Question Period Note: National Emergency Strategic Stockpile - Public Services and Procurement Canada’s role

Prior to COVID-19, the Public Health Agency of Canada’s (PHAC) National Emergency Strategic Stockpile (NESS) warehouse network was comprised of [Redacted] warehouses totalling approximately 168,500 square feet. This included [Redacted] warehouses (120,000 square feet) and [Redacted] warehouses (48,500 square feet). The amount and volume of personal protective equipment (PPE) ordered in response to the pandemic was well beyond PHAC’s capacity to receive and store. Public Services and Procurement Canada (PSPC) has supported PHAC by entering into service contracts and leases to provide them with additional warehousing capacity.

• The health and safety of Canadians is our top priority, and that means ensuring life-saving medical supplies reach our frontline healthcare providers as quickly as possible
  • Maintaining the NESS is the responsibility of the PHAC
  • Since the outset of the pandemic, PSPC has taken an aggressive procurement approach to fulfill immediate, emerging, and long-term medical supply requirements. This included buying in bulk, domestically and internationally, to secure key items of PPE and medical supplies
  • On September 11, 2020, PSPC awarded a competitive contract to Metro Logistics Inc., on behalf of PHAC, as a primary source of services for warehousing and distribution of PPE to provinces and territories

If pressed on PSPC’s role:

• PSPC is providing procurement services to PHAC to support them with the various logistics activities required to inventory, warehouse and distribute PPE
• PSPC has awarded contracts for warehousing and distribution services to support PHAC’s requirements and is working closely with PHAC in managing these contracts
• PSPC has also entered into leases to provide PHAC with additional warehousing capacity
• A total of approximately 2.3 million square feet of warehouse space has been added through service contracts or new leases
• While PSPC established processes at the outset of the pandemic aimed at ensuring oversight and due diligence processes were maintained, we recognize that procurement processes can always be improved

If pressed on PHAC’s role:

• PHAC is responsible for managing the NESS
• PHAC is maintaining oversight on the amounts of PPE and supplies available, including the monitoring of expiry dates and distribution to provinces and territories

If pressed on Request for Proposal for national logistics and warehousing services:

• To facilitate the intake and distribution of large volumes of PPE and medical supplies, a notice was posted in Spring 2020 on the PSPC Buy and Sell website to solicit interest from major logistics service providers
• This notice closed on May 7, 2020 and the review of the expressions of interest resulted in a short-term contract to Groupe Robert to support immediate warehousing needs
• A Request for Proposal was also published on the Buy and Sell website and on September 11, 2020, PSPC awarded a competitive contract to Metro Logistics Inc. on behalf of PHAC

This contract ensures warehousing across the country to accommodate and best position supplies for distribution to the provinces and territories

Since the outset of the pandemic, the government has adapted to manage the volume of supplies. These measures have included service contracts and leases for additional warehouses, turning to the Canadian Armed Forces for assistance with logistics, and leveraging existing agreements.

A number of different suppliers, including Maritime Ontario, Groupe Robert Inc, Metro Logistics Inc, Urban Valley Transport Ltd., Overseas Express Consolidators and Bolloré Logistics Canada have been used to support inventory management, warehousing and distribution. Through such contracts, PPE is currently being warehoused in [Redacted].

PSPC also entered into short-term leases for PHAC for 2 additional warehouses ([Redacted] and [Redacted]) in [Redacted] totalling approximately 187,000 square feet. These warehouses are expected to be vacated upon expiry of the leases in September 2021 and March 2022 respectively. A new lease at the [Redacted] has been secured to replace these expiring leases with a start date of January 1, 2021, for a fixed period of 8 years with a total of 127,000 square feet of warehouse.

On April 1, 2020, PSPC signed, on behalf of PHAC, a one-year contract with Amazon to use their on-line technology for provinces to order material directly. Canada Post and Purolator were delivering the equipment to provinces and territories as a subcontractor of Amazon. The agreement had primarily been put in place to access Amazon’s easy-to-use online interface, which allowed individual health establishments to order supplies directly from PHAC. As provinces and territories requested that PHAC deliver the supplies directly rather than awaiting for orders from them, the requirement evolved beyond what was covered in the Amazon agreement. As a result, the contract with Amazon was suspended in mid-July 2020. Prior to the suspension, only $200,000 has been spent under this contract.

A separate agreement between PHAC and Canada Post allowed for the warehousing of the PPE at [Redacted]. This warehouse quickly ran out of space. PHAC subsequently awarded, on May 22, 2020, a contract to Groupe Robert as a temporary measure while a long-term solution was being developed.

On May 4, 2020, PSPC published a Letter of Intent / Request for Information (LOI / RFI) on Buy and Sell to gather information in relation to a longer-term warehousing, inventory management and transportation solution. Further to the LOI / RFI process, PSPC awarded a 6-month contract to Groupe Robert Inc. on June 13, 2020. The contract has since been extended to the end of March 2021. This contract provided warehousing space in the [Redacted], transportation capabilities and a Warehouse Management System capability. Transition of PPE product out of these warehouses to provinces or other PHAC facilities is underway and expected to be completed by the end of March 2021 at which point the contract will come to its end.

Additionally, a 2-year service contract was awarded to Groupe Robert Inc. on July 31, 2020, to operate the 350,000-square-foot facility leased by PSPC on behalf of PHAC in [Redacted].

As further warehousing capacity was required during the summer, existing and new contracts were utilized with different suppliers, including Overseas Express Consolidators, Bolloré Logistics Canada and Urban Valley Transport Ltd. to meet the required warehousing capacity.

PSPC also proceeded with a Request for Proposal for National Logistics and Warehousing Services on July 16, 2020, to provide for warehousing, inventory management and distributions services. As a result of this competitive process, PSPC awarded, on behalf of PHAC, a 2-year contract, with an option for an additional year to Metro Logistics Inc. The contract, awarded on September 11, 2020, ensures warehousing across the country to accommodate and best position supplies for distribution to the provinces and territories.

In August 2020, the Government of Canada announced the creation of the Essential Services Contingency Reserve (ESCR), an emergency backstop of PPE and other critical supplies, managed by PSPC. The ESCR includes a number of warehouses across Canada, managed under a separate contract by SCI Logistics, a subsidiary of Canada Post, with Purolator serving as the distribution and delivery agent.

Office of the Auditor General Report

The main findings of the audit are that PHAC, Health Canada and PSPC helped to meet the needs of provincial and territorial governments for PPE and medical devices during the pandemic and that PSPC was able to mobilize and adapt quickly to deliver on urgent procurement requirements.

Notably, the report highlights how PSPC mobilized resources around the clock and modified its procurement activities to quickly buy the required equipment on behalf of the Government of Canada to respond to the pandemic.

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