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On March 19, 2020, Prime Minister Justin Trudeau stated that
Canada’s Defence Production Act could soon be invoked to
respond to the COVID-19 crisis. Trudeau, who was speaking from his
home where he is himself in self-isolation due to the virus, added
that the government was considering a range of options.
The Prime Minister’s statement followed publication of an
open letter in the Globe & Mail on March 15th, by
over a hundred of Canada’s top business leaders, calling for
concerted action to respond to the crisis. These executives called
upon all business and government leaders to shift their focus to
the “singular objective of slowing the pace of
transmission” of the coronavirus.
Meanwhile, on March 18th, President Donald Trump
invoked the US Defense Production Act, which gives the President
the power to force businesses to produce certain goods and deliver
them to the government (Trump later tweeted that he would only
use the law as a last resort). This law has been used by
the US in the past, usually during times of war or a major
disaster.
The Minister of Public Services and Procurement Canada
(PSPC) holds broad statutory authority to acquire
goods and services — not only on behalf of the federal government,
but on behalf of provincial, territorial, and municipal
governments.
While Canada’s national and international trade agreements
seek to assure open and competitive procurements, all agreements
defer to the implementation of measures, including limited
tendering and shortened procurement time frames, for the purposes
of national security, preservation of public health and safety,
public order, and preservation and protection of human health and
life. The COVID-19 pandemic clearly fits within one or more
of these categories.
As such, the Minister does not need a further
“emergency” authority to acquire goods and services;
although having a Cabinet Directive in hand –identifying that all
procurements responding to the COVID-19 pandemic meet the emergency
or public interest exceptions of the Government Contracts
Regulations— would help prevent any delay arising from
contracting authorities having to justify that one or both of the
exceptions apply for any purchases they need to make.
To date, over 5,800 responses to a call out to Industry to
supply necessary goods and services1 have been
received.
Directing Industry to Respond to the COVID-19 Pandemic –
How Can it be Done
As noted above, President Trump invoked the Defense
Production Act, legislation. This provides the US federal
government with authority to direct private businesses to meet the
needs of “national defense”. The US government has
invoked this authority to deal with domestic emergency preparedness
in limited situations in the past; most recently in 2017, to
provide disaster relief following the hurricane that ravaged Puerto
Rico.
Canada’s Defence Production Act
(DPA), although similar in name and general
intent, is different.
The Canadian legislation grants the Minister of PSPC with broad
authority to acquire “defence supplies” for the
government, which is exercised routinely, and is the authority
under which goods and services are acquired for the Canadian
Forces, the Canadian Coast Guard and others. The legislation
also contains provisions enabling the Minister to “mobilize,
conserve and coordinate all economic and industrial
facilities”, including engaging in the manufacture of
supplies, stockpiling essential materials and substances to prevent
shortages, and making loans or advances (or providing repayment
guarantees) to provide assistance or capital to industry to achieve
the production of defence supplies. Aside from times of war, this
additional authority – to direct industry and assume control of
industrial operations – has not been exercised by any
government.
The use of this additional authority to meet a national pandemic
would raise significant policy considerations for any government
with respect to how it interacts with industry in peace-time, in
addition to being unprecedented. Further, the Canadian government
has other options and resources at its disposal, many of which are
already operational, and arguably can achieve the requisite level
of response to the COVID-19 emergency.
Funding has already been allocated to fight the COVID-19
emergency. Processes such as those supported by the national
Emergency Management Framework 2, have been implemented.
The government is also realigning existing funding mechanisms to
focus research and development efforts to respond to COVID-19. On
March 20th, the government announced that Canada’s current
industrial policy will be refocused to support the COVID-19
response; meaning that funds reserved to help companies innovate,
such as the Strategic Innovation Fund, will be used to help
companies accelerate the research and development of products and
services that can be used in Canada’s response to the COVID-19
emergency (i.e. masks, ventilators and hand sanitizer).
Canada’s other national regimes, such as the Disaster
Financial Assistance Arrangements administered by Public Safety
Canada, are also available and have been used by the federal
government in the past, without the need to invoke the DPA.
Finally, the federal government has at its disposal the
Emergencies Act and its companion legislation, the
Emergency Management Act, which, through the Minister of
Public Safety, provides a framework for pan-Canadian emergency
management and response. While the Emergencies Act is
often referred to as legislation of “last resort”, it is
likely better suited to support a response to COVID-19 than is the
DPA.
Marcia Mills is procurement counsel with
the Fasken Ottawa office and has 20+ years of private and public
sector experience, including over a decade as counsel to the
Department of Public Procurement and Services Canada, advising on
major Crown defence procurements and the Defence Production
Act. She can be reached at [email protected].
Peter Mantas is the leader of the
Procurement group of Fasken. He is frequently retained to advise
companies in complex matters involving government. He has expertise
in Canadian defence and other forms of procurement, and also has
experience with the US Defense Production Act. He can be
reached at [email protected].
Andrew House practices in the areas of
Government relations, ethics, and national security law. He works
with clients facing urgent and emerging issues related to
government regulation of corporations in the protection of critical
infrastructure, supply chain assurance, and the safety of citizens.
Andrew served as Chief of Staff to Canada’s Public Safety
Minister from 2010 to 2015. He can be reached at [email protected].
Footnotes
1 See our bulletin at Triggering an “Excusable Delay” Claim
During the COVID-19 Pandemic: What Federal Contractors Need to
Know
2 An Incident Response Group on Coronavirus and a
federal-provincial-territorial Special Advisory Committee on the
Novel Coronavirus (SAC) were both established in January and, in
March, a Cabinet Committee on the federal response to the
coronavirus disease (COVID-19) was struck.
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