How the federal government can fast-track medical supplies in a crisis

The federal government can bypass the normal tendering process for goods and services to deal with the COVID-19 crisis — but that power has to be used carefully, says one of Canada's top experts in procurement law.

Lawyer Paul Emanuelli, managing director of The Procurement Office, which advises many governments and agencies on the laws governing buying supplies and services, said the Emergency Rule could allow governments to go directly to companies to get what they need to fight the COVID-19 pandemic.

While the government already has long lists of companies with standing offers to provide the goods and services it needs, the Emergency Rule could explain last week's call-out to companies not currently on the list of existing suppliers.

The federal government posted a notice on its Buy and Sell website late last week calling on companies to let it know if they could supply products like N95 masks and surgical masks, nitrile gloves, vinyl gloves, gowns and bottles of hand sanitizer, as well as services ranging from security guards to nurses, food and laundry services and IT support.

The Emergency Rule would allow the government to deal directly with those companies without going to tender if an existing supplier can't fill the need, Emanuelli said.

A procurement short cut

Emanuelli said the Emergency Rule in procurement is separate from the much broader Emergencies Act the government mentioned Tuesday. The rule can be used at any time, provided the government or agency can prove that it is dealing with a true emergency, not a failure to plan.

"In circumstances like this, the procurement rules are calibrated to recognize that in situations of genuine emergency, then we don't need to go through the open, competitive bidding process because the timing doesn't permit it," Emanuelli said. "The health and safety of the public is paramount in those circumstances, providing that the acquisition is for the servicing of health and safety needs for the public that are urgent."

"Governments obviously have to be careful not to overreach and go beyond the scope of the emergency in these direct award situations," Emanuelli said, adding that governments using the rule to bypass tendering should document their reasons for doing so.

The use of the rule can be subject to court challenges by suppliers who feel that they weren't given a fair chance to bid on government business — and courts can cancel the contract.

Use of the rule can also be subject to audits afterwards.

Emanuelli said he's not hearing about any shortages at this point and the government would have enough supplies or arrangements for a short-term emergency. However, if the COVID-19 crisis drags on, it might need to use the Emergency Rule to restock supplies, he said.

But that might not help if other countries prevent shipments of supplies from getting to Canada in order to meet their own requirements.

"The interconnected nature of our current global supply chain is really being put in the spotlight by the current pandemic crisis, and the questions you're asking about how secure those global supply chains are is a fluid situation that will vary by jurisdiction and how it connects to the global marketplace," said Emanuelli.

"That's why the government's focus has been on ensuring that, notwithstanding other travel bans ... commercial activity across the border is continued."

Emanuelli said he has already been consulted by another country which is concerned that the crisis will affect its ability to get supplies from the U.S.

"That's a critical question and the situation continues to evolve rapidly, so it is very difficult to assess," said Emanuelli.

Canada also should take a closer look at its supply chain once this is over, he said.

"We need to be planning for the immediate, for the quarter — the next three months or so — and we also need to be thinking longer term to establish robust frameworks for supply chains [so] when these types of situations arise, public bodies have already established business continuity measures that they can then activate."

Elizabeth Thompson can be reached at elizabeth.thompson@cbc.ca