Decades-long issues with PPE supply sent feds scrambling at onset of pandemic: AG
OTTAWA -- At the beginning of the COVID-19 pandemic, the Public Health Agency of Canada (PHAC) was not adequately prepared to respond to the surging demand for essential personal protective equipment (PPE), after failing to address decades-long issues with managing Canada’s stockpile of emergency supplies.
This was the conclusion reached by Auditor General Karen Hogan in a report tabled in the House of Commons on Wednesday afternoon examining the federal government’s handling of procuring PPE in the lead up to and through the pandemic.
“At the onset of the pandemic, PHAC lacked some of the systems and practices it needed to properly manage and operate the country’s stockpile of emergency equipment… As a result, it was not as prepared as it could have been to respond to the increased demand for personal protective equipment and medical devices that came from the provinces and territories,” read Hogan’s report.
The performance audit focused on the role PHAC, Health Canada, and Public Services and Procurement Canada (PSPC) played in ordering, delivering, and stockpiling key pandemic protective gear such as N95 masks, medical gowns, testing swabs, and ventilators.
In the 42-page report, Hogan said that facing an urgent need and an “unprecedented” international competition for a limited supply—which the federal Liberals have described as a “Wild West” of procurement—the government managed to turn things around as the pandemic waged on.
However, the auditor general said that the government still has not addressed the longstanding issues and shortcomings, rather has found ways to “work around” them.
On March 3, 2020 the World Health Organization (WHO) announced a global shortage of PPE and medical devices, and 10 days later Public Services and Procurement Canada had assembled a team focused on securing COVID-19 supplies.
But it took a month from the initial WHO warning of shortages for the federal, provincial and territorial governments to launch a strategy to share the scarce resources across the country, according to the report.
Hogan said that despite these initial struggles and “very limited domestic capacity,” the government was able to meet the needs of the provinces and territories by adapting quality assurance and supplier license processes, and making changes to how bulk quantities of essential supplies were procured.
During a press conference following the release of the report, Hogan told reporters that her office decided to stop digging into just how severe the shortages and supply issues were given the gaps in the records kept.
“The quality of the data was such that we couldn't rely on what the agency estimated was the stock on hand,” she said.
She noted that by the time the audit began earlier this year, the deficiencies that saw provinces’ and territories’ requests for supplies unfulfilled early on were in the past.
“When it's bad, let's not focus on how bad is it, and why did it get to the situation it got to, and focus on how to move forward,” said Hogan, whose mandate is to examine government activities and the conduct of departments and agencies. She said more will be coming in future financial-focused audits on the value-for-money aspect of Canada’s mass pandemic purchases.
In an interview on CTV News Channel’s Power Play, Hogan was asked about this comment. In response she said that it is “absolutely part of the job to identify weaknesses and make recommendations on how to improve things.”
“We're really in the middle of real-time auditing a response to a pandemic as it continues to evolve,” she said.
As the report outlines, Canada established a National Emergency Strategic Stockpile in the 1950s to have equipment from pharmaceuticals to social service supplies on hand to protect Canadians from the threats of the Cold War, and has since been focused on ensuring there is an arsenal of supplies that may be needed in emergency situations or to contain “ items that are rare and difficult to obtain in a timely manner.”
PHAC is responsible for managing the National Emergency Strategic Stockpile, and as has been previously reported, disposed of numerous supplies in advance of the pandemic, as they had expired. The auditor general found that the agency did not have a process in place to establish how much equipment should be stockpiled to meet the needs of the country in an emergency, or to properly manage the supply once it has been established.
“Some of the federal stockpile inventory was expired or outdated and the Public Health Agency of Canada did not track the age or expiry date of some items,” Hogan wrote in her report, also noting that some inventory records that were kept were inaccurate.
There were also issues with tracking inventory as it travelled across Canada, and no rationale outlining why there should be certain quantities of supplies in the stockpile.
Further, Hogan found that unaddressed federal stockpile issues had been brought to the agency’s attention through internal audits “dating back to at least 2010.”
For example, the policy outlining the stockpile’s objective had not been updated since 2012.
Despite the shortcomings early on, Hogan noted that PSPC “mobilized resources and modified its procurement activities to quickly buy the required equipment” on behalf of PHAC.
In doing so, procurement officials accepted risks beyond what is typical to procure bulk orders of supplies and during the period of the audit, issued 85 contracts worth a combined $3.7 billion for PPE and medical devices.
Hogan looked at 39 of these contracts in depth and found one where the federal government prepaid, but the goods had not yet been received.
“The limited supply made the market for this equipment very competitive and resulted in increased prices. In such an environment, advance payments were sometimes required by suppliers. There were also challenges to secure sufficient cargo space on planes to urgently transport goods to Canada, and logistics services were put in place to take possession of the equipment earlier in the delivery chain,” Hogan wrote.
PSPC also expanded its warehouse space, doubling the number of federally-managed warehouses from 8 to 19 to store the mass orders of pandemic essentials.
In the audit, Hogan looked at a portion of deals and found that on average it took 34 days from requisition to contract signature, 71 days from signature to delivery for N95 masks; and a total of 154 days between when ventilators were sought and when they arrived.
To accelerate PPE purchases, a national security exemption was invoked and it remains in place, allowing Canada to exclude its contracts from certain trade deal and market obligations.
As of the end of 2020, the government has spent more than $7 billion on PPE, medical devices, and key supplies like hand sanitizer.
PREPARING FOR THE NEXT CRISIS
The auditor general has issued four main recommendations outlining what needs to happen so that Canada is better prepared for the next global health emergency, as Hogan notes it could “occur at any time with little warning.”
The main recommendation is that PHAC should “develop and implement a comprehensive National Emergency Strategic Stockpile management plan with clear timelines that responds to relevant federal stockpile recommendations made in previous internal audits and lessons learned from the COVID-19 pandemic.”
Hogan has also given specific suggestions to Health Canada and PSPC to improve their classification of certain medical equipment, to enforce the contracts with third-party warehousing and logistics services providers, and to ensure the “financial strength” of suppliers before awarding them contracts with advanced payments.
In a response included in the report, PHAC has agreed to make changes based on the numerous lessons learned from COVID-19, and Health Canada said it will explore relevant issues raised “within 1 year of the end of the pandemic.”
PSPC said that procuring essential COVID-10 supplies in the first 100 days of the pandemic was “an around-the-clock effort, undertaken in an unprecedented environment of extremely tight global supply chains.”
Responding to the report, Conservative MP and health critic Michelle Rempel Garner took aim at the 10-day delay between the WHO PPE shortage being declared and the federal Liberal government setting up bulk purchasing of supplies.
“This delay meant Canadian frontline workers were being exposed to COVID-19 without appropriate PPE for weeks during the onset of the pandemic,” she said in a statement.
Reacting to the auditor general’s findings, Health Minister Patty Hajdu and Procurement Minister Anita Anand vowed to implement the recommendations made.
“Early on in the pandemic, as we were trying to ascertain from provinces and territories what their anticipated needs would be, it became clear that we didn't have the information that we needed and that we needed to act quickly,” Hajdu said, not answering specifically when she became aware of the shortages in Canada’s PPE inventory.
“Since then, we've come a long way… We’ve taken many steps towards a much more robust system of really understanding what's in the NESS, what the anticipated requirements or needs might be of provinces and territories, and ensuring that we have a very good and strong line of sight on how to get that product quickly,” said Hajdu. “As we have learned these lessons in responding to COVID-19, it's given a very strong foundation for the kinds of reflections that the agency needs to have about an ongoing maintenance of a national emergency stockpile that's robust enough and flexible enough to be able to respond to any public health threat regardless of how it presents.”