PHAC lost $150 million on an unfulfilled contract, but won’t say why

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OTTAWA — The Public Health Agency of Canada is refusing to disclose any information on how it lost $150 million in taxpayers’ money for an unfulfilled contract with an undisclosed vendor last year.

Who was the contract with? What was it for? And why did it go unfulfilled, leading to a loss of $150 million? Those are all questions the Public Health Agency of Canada (PHAC) has repeatedly refused to answer.

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The government’s lack of transparency regarding any information of the contract is incomprehensible, according to three experts, including the current and a former Parliamentary Budget Officer.

“It is a large write off. It seems wrong that the PHAC refuses to answer your questions about how money has been spent or written off,” Kevin Page, former PBO and current president and CEO of the Institute of Fiscal Studies and Democracy, said in an email.

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Information about the loss is buried within the government’s 2022-2023 public accounts which were tabled on Oct. 24 and detail its financial operations during the previous fiscal year.

Deep within the roughly 1,000-page, three-volume document, buried in the “losses of public money due to an offence, illegal act of accident” section, is a line that details the staggering loss of public funds by PHAC.

The agency disclosed that an “unfulfilled contract by a vendor” led to a $150-million loss, none of which it ever expects to recover.

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On Oct. 24, the National Post contacted Health Canada with several questions about the loss, including who the vendor was, what the contract was for, when PHAC discovered the contract would never be fulfilled and why.

The following day, Health Canada spokesperson Anne Génier said it couldn’t share any details whatsoever.

“Due to a confidentiality agreement with the contractor, specific details of the contract, including the vendor name and financial information, cannot be disclosed,” she wrote.

This newspaper followed up with questions about details of the contract other than the vendor’s name, such as what the deal was for and why it fell through. It also questioned why confidentiality clauses would still apply if the contract was unfulfilled and if the government was doing anything to recover the $150 million.

Days later, another Health Canada spokesperson said that disclosing any information, even after the contract was terminated, could expose the government to lawsuits.

“Due to confidentiality agreements, specific details of the contract cannot be disclosed, even after it has been terminated. Disclosing further information about this contract could lead to legal consequences or be considered as a breach of contract,” Health Canada spokesperson Mark Johnson said in an email.

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University of Ottawa professor Geneviève Tellier said she was not surprised, but was quite concerned to learn that PHAC is refusing to disclose any information about the heavy loss.

“It’s not normal. It’s public money and so you have to be accountable,” Tellier said in an interview.

“I think that the government is not cautious about public money and gives too much to businesses who want confidentiality without considering the public good. Citizens are allowed to know what’s happening with their money, especially if the money is lost.”

Current Parliamentary Budget Officer Yves Giroux says the refusal to disclose any information at all about a $150 million loss is “highly unusual.”

“I would expect the department to be in a position to provide at least some details, if they can’t or won’t reveal the name of the company. I think they should explain the circumstances through which this happened. A loss for one contract of $150 million I think is clearly worth some explanation,” Giroux said in an interview.

Spending by PHAC exploded during the COVID-19 pandemic as the agency was charged with procuring unprecedented amounts of medical supplies, such as masks, ventilators and vaccines.

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The federal government spent over $11 billion from March 2020-2023 just on personal protective equipment (PPE), with roughly half of that on COVID-19 testing equipment alone, according to a Public Services and Procurement Canada compilation. That’s in addition to billions spent on COVID-19 vaccines.

In a 2021 report, Canada’s Auditor General noted that the government changed its procurement practices during the pandemic to be able to better make bulk purchases of PPE to deal with the pandemic. That’s a change it applauded though it noted it came with certain “risks.” Nowhere did the report mention that the information should remain confidential.

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