Question Period Note: Procurement of personal protective equipment

The Government is ensuring that suppliers are providing the PPE that Canada requires and that sources of supply are free of unethical practices.

• The Government is committed to protecting 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
  • 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
  • The vast majority of our suppliers have stepped up to provide high quality and effective supplies and in the small number of situations where this has not happened, or where we have been made aware of allegations that supplies may have been produced using unethical practices, we are taking action to hold suppliers accountable
  • Forced labour is a significant and unacceptable problem in global supply chains and we take all allegations of such conduct very seriously
  • The Government of Canada is committed to ensuring that it does not do business with companies that employ unethical practices, either directly or within their supply chains

If pressed on TCG Medical:

• The Government of Canada expects that suppliers meet their contractual obligations. 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. Tango Communications was unable to delivery respirators that met performance and quality standards, so Public Services and Procurement Canada terminated three 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, valued at $42.7 million for the production [Redacted]
• The contract required full delivery of gowns by September 30, 2021. However. Harbour Technologies requested an extension to March 2022. Public Services and Procurement Canada’s General Condition contract clauses allow for an extension under specific circumstances
• As such, an extension was provided until December 30, 2021, which was also provided to 1 other supplier who requested a delivery extension

If pressed on Supermax Healthcare Canada allegations of forced labour practices:

• 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
• Canada maintained two existing contracts with Supermax Healthcare Canada. In light of the current situation, Canada has engaged with the company to seek assurances that Supermax Corp is not engaging in forced labour practices
• Supermax Healthcare Canada confirms that in October 2021, given the public allegations of forced labour practices, Supermax Corp hired an independent firm to conduct a comprehensive audit of its operations in accordance with the indicators of forced labour of the International Labour Organization. The resulting report is expected in mid-December 2021 to Canada, and once Canada has reviewed it will determine the next steps

If pressed on La Presse article on masks manufactured in China:

• At the onset of the COVID-19 pandemic in March 2020, 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 also 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

TCG Medical

On May 6, 2020, Public Services and Procurement Canada (PSPC) 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 delivery 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 recovery 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 three contracts to Tango Communications totaling approximately $111 million for [Redacted] 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 three 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 signaled to PSPC in late July 2021 various supply chain issues they were encountering. Harbour Technologies followed up in late August 2021 with official request for contract delivery extension up until March 2022.

PSPC consulted with its client Public Health Agency of Canada (PHAC) in regards to this request and was advised that an extension up until November 30, 2021 is granted. This was consistent with the approach to other gown suppliers extension approvals, this would be 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.

Harbour Technologies is seeking an extension up until March 2022.

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.

[Redacted]

Supermax Healthcare Canada

Since April 2020, Supermax Healthcare Canada has been awarded several contracts for the supply of nitrile gloves.

In December 2020, it was brought to PSPC’s attention via media reports that there was possible forced labour issue with suppliers in Malaysia, including Supermax. PSPC reached out to its nitrile glove suppliers that may be sourcing their gloves from manufacturers in Malaysia, to remind them of their obligations with regards to ethical practices and human rights. In January 2021, PSPC issued communication to contracted nitrile glove suppliers, Supermax Healthcare Canada being one, to provide attestation of actions against forced labour. Supermax Healthcare Canada confirmed to PSPC in January 2021 of their commitment to ethical working conditions.

On October 21, 2021, PSPC learned from media reports that the United States Customs and Border Protection issued an order that prohibits imports from Supermax based on reasonable information that indicates the use of forced labour in the company's manufacturing operations in Malaysia.

On October 25, 2021, PSPC communicated to Supermax Healthcare Canada that it remains concerned about the risk of forced labor and poor working conditions abroad, and would like an explanation in regards to the recent media reports of allegations of the use of forced labor.

There are currently two active contracts providing for the delivery of [Redacted] pairs of gloves by March 2022. In light of this new allegation, PSPC has asked Supermax Healthcare Canada to suspend all future deliveries until Canada is satisfied that its contracted gloves are produced without forced labor.

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