed on inventory:
- inventory in the Essential Services Contingency Reserve includes items such as:
- KN95 masks
- nitrile gloves
- non-medical masks
- thermometers
- face shields
- disposable coveralls
- to date, the total value of products procured under the Essential Services Contingency Reserve is about $168 million with Public Health Agency of Canada and other departments donating some additional personal protective equipment
- the most sought-after items are KN95s and nitrile gloves. While overall uptake has been fairly low, there has been a significant recent increase in demand for KN95 masks due to the Omicron variant
- at the end of December 2021, Public Services and Procurement Canada collaborated with the Canadian Red Cross to donate 13 million KN95 respirators for use in the voluntary sector
- as of January 10, 2022, Public Services and Procurement Canada is working with the Federation of Sovereign Indigenous Nations to donate 1 million KN95 masks
Background
In summer of 2020, the Government of Canada established the ESCR as a temporary measure to provide a backstop when PPE are unavailable on the marketplace. Operating since August 2020, it provides access to PPE to essential service sectors, the social sector, as well as organizations serving Indigenous communities.
Status
Currently, items are being provided at cost to essential service sectors and at no cost to organizations serving Indigenous communities and social service sectors.
To be eligible, businesses or organizations must be from one of the 10 critical infrastructure sectors as identified in Public Safety Canada’s Guidance on Essential services and Function in Canada during the COVID-19 Pandemic (for example, energy and utilities, health, food).
Assessment criteria include (1) the degree to which the sector is facing critical shortages of PPE, (2) if the requested supplies are appropriate based on public health guidance and occupational health and safety requirements, (3) if the requestors have been unable to secure PPE elsewhere.
The total value of products procured under the ESCR is roughly $168 million. The Public Health Agency of Canada and other departments donated additional PPE to the inventory.
The ESCR inventory has been mostly accessed by small and medium-sized enterprises.
Next steps
Given the current state of the pandemic, the escalating public health advice and the steady need for PPE, Public Services and Procurement Canada is proposing to optimize the use of the existing ESCR inventory by increasing the visibility and making the remaining PPE inventory more accessible.
Ventilator procurement
Context
Recent questions have been raised about domestic contracting for ventilators.
Suggested response
- The Government of Canada is thankful to Canadian manufacturers who stepped up and offered their solutions and expertise in ensuring that Canada had enough ventilators to protect the health of Canadians
- Thanks to the efforts of our suppliers and their staff, the Government of Canada successfully secured 27,388 ventilators—enough to keep Canadians safe in any scenario
- The Government of Canada has worked with some of the manufacturers to identify opportunities to reduce the volumes ordered from suppliers that encountered delivery issues
- We are grateful for all Canadian companies that answered the Government of Canada’s call to action and continue to support our pandemic response
If pressed on which companies will be affected by the reduction:
- the contracts that have been affected by reductions in quantities are the contracts with ventilators still undelivered
- all companies affected by the reduction have already delivered ventilators
If pressed on whether FTI was affected:
- as FTI had fully delivered its order of ventilators by the end of December 2020, there was no opportunity to reduce the volume ordered
If pressed on FTI:
- Ventilators for Canadians, a consortium of entrepreneurs, manufacturers and businesses, is 1 of 11 domestic suppliers that came forward with a proposal to supply ventilators to the government
- their proposal, based on an open source Medtronic design, was recommended by a review panel of technical experts, including respirologists, biomechanical engineers, and manufacturing professionals
- following this recommendation, on April 10, Public Services and Procurement Canada awarded a contract to FTI Professional Grade Inc., the corporate entity put forward by the consortium for the purposes of this contract, for the supply and delivery of ventilators
- Baylis Medical is a subcontractor to FTI Professional Grade Inc. and a partner to Ventilators for Canadians
- FTI Professional Grade Inc. has fulfilled its obligations under its contract
If pressed on for the process that led to contract awards:
- a broad call to action was issued by Innovation, Science and Economic Development Canada to solicit interest from Canadian companies that were able to support Canada’s COVID-19 response
- as part of this call to action, a number of companies identified their interest in supplying Canada with ventilators. Separately, potential ventilator suppliers had also come forward to the National Research Council and to the next generation (NGEN) supercluster
- all of these companies—11 in total—were subsequently invited to send proposals to ISED covering the design of the ventilator, its clinical functionality, and the manufacturing plan, including details on the supply chain
- proposals were reviewed by a panel of experts to assess the viability of technology and manufacturing approaches. The panel, which included medical clinicians, respirologists, biomechanical engineers, and manufacturing professionals, was asked to provide government with their best advice as to which designs would be most useful in the fight against COVID-19 and could be manufactured quickly to meet the needs of Canada’s public health system
- the review panel also included technical experts from within the Government of Canada (Health Canada and the Public Health Agency of Canada (PHAC)). Staff from PSPC participated in the panel, however, recommendations were based on feedback from technical experts
- based on the advice of this panel of experts, Government of Canada officials identified 4 Made-in-Canada ventilators, and contracts were subsequently awarded to CAE Inc., FTI Professional Grade Inc., Canadian Emergency Ventilators (Starfish), and Vexos for 37,500 ventilators
- each of the 4 companies subsequently worked with Health Canada officials through the regulatory process to ensure the ventilators met all the regulatory requirements to receive approval under the interim order
Background
At the onset of the COVID-19 pandemic, Canada procured ventilators at a rate that would allow it to be oversupplied in the event there was a significant surge in COVID-19 cases and worst-case scenarios for disease infection occur. Canada’s initial approach was to secure contracts with manufacturers of commercial-off-the-shelf (COTS) ventilators. The Government of Canada procured approximately 3,000 COTS ventilators which were deployed.
In March/April 2020, PSPC entered into 8 non-competitive contracts with 6 suppliers using its emergency delegation. In May/June 2020, PSPC entered into 3 additional non-competitive contracts. Delivery dates under these contracts were not firm due to suppliers not being able to provide firm commitments in the face of increased global demand.
To secure ventilators, PSPC, PHAC and Innovation, Science and Economic Development Canada undertook a process to identify viable proposals to manufacture ventilators in Canada. As a result, Canada awarded 4 contracts to domestic manufacturers to produce 37,500 ventilators in Canada.
In the fall of 2020, it was becoming apparent that the quantities contracted by PSPC coupled with the quantities procured directly by provinces/territories indicated that Canada would have an oversupply of ventilators. In response to this, Canada proceeded to reduce the quantities required by terminating contracts for convenience with domestic manufacturers. In lieu of requiring, contracting and receiving 40,545 units at the onset of the requirement, Canada’s reduction resulted in only requiring and receiving 27,706 units.
Contract termination for convenience was actioned with the 4 domestic suppliers of which 1 is currently still in the final steps of the claims process.
Late show speaking notes: COVID-19 domestic personal protective equipment manufacturing
Adjournment proceedings: Notices of questions
Original exchange for background: Hansard, December 3, 2021
Mr. Tony Baldinelli (Niagara Falls, Conservative Party of Canada (CPC)): Canada's new PPE manufacturing industry is already in a state of crisis. These patriotic innovators answered the government's call to help Canadians when PPE supply was short and badly needed at the start of the pandemic despite the prime minister promising to buy made in Canada PPE, all I can find in the parliamentary precinct are masks that are made in China. When will this liberal government start supporting Canadian PPE innovators and manufacturers and stop breaking their promises?
Hon. Filomena Tassi (Hamilton West—Ancaster—Dundas, Liberal): In the House in the 44th Parliament I want to thank the good people of Hamilton West St. Catharines-Dundas for electing me. This truly is an honour. With respect to the member's question, Madam Speaker, we know that Canadian businesses have pivoted. They retooled. And we have supported them every step of the way. We are in a position now where we are not short on PPE. Why? Because Canadian businesses stepped up and our procurement efforts have supported those businesses. We're going to continue to do that, ma'am. Thank you.
Late show response 4 minutes (557 words)
Mr. Speaker, I would like to thank the honourable member from Niagara Falls for the question.
From the very first days of this pandemic, our government has worked around the clock to procure critical PPE and essential medical supplies to protect the health and safety of Canadians.
Canadians can rest assured that we will continue to do whatever it takes to get us through this global health crisis.
When COVID-19 reached our shores, our government acted promptly to get our frontline health care professionals the vital supplies they required.
As the member knows, Mr. Speaker, the entire world was scrambling to get the same materials from a finite number of suppliers, making it a highly competitive global environment.
Our procurement experts worked day and night aggressively buying from all available suppliers and distributors here at home and abroad.
We have been aggressive in our efforts to secure PPE just as we have been to secure safe and effective vaccines.
And while this pandemic is far from over, we have delivered for Canadians.
When it comes to PPE, our government has acquired billions of units of non-surgical masks, N95 respirators, face shields, hand sanitizer, protective gowns, gloves and more.
Thanks to these efforts, Canada is in now a strong and stable position in terms of PPE and supplies.
But in the face of intense global demand, our government’s procurement strategy had to be smart and agile.
Making sure we had diverse supply chains operating simultaneously has been key to ensuring we have reliable sources of critical goods and supplies.
There is no doubt that the urgent global demand meant that early supplies largely came from overseas.
However, Mr. Speaker, as part of our pandemic response, this government also invested in Canadian companies to make the PPE we needed so much.
We also put out a call to action to domestic companies that could supply such items to us.
As soon as we did, companies from across Canada did their part and answered that call, and some completely shifted their production lines to meet the urgent need.
Mr. Speaker, we should all be proud that Canadian industry stepped up in a big way.
Medicom out of Montreal and 3M in Brockville are prime examples.
Our government has a 10-year contract with Medicom to supply N95s and surgical masks. And we have a contract with 3M for 25 million N95s annually, through to 2026.
Our investments with these companies have helped secure domestic capacity for the production of PPE, now and into the future.
If we take a look at all the contracting handled by Public Services and Procurement Canada to combat COVID-19, aside from vaccines, over 40% of expenditures are associated with products manufactured in Canada or services delivered by Canadian companies.
And I will also note that the vast majority of the total value of contracts for PPE, medical equipment and supplies have been with Canadian companies that supply and distribute PPE—accounting for approximately 87% of overall contractual expenditures.
Combating COVID-19 in this country truly has been a Team Canada effort.
As we face new variants and new waves of infection, our top priority remains to finish the fight against COVID-19.
Canadian companies that stepped up to join the fight have been, and will continue to be, key to our success.
And our Government’s will always have their backs.
Thank you.
One minute rebuttal (106 words)
Mr. Speaker,
Our government will continue to do whatever it takes to keep Canadians safe and healthy and to finish the fight against COVID-19.
The work to secure PPE as well as safe and effective vaccines truly has been a Team Canada effort.
Our success in acquiring billions of pieces of PPE was in no small part due to the dedication and perseverance of many Canadian manufacturers who did not hesitate to answer the call to action.
Our government will always support those manufactures, as we have done.
Together, we will continue to combat COVID-19 until Canada is on the other side of this pandemic.
Thank you.
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