POLITICS
10/16/2020 13:12 EDT | Updated 10/17/2020 09:53 EDT

Feds Kept Most COVID-19 Contracts Secret Under National Security Exemption

A May memo confirms “vast majority" of early government pandemic-related contracts included a national security exemption.

CP/Lars Hagberg
Minister of Public Services and Procurement Anita Anand and Prime Minister Justin Trudeau wear a mask during an announcement at the 3M plant in Brockville, Ont. on Aug 21, 2020.

OTTAWA — The federal government cited a national security exemption (NSE) to withhold details of a “vast majority” of its COVID-19 related contracts struck at the onset of the coronavirus pandemic.

The exemption expedited the weeks-long procurement process — and keeps details of domestic and international contracts, including costs and supplier information, secret.

A memo approved in late May, obtained by HuffPost Canada through an access to information request, recommended the deputy minister of Public Services and Procurement Canada authorize “the 2019-2020 Q4 proactive disclosure of contracts not include those that are COVID-related.” 

James Fitz-Morris, the procurement minister’s director of communications, said “nearly all” of the contracts have since been posted publicly.   

“The few exceptions are limited to three specific commodities that, as the website says: ‘Given the intense competition for PPE and other supplies, and in the interests of Canadians, [Public Services and Procurement Canada] must protect the names of suppliers for certain commodities that are difficult to procure, including N95 respirators, gloves and swabs.’”

Members of the opposition have raised concerns about the federal government invoking NSEs for COVID-19-related contracts, calling for increased transparency.

Watch: Canada buys options for fifth potential COVID-19 vaccine. Story continues below video:

 

During an Oct. 7 debate in the House of Commons, Conservative national defence critic James Bezan said national security isn’t at risk with regard to the purchase of ventilators or N95 masks.

“It is just another example of how the government likes to cloak itself in the curtain of secrecy and never, ever talk about details of these contracts,” Bezan said. 

“This is another sole-source situation and we could be looking at another WE scandal. The government needs to come clean on this,” he said, referencing an April federal contract awarded to a Baylis Medical, a Montreal-based medical device company, for new ventilators. The chairman of the company is former Liberal MP Frank Baylis.

The government has defended the use of national security exemptions, calling them necessary for internationally competitive processes.

ParlVu screengrab
Conservative MP James Bezan speaks during a hybrid meeting of the House of Commons on Oct. 7, 2020.

Bezan’s colleague, Conservative MP Blaine Calkins, acknowledged that NSEs can be useful in preventing foreign companies or governments from bidding on the contracts. 

“However, that does not mean they need to use the secrecy components to prevent Canadian taxpayers from knowing how much the federal government is paying for our own domestic [personal protective equipment] and other protective equipment, and who we are buying it from,” he said.

Calkins, who represents the Alberta riding of Red Deer–Lacombe, said a business in his constituency lost a bid to provide the government with face masks but because an exemption was invoked, the owner wasn’t able to discover why they were unsuccessful.

“This does not make any sense, because there is nothing sensitive about non-medical, disposable masks,” Calkins said. “Given the fact that we are now months down the road, there seems to be no reason or rational explanation for the need to hide some of this information from the taxpayers of Canada.”

Prime Minister Justin Trudeau has repeatedly insisted his government is being transparent about the hundreds of billions of dollars being spent in response to the coronavirus pandemic and ensuing economic crisis. 

Liberal MP Steven MacKinnon, parliamentary secretary to the procurement minister, responded to Calkins with the assertion that NSEs are applied in situations where officials believe they are serving “Canada’s interest, and in the interest of our citizens, our partners in the provinces and our health care workers.”

MacKinnon said the government has released details of “dozens” of contracts online.

‘Global nature’ of pandemic necessitated exemption, spokesperson says

Under the Access to Information and Privacy Act (ATIP), the head of a “government institution” has the power to refuse the disclosure of documents if the information “could reasonably be expected” to challenge an organization’s competitive position or “contractual or other negotiations.” This provision was referenced in the memo.

It also recommended that “information be made publicly available as soon as the federal procurement department’s competitive position is no longer prejudiced so that transparency is maximized.”

The Treasury Board requires federal departments to publicly disclose, on a quarterly basis, contracts that exceed $10,000. 

Carlos Osorio / Reuters
Two employees collect information from the people waiting in their cars at the Etobicoke General Hospital Drive-Thru coronavirus disease (COVID-19) testing facility in Etobicoke, Ont. on Sept. 18, 2020. 

According to department guidelines, requests for a national security exemption must be made in a letter explaining how the proposed procurement is related to Canada’s national security interests or “the maintenance of international peace and security.”

An NSE “removes the obligation for tenders to stay open for a set period of time, thereby maximizing the speed with which urgent procurement can be completed,” the memo reads.

It said it’s “important” the government is not required to make its tender notices public, citing marketplace volatility and international competition for personal protective equipment (PPE).

“The disclosure of procurement information, such as supplier name and contract value could jeopardize orders and compromise Canada’s negotiating position, in particular international markets.”

We are now disclosing the majority of our COVID-19 contracting information on our web page as well as through normal proactive disclosure requirements.Michèle LaRose, department spokesperson

Public Services and Procurement Canada spokesperson Michèle LaRose confirmed to HuffPost the memo’s recommendation to forgo public disclosure of COVID-19-related contracts was approved. 

“Given the global nature of the pandemic and the severe competition for goods early on, we needed to protect the names of suppliers for certain hard-to-procure commodities, such as N95 respirators, nitrile gloves and swabs, to ensure these sources of supply remained available to us,” LaRose wrote in an email Tuesday.

LaRose included a statement outlining how the federal government has since secured more than two billion articles of PPE, and now “more than 40 per cent of the total value of PPE contracts” have gone to domestic companies. 

“In line with this new reality, and consistent with our commitment to transparency, we are now disclosing the majority of our COVID-19 contracting information on our web page as well as through normal proactive disclosure requirements,” LaRose said. 

“In limited cases, certain contract details cannot be disclosed, for example to protect commercial confidentiality of suppliers.”

Memo warned proactive disclosure of COVID-19 contracts would be ‘problematic’

Quarterly public disclosure of contracts must be reported within 30 days of the end of the first three quarters of the year between April and December. Reporting for the fourth quarter, between January and March, is different. Contracts must be publicly disclosed within 60 days of the end of the last period. 

The three-page memo was received by Deputy Minister Bill Matthews in late May. It stipulated the fourth quarter proactive disclosure of contracts was expected in a matter of days, on the 29th.

Under a section titled “Considerations,” it pointed out the upcoming proactive disclosure deadline in May “could be problematic were it to include COVID-19 contracts.” 

The memo included a caveat that stated “the application of an NSE does not absolve a department of its obligation to proactively disclose contracts; however, [ATIP] contains provisions that provide heads of organizations discretion around disclosure.” 

Blair Gable / Reuters
Canada's Prime Minister Justin Trudeau is seen on a screen as he attends a House of Commons finance committee meeting in Ottawa, Ontario, Canada July 30, 2020. REUTERS/Blair Gable TPX IMAGES OF THE DAY

The Access to Information and Privacy Act came into force in 1983 with the intent to give citizens timely access to government files. 

Information Commissioner Caroline Maynard told the House of Commons’ government operations and estimates committee in June that information related to a crisis such as the coronavirus pandemic should be made accessible either through ATIP or proactive disclosure.

“When I talk about proactive disclosure, it’s really providing information without having to wait for it to be requested,” she said.

Experts have since repeatedly criticized the Access to Information Act as broken. Despite more than a dozen reviews, excessive wait times and backlogs continue. The government’s decisions to withhold documents, claiming cabinet confidence or concerns of national security can be challenged by the information commissioner to force disclosure — though that process can sometimes take years.

In June, Procurement Minister Anita Anand defended contracting under NSEs, including sole-sourced deals during the pandemic, was “done in the interest of Canadians.”

Documents tabled in the House’s government operations committee before Parliament was prorogued in August stated the federal procurement department received more than 25,000 replies from potential suppliers by March 25 with a “large amount” from firms based in China.

By July, the documents suggested procurement risks related to the pandemic had calmed. 

The committee was told an email was sent to “all domestic and foreign suppliers” on July 10 to inform them the department had “transitioned back to normal competitive procurements.”

Read the Public Services and Procurement Canada memo below:

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