Ottawa signed a 10-year, $382 million, sole-sourced contract with AMD Medicom for medical masks
OTTAWA – The federal government signed a 10-year, $382-million sole-sourced contract with a Quebec firm to make millions of medical masks in Canada, after getting caught short of supplies early in the pandemic.
AMD Medicom, based in Pointe-Claire, Que., a Montreal suburb, was recommended for the estimated $382-million contract in April. The company’s headquarters are in Pointe-Claire, but it makes medical products in several countries around the world. Prior to this government contract it had no manufacturing in Canada.
Since the contract was signed in April, the company set up a plant in Montreal that is set to manufacture millions of masks a year.
In a briefing note given to Minister Anita Anand on April 3, civil servants advised her the international market, which was Canada’s only source for masks, was becoming unpredictable as demand for masks soared.
“Canada has no domestic N95 or surgical mask production capacity and is completely reliant on imports, which has become increasingly challenging with a surge in global demand,” reads the memo. “The situation has also worsened as countries continue to impose export restrictions on PPE.”
Many of Medicom’s own factories were in countries with export bans on medical equipment, preventing them from shipping the products to Canada.
The government ordered millions of masks early in the pandemic and emptied national stockpiles, including sending nearly 600,000 recently expired masks out to provinces and territories. The government has also invested in sterilizing equipment that allows the masks to be reused.
The briefing note was among thousands of pages given to the House of Commons committee on government operations that has been studying the Liberal’s PPE purchases.
N95 masks have been among the most difficult types of personal protective equipment for the government to source during the pandemic as global demand for them skyrocketed. The government has ordered both the N95 masks and the KN95 masks, a Chinese version of the respirators.
Most of Canada’s initial deliveries were the Chinese masks that were plagued with quality issues. Nine million of the masks the government received did not meet standards.
The KN95 masks that did live up to specifications aren’t being used by provinces. According to some of the documents provided to the committee, some of the provinces held the KN95 masks in reserve because of concerns they were not up to standards and the need to train medical personnel on how to wear them properly.
Canada also had trouble in early April getting N95 masks from the United States. The Trump administration banned 3M, a major manufacturer of the masks, from exporting them to fill orders in Canada.
That ban was quickly rescinded but still delayed shipments bound for Ontario early in the pandemic.
Bureaucrats recommended Medicom because the company had experience making the masks overseas and had ties to Canada.
“Increased demand for these supplies in the context of the COVID-19 pandemic has revealed a pressing and critical need to build domestic capacity,” reads the memo. “The company is an international recognized supplier, with long-term supply agreements in place or being developed.”
In a statement, Anand’s office said they expect to get the first deliveries from Medicom soon.
“In accordance with the contract, Medicom started Canadian production of surgical masks in July, while production of N95 masks is planned to begin in August,” reads the statement.
The proposal Anand initially approved was to have the first shipments arrive in government hands in July, which has not yet happened.
The minister’s office said this and several other contracts with Canadian firms have brought back PPE manufacturing to Canada.
“This work has resulted in 44 per cent of Canada’s contracts for PPE and medical supplies by dollar value being held with domestic manufacturers, and the establishment of Canadian production of these supplies, while supporting and creating jobs during this difficult economic time.”
According to the briefing note, 3M was approached about building a factory in Canada, but their proposal would have taken longer to get the factory up and running. General Motors is currently producing surgical masks in an Oshawa, Ont., assembly plant at the rate of about one million a month.
Under the contract, Medicom will provide the government with 20 million N95 masks and 24 million surgical masks every year for ten years. Those masks will be stored in the national emergency stockpile and distributed to provinces as needed.
Conservative MP Kelly McCauley said he understands the need to get the masks quickly, but he doesn’t understand the insistence on a sole-sourced contract when a competitive process would have yielded better results.
“It is just this continual lack of transparency and continual hesitancy to stand up for taxpayers,” he said.
The documents provided to the House of Commons committee show many gaps, including just how many masks Canada needs in a given year. He said if the Liberals really believe Medicom is the only company that can do the work then there should be no problem revealing all of the details.
“There is no reason for all this lack of transparency. What are they trying to hide?”
McCauley said he has heard from several other businesses who believe they could have handled the work Medicom is now doing and there should have been a broader call out.
Twitter: RyanTumilty
Email: rtumilty@postmedia.com