Question Period Note: Essential Services Contingency Reserve

The Government of Canada is operationalizing the Essential Services Contingency Reserve (ESCR) to provide essential services workers with access to personal protective equipment (PPE), non-medical masks and disinfection products to meet urgent, short-term needs.

• The health and safety of Canadians continues to be our top priority, and that means ensuring that businesses and organizations in essential services sectors have access to PPE, non-medical masks and disinfection products as we begin reopening the economy
  • We have entered into an agreement with Canadian supplier SCI, to provide warehousing and order fulfillment across Canada for the ESCR, 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
  • The ESCR will ensure timely access to PPE, non-medical masks and disinfection products to keep Canadians safe and avoid disruptions in essential services
  • The ESCR started its operations on August 3, 2020. A number of organizations have registered to access the inventory and orders have begun to be placed in a variety of essential services sectors

If pressed on contracts issued to operationalize the ESCR:

• Three suppliers have been engaged to support the delivery of the ESCR
• A task authorization for approximately $3.7 million has been issued to InfoSys Public Services to create a case management system and order intake tool, leveraging work to date on the Electronic Procurement System
• A contract for approximately $3.9 million has been awarded to SCI, a subsidiary of Canada Post, for warehousing and inventory management
• Purolator, which is on the National Master Standing Offer, has been engaged to cover ground transportation for order fulfillment which is expected to cost approximately 2 million dollars

If pressed on supplier types for contracts issued to stock the ESCR:

• To stock the ESCR, Public Services and Procurement Canada (PSPC) is purchasing supplies from a number of sources, both internationally and domestically

If pressed on eligibility for the ESCR:

• To be eligible, businesses or organizations must be legally constituted, from 1 of the 10 critical infrastructure sectors, and reflected in Public Safety Canada’s “Guidance on Essential Services and Functions in Canada During the COVID-19 Pandemic”
• Orders valued at $5,000 or above will be assessed against the degree to which the sector is facing critical shortages of PPE, if the requested supplies are appropriate based on public health guidance as well as occupational health and safety requirements, and that requestors have been unable to secure PPE elsewhere

If pressed on ESCR timelines for order fulfillment:

• A streamlined approval process for orders under $5,000 has been implemented to ensure organizations have timely access to PPE, non-medical masks and disinfection products

If pressed on cost-recovery:

• The cost of goods will be established based on the average price paid by PSPC to purchase inventory for the ESCR and would not include overheard costs to acquire and warehouse the inventory
• Costs will be reviewed on a regular basis and updated accordingly
• Shipping costs will also be applied to purchases from the ESCR

If pressed on inventory:

• Inventory in the ESCR will evolve over time due to supply and demand context
• Efforts will be made to ensure that the inventory aligns with the needs of essential services sectors

In late April 2020, [redacted]. Given supply and demand challenges, procurements for PPE and associated disinfecting supplies were quickly initiated before warehousing was in place.

Initially, stock for the ESCR was housed at PSPC-owned warehouse locations. However the sites did not have sufficient capacity for the planned inventory and were not equipped with the necessary tools to manage the inventory, including rapid distribution to end users.

Discussions were held in early June 2020 with Canada Post, Purolator and

SCI to explore options for an integrated warehousing, logistics and distribution solution. Subsequently a contract was issued to SCI as it provided a turnkey solution, including immediate capacity and a nation-wide network of warehouse locations. Further, SCI had a warehouse management system with the ability to provide real-time inventory management and the ability to integrate the system with the online catalogue ordering tool being developed.

At the same time, Infosys Public Services was engaged to develop the case management and intake tool for the ESCR as there was a requirement to put in a place a solution that would be compatible with the existing Electronic Procurement System they had developed. Given their experience developing the Electronic Procurement System and the need for the solution to leverage existing infrastructure in place, only this vendor could deliver a solution for the ESCR within the short timeframe required.

There is a two-step process to access the ESCR; (1) Registration; (2) Order Placement. As of November 10, 2020, the ESCR has received a total of 142 requests for registration from the following sectors: Health, Safety, Manufacturing, Information and Communication Technologies, Food, Government, Transportation, Energy and Utilities, Water and Finance sectors. Of the businesses registered, 19 have placed orders. Of those orders, 11 have been cancelled, 6 approved and 2 are under review. A portion of the cancelled orders have been redirected to supply available through provinces and territories.

To date, the ECSR has been mostly accessed by small and medium size enterprises rather than consolidated requests from critical sectors. As such, the approval process for orders valued at less than $5,000 has been streamlined to remain within Public Services and Procurement Canada to reduce processing times and ensure timely order fulfillment.

Supplementary Estimates B

PSPC is seeking access to $500 million (in both Vote 1—Operating Expenditures and Statutory Authority) in 2020—2021 to establish the ESCR, to which essential service organizations can apply for temporary, urgent access to PPE and other critical supplies.

This funding is in addition to the original $500 million received through Supplementary Estimates (A), which brings PSPC’s total authorities to $1 billion for 2020 to 2021.

Statutory authorities granted under the Public Health Events of National Concern Payment Act (PHENCPA) are available until December 31, 2020.

Funding sought in the Vote 1—Operating Expenditures will provide the Department with the necessary funding to continue activities related to the COVID-19 response after the expiry of the PHENCPA.

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