TVA Nouvelles has learned that Quebec entrepreneurs in the biotechnology and health sciences industries filed a colossal lawsuit valued at more than CA$21 million against the Attorney General of Canada on Monday.
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The owners of Cryopak and LaunchWorks accuse the federal government of “breaching its duty of good faith” by “abruptly withdrawing from negotiations” aimed at shipping 10,000,000 test kits for COVID-19 at the time , where Canada, particularly Quebec, was on its knees at the end of the first wave.
During an interview conducted at large, record-time facilities in Anjou that would be used for production, Cryopak President and Chief Executive Officer Maurice Barakat deplored Ottawa’s stance on this filing because of the disastrous consequences learned about the activities of family businesses. “From an industry perspective, we have been able to complete projects that typically take two years in three months. To this day we do not understand why the contract was terminated. Suddenly we received a message from the federal government that this was no longer a priority and that there would be no more discussions about the factory we were building, but also about the efforts of the National Board of Health, the National Council for Scientific Research and McGill to find these solutions to develop, which were largely funded by the federal government,” emphasizes Mr. Barakat.
According to the facts set out in the lawsuit, the German government had already encouraged Cryopak in the summer of 2020, after numerous discussions, to move on to the commercial production phase of these tests. Ottawa had even recommended submitting a masterbatch proposal for 10,000,000 tests. “Given the exceptional circumstances surrounding its response to the pandemic, the federal government has decided to negotiate a contract to provide these tests without going through a competitive bidding process,” the statement said.
“We are honored to respond to this request and to help the country achieve its strategic goal of developing a ‘Made in Canada’ COVID-19 test kit,” recalls the entrepreneur. The aim is to avoid supply chain problems in the future.
On August 25, 2020, Canadienzyme and Cryopak/LaunchWorks submitted their proposal to supply the Government of Canada with 10,000,000 test kits at a price of $2.10 each for a total of $21 million. Deliveries were scheduled to begin on December 18, 2020 and end on March 18, 2021. The federal government has insisted in talks that everything is being produced and delivered urgently to help them fight the pandemic.
To meet the terms of the negotiated agreement, LauchWorks quickly established its facility in Anjou and completed construction of a laboratory and manufacturing area. Technical staff was hired and agreements were signed with McGill and BioVectra Inc. for protein production. LeekWorks sourced and purchased all other ingredients needed to produce the masterbatch for 10,000,000 tests.
A major course change in early January 2021. Public Services and Procurement Canada (PSPC) was the first to point out that the unit price of the test kits was too high and abruptly pulled out of negotiations for the agreement. On January 14, PSPC informed Cryopak/LaunchWorks that its decision was not based solely on the original unit price and not the actions taken by Cryopak/LaunchWorks. “Given current product supply, reagent utilization rate and other sources of supply, PSPC could no longer justify an exclusive supply agreement because “the urgency to meet this need was no longer felt.” PSPC has announced that it will conduct a competitive bidding process to purchase test kits for the future will start. To date, the Canadian government has not launched a tender process for test kits.
Me Frédéric Gilbert de Fasken, who represents the complainants in this case, points out that the federal government initiated the talks itself. “Our customer wanted to develop tests. We are talking about a technology developed in Montreal with local know-how for PCR screening tests with full Canadian autonomy. In the end, unfortunately, there was an abrupt withdrawal from the federal government after large investments from both Canadian taxpayers and corporations.
In response, the action for damages was effectively served on the Attorney General of Canada today. He is examining the procedure and will submit his answer within the legal deadlines.