MPs investigate use of national security exceptions in federal procurement

A group of MPs is trying to get to the bottom of how and why the government invokes national security exceptions on so many of its federal contracts.

The study comes after CBC News reported on how Shared Services Canada has blanket authority to invoke such exceptions on all of its information technology contracts.

A national security exception means buyers are exempt from trade rules requiring all bidders to be treated equally. It may also mean equipment must be made in specific countries and data must be stored or processed within Canada.

Many companies have complained the government wrongly and routinely applies the measure on high-value contracts for everything from parkas and binoculars to email services and a supercomputer. 

• Tribunal won't halt inquiry into supercomputer contract
• Trade tribunal looking into weather supercomputer contract
• Suppliers for Syrian refugee welcome kits kept secret

The House of Commons government operations committee on Thursday called on top procurement executives from Shared Services, Public Works, the RCMP and Canada's spy agency CSIS to answer questions.

Lisa Campbell, assistant deputy minister at Public Works, told MPs she has invoked national security exceptions 55 times over the last three fiscal years. NDP MP Erin Weir asked how often her department turns down requests for such measures.

"At my level, I have not turned down one, but there are instances, a couple of cases, where I have questioned whether it should have been applied," Campbell replied.

We invoke [national security exception] on every transaction so there is no discretion applied.- Karen Robertson, assistant director of finance and administration, CSIS

She went on to say that some of those instances were blanket invocations, which covered many purchases in a particular project, such as the arrival of Syrian refugees in 2015. There, the government purchased parkas.

"Is it fair to say something like jackets for refugees isn't really about security, it was more using the exception because the procurement needed to be done quickly?" Weir asked.

Campbell replied that scheduling alone would not be enough to justify a security exception.

"Really the focus for national security purposes is economic security, environmental security, human security, sovereignty, national defence and military threat as well as the protection of intelligence," she said, while not explicitly explaining how winter coats were subject to a national security exception.

'Omnibus' national security exception

Shared Services' head of procurement said the agency only invoked the security exceptions twice last year, but conceded those covered more than 720 contracts.

"Our invocation was an omnibus invocation, but it is one that we are in constant dialogue with our security partners to do that threat assessment," said Pat Breton.

Shared Services is currently defending its procurement practices at the Canadian International Trade Tribunal, where Hewlett-Packard Canada alleges that it was wrong to invoke the exception in its $430-million contract for the lease, upkeep and upgrade of a weather-forecasting supercomputer for Environment Canada.

"The national security exception is a very important tool for SSC in order to do supply chain integrity and some of the other aspects that are required to ensure our national security from an IT infrastructure perspective," Breton told MPs. 

Liberal MP Nick Whalen had questions for the RCMP about its use of national security exceptions.

Last year, the trade tribunal ruled the Department of Public Works had wrongly invoked a national security exception in the purchase of night-vision binoculars for the Mounties.

"It would seem to me that the type of equipment police officers use would be immediately known as soon as the police officers have the material. So I don't see how that would be a justification in your particular instance," Whalen said to the RCMP's acting chief financial officer.

Yet Dennis Watters said the Mounties occasionally need that kind of discretion. 

"Body armour. Sometimes you don't want everybody to know what it's made out of, what the components are in order not to let the other people — to give them the advantage," Watters replied.

Canada's spy agency CSIS had little to add to the discussion.

"We invoke NSE on every transaction so there is no discretion applied," said Karen Robertson, the agency's assistant director of finance and administration. 

The committee said it will take a closer look at 55 public works contracts subject to national security exceptions.