$21 million lawsuit against Ottawa after failed negotiations

$21 million lawsuit against Ottawa after failed negotiations

TVA Nouvelles has learned that Quebec entrepreneurs in the biotech and life sciences industry filed a colossal lawsuit worth more than $21 million Canadian on Monday against Canada’s Attorney General.

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The owners of Cryopak and LaunchWorks accuse the federal government of having “breached its obligation of good faith” by withdrawing “abruptly from negotiations” aimed at the delivery of 10,000,000 test kits against COVID-19, at a time when Canada, particularly Quebec, was on its knees at the end of the first wave.

In the context of an interview held at a large Anjou facility set up in record time that was to be used for production, Cryopak President and CEO Maurice Barakat regretted Ottawa’s attitude on this dossier as it had consequences disastrous on the activities of family businesses. “From an industry perspective, we have been able to complete projects that normally take two years in three months. To date, we do not understand why the contract was cancelled. Suddenly, we received notification from the federal government that it was no longer a priority and that there would be no more discussions about the factory that we built, but also the effort that the national health agency, the National Council for Scientific Research and McGill to develop these solutions, which have been largely funded by the federal government,” says Mr. Barakat.

As early as the summer of 2020, the federal government, according to the facts presented in the lawsuit, encouraged Cryopak to move into the commercial production stage of these tests after numerous discussions. Ottawa had even recommended submitting a proposal for the masterbatch for 10,000,000 tests. “Given the extraordinary circumstances surrounding its response to the pandemic, the federal government has decided that it will negotiate a contract for the provision of these tests without going through a competitive bidding process,” the follow-up statement read.

“We are honored to respond to this request and help the country achieve its strategic goal of developing a COVID-19 test kit made in Canada,” recalls the businessman. The goal is to avoid problems in the supply chain in the future.

On August 25, 2020, Canadienzyme and Cryopak/LaunchWorks submitted their proposal to supply the Canadian government with 10,000,000 test kits at a unit price of $2.10, for a total of $21 million. Deliveries were to start on December 18, 2020 and end on March 18, 2021. During discussions, the federal government insisted that everything be produced and delivered urgently to help them in their fight against the pandemic.

To meet the terms of the negotiated agreement, LauchWorks quickly set up its Anjou facility and completed construction of a laboratory and production area. Technical personnel have been hired and agreements have been signed with McGill and BioVectra Inc. for protein production. LaunchWorks sourced and purchased all other ingredients needed to produce the masterbatch for 10,000,000 proofs.

At the beginning of January 2021, a big change of course. Public Services and Procurement Canada (PSPC) indicates, for the first time, that the unit price of the test kits was too high and abruptly withdrew from discussions related to the agreement. On January 14, the PSPC informed Cryopak/LaunchWorks that its decision was not based solely on the initial unit price or actions taken by Cryopak/LaunchWorks. «Compte tenu de son approvisionnement actual en produits, du taux d’utilisation des réactifs et des autres sources d’approvisionnement, SPAC ne pouvait plus justifier un contrat à un fournisseur unique parce que «l’urgence de répondre à ce besoin n’existait More.” PSPC has announced that it will launch a competitive bidding process for the purchase of future test kits. To date, the Government of Canada has not launched any bidding process for test kits.

For his part, Me Frédéric Gilbert de Fasken, who represents the plaintiffs in this case, indicates that it was the federal government itself that initiated the discussions. “Our client set out to develop tests. We are talking about a technology developed in Montreal with local know-how for PCR screening tests with total Canadian autonomy. In the end, unfortunately, there was an abrupt withdrawal from the federal government after significant investment from both taxpayers and Canadian businesses.

In response, Canada’s Attorney General today effectively received the declaration of claim for damages. He is reviewing the procedure and will give his answer within the legal deadlines.

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