Fear of competition from the U.S., the Prime Minister’s Office approved a breach in contracting rules by wiring millions in advance cash payments to pandemic suppliers in China, according to internal e-mails..Blacklock’s Reporter reported staff said payments were rushed to contractors because “the Americans are moving faster than us.”.Most federal supplies for masks, medical gowns and other personal protective equipment was ordered from factories in China and staff said contractors were paid up front, in an April 5, 2020 e-mail..“Throughout the weekend folks on the ground in China undertook major logistical changes to make sure orders are as secure as possible,” said the staff e-mail by Sabrina Kim, then-advisor to the prime minister. “Embassy and consulate (are) completely engaged.”.“We are losing deals because the Americans are moving faster than us so we are moving as quickly as possible to wire transfer $ now,” wrote Kim. “If we need to use the military on logistics and deliveries in Canada so things can get where they need to go faster then we can do that.”.Auditors identified more than $600 million in cash advances to COVID-19 contractors. The Treasury Board forbids advance payments without careful review. A 2019 Guide To Advance Payments states cash transfers must be issued “only in exceptional circumstances” where “no other reasonable payment alternative exists.”. PMO breaches rules because it feared US rivalry .“Before agreeing to an advance payment, departments should explore other possibilities,” said the Guide. “For example, they could seek out other suppliers that will accept payment after they have delivered the goods.”.Advance payments were only to be made after a department could “assess the risks associated with paying for the goods and services before it has received them” and “consider the financing and interest costs to the Crown,” said the Treasury Board..Auditor General Karen Hogan in a May 27 audit, Securing Personal Protective Equipment And Medical Devices, said guidelines were breached. “I do not have a dollar figure where contracts were awarded with prepayment and goods not received,” Hogan told reporters..“Advance payments were made in 36% of the contracts we examined,” wrote auditors. “These contracts are considered riskier since the government might pay for goods it does not receive. We found the value of the advanced payments made in the contracts we examined ranged from 20 to 80% of the original value.”.In one case a Québec supplier, Tango Communications Marketing Inc. of Montréal, received $81 million in cash to ship 37 million masks from China. The deliveries were late and shoddy, according to Ontario Superior Court records. Federal lawyers are currently suing to recover the payment..In a separate case, an Ottawa contractor, Spartan Bioscience Inc., received $16.4 million up front to deliver COVID-19 test kits that later failed clinical trials. The Commons government operations committee was told last April 14 that no useful kits were ever delivered..Spartan Bioscience is currently in bankruptcy court.
