Business·The Big Spend

In Ottawa's rush to buy PPE, companies with little or no experience got some of the biggest contracts

The federal government awarded a $371-million contract to secure personal protective equipment — one of the largest medical supply deals in its history — to a small company headquartered in a house in suburban Ottawa that had no apparent prior experience in PPE procurement.

Government says first-time PPE supplier that received $371-million contract delivered the goods

A nurse in full protective gear tends to a patient in the intensive care unit at North York General Hospital in Toronto back in the early days of the pandemic. Concerns over shortages of personal protective equipment and supply chain interruptions led to a rush to bolster supplies. (Evan Mitsui/CBC News)

This story is part of The Big Spend, a CBC News investigation examining the unprecedented $240 billion the federal government handed out during the first eight months of the pandemic.

The federal government awarded a $371-million contract to secure personal protective equipment — one of the largest medical supply deals in its history — to a small company headquartered in a house in suburban Ottawa that had no apparent prior experience in PPE procurement.

Proline Advantage Inc.'s tender submission was one of more than 26,000 received by the government through its BuyandSell.gc.ca portal after it put out a call to suppliers last March for help procuring PPE.

Of those thousands of submissions, a number of lucrative contracts went to low-profile companies that pivoted to the PPE market, seeing opportunity in the mad dash to secure supplies in the early stages of the COVID-19 pandemic.

In the case of Proline Advantage Inc., the government says the company delivered the goods and fulfilled the obligations of its contract by August, coincidentally the same month Proline's PPE procurement website went live.

The company's headquarters is owned by its two directors, Mike Caron and Chantal Beauchamp. Caron is also listed as a partner in a nutritional supplement company called Max Q and is the founder and director of Portions Master, a company that sells supplements and a product called the Skinny Plate. Available on Amazon, the Skinny Plate is a plastic dish with dividers designed to help limit portion sizes.

Caron declined the CBC's request for an interview, providing an emailed statement instead.

"Our company is experienced in supply chain management and has a proud track record of sourcing products of various types from around the world," Caron wrote.

"Like many firms, we were able to quickly pivot our business, and leverage our international sourcing expertise to answer the government's call and address the immediate and pressing need to provide PPE to front-line medical professionals."

In total, the federal government has spent just over $6.1 billion on what it describes as "a broad range of equipment and supplies from domestic and international suppliers to combat COVID-19," not including vaccines.

As of Oct. 15, gowns were the biggest-ticket item on the list — accounting for 29 per cent of the overall amount, at nearly $1.8 billion.

Proline Advantage Inc.'s contract of $371,318,000 accounted for almost 21 per cent of that.

In addition to gowns, Proline's contract included about $17.5 million for other protective clothing such as shoe and boot covers, and disposable overalls.

WATCH | The 'Wild West' early days of the scramble for PPE:

Early days of PPE contracts were ‘the wild west’ | The Big Spend

The National

1 month agoVideo
2:19
CBC News tracked some of the billions of dollars the federal government spent on personal protective equipment during the pandemic and found the early days were tumultuous and two large contracts went to companies that seemingly had no pre-pandemic experience procuring PPE. 2:19

The size of the contract, and the fact it's at the top of the list posted by Public Services and Procurement Canada, has drawn media attention and raised some eyebrows among Conservative MPs and some supply chain experts.

"The largest medical supply contract in Canadian history was given to Proline Advantage for medical gowns," Conservative MP Pierre Paul-Hus said in a meeting of the government operations committee last month. "I want to know whether or not this company is well established in the medical field."

"This company is a small business and ensured that their gowns were made available as soon as possible by renting the largest plane in the world until all of their gowns were delivered," responded Anita Anand, minister of public services and procurement.

"This company stepped up at the beginning of the crisis when this country had no gowns, gloves, masks and the like. We need to respect the ability of small and large businesses across this country to step up for Canadians."

Anand's deputy minister, Bill Matthews, pointed out that the company had "a history of importing medical goods into Canada."

More stories in this series:

In all, 26 contracts were awarded to 23 different suppliers for more than 132 million medical gowns.

In some cases, finding out more about the companies involved is a challenge.

MuFactor Ltd., for example, received a contract worth $257 million, also to procure gowns. The company is registered in Alberta, with its headquarters listed as a house in northwest Calgary. Searches of import databases show MuFactor has a history of importing furniture. Very little other information is available about the company — no contact information online, no email, no phone number.

CBC News has asked the government about the status of the MuFactor contract and is awaiting its response.

How the process worked

"What I've seen in my work over the last eight months … there's been a lot of opportunistic organizations, distributors that don't have any experience in procuring health care, PPE and equipment, that have kind of popped up," said Fraser Johnson, an expert on supply chain management at Western University's Ivey Business School.

"From a procurement standpoint, if you're going to write contracts for several billions of dollars, and in these cases, tens of millions of dollars, you want to make sure that you know what the background of the company is."

That vetting process should assess whether a company is financially stable; what expertise it brings to the table; and the cost and quality of the products it can buy and how quickly it can deliver, he said.

Prof. Fraser Johnson of Western University's Ivey Business School says his research found many companies that didn't have experience in health-care procurement entered the sector to try to secure contracts. (Ivey Business School)

In a statement to CBC News, Public Services and Procurement Canada says potential suppliers were required to provide manufacturers' test results and certifications, and the Public Health Agency of Canada was responsible for validating those documents. Financial capability assessments were also performed, and delivery schedules were validated and confirmed, the statement says.

Delivery of the PPE is validated and quality assurance tests are performed on site by the Public Health Agency of Canada, the government says.

'This was akin to a war footing'

The speed and sheer size of the PPE procurement was in response to a desperate need in the early stages of the pandemic.

"There was concern we didn't have sufficient domestic supply," said Dr. Sandy Buchman, who was head of the Canadian Medical Association when the COVID-19 crisis began last spring.

"For example, I was told locally by the leadership in a Toronto hospital that they were concerned that they had a two-day supply of PPE at the beginning of the pandemic. So, obviously, things were very thin at the time.

"There was a sense from government that they were scrambling to find PPE wherever they could."

Established PPE suppliers watched newcomers pour into the market.

"There were literally tens of thousands of new entrants," said David Welsh, CEO of Edmonton-based Primed Medical Products, a company with 25 years of experience procuring and manufacturing a range of PPE.

Welsh, whose company was awarded $93 million in government PPE contracts, says Ottawa did an excellent job of securing enormous amounts of PPE at a time when it was in huge demand around the world.

"But, yes, it was the Wild West. Decisions had to be made more quickly than normal. And the level of due diligence had to be shortened," he said.

Necessarily so, say some experts, because of the fast-moving, highly volatile situation at the time.

"This was akin to a war footing here, given the severity of the event," said Vikas Mehrotra, a business professor at the University of Alberta.

Vikas Mehrotra, a finance professor at the University of Alberta, says the early days of the pandemic were 'akin to a war footing.' (Aaron Saltzman/CBC)

Mehrotra said the government had to act quickly because other countries would be chasing the same PPE supplies and there was concern the world would be cut off from PPE manufacturers, most of which are based in China.

"The purpose was to make sure that in case we get shut off from the global supply chain, we still have our own equipment to deal with the crisis," said Mehrotra.

In that sense, he said, the $6-billion government PPE procurement operation was an overwhelming success, regardless of who filled the orders.

About the Author

Aaron Saltzman

Senior Reporter, Consumer Affairs

Aaron Saltzman is CBC's Senior Business Reporter. Tips/Story ideas always welcome. aaron.saltzman@cbc.ca twitter.com/cbcsaltzman

With files from James Dunne and Laura Clementson

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