Fifteen Canadian mask and respirator manufacturers are suing the federal government for $5.4 billion in damages, claiming that Ottawa broke its promises to buy their products to fight the spread of COVID-19.
In a statement of claim filed in Federal Court last week, the companies and their industry association, the Canadian Association of PPE Manufacturers (CAPPEM), allege the governent made “negligent misrepresentations” that prompted them to invest in personal protection equipment innovations, manufacturing and production.
The federal government will have an opportunity to file a defence to the unproven allegations as the court case proceeds.
The firms claim they lost $88.4 million in equipment and research and development investments made in connection with the federal program “Canada’s Plan to Mobilize Industry to Fight COVID-19,” launched in March 2020.
The $11.5 billion the federal government spent on medical supplies mostly went to importers, CAPPEM spokesman Barry Hunt told Global News.
Hunt, who is also CEO of the healthcare equipment manufacturer Prescientx, said that the government got into “the business of putting Canadian SMEs out of business” as it distributed these supplies to the provinces and territories, often for free.
Hunt estimates that Prescientx and its partners bought $10 million in equipment for one of the federal government’s innovation challenges.
The group created what Hunt called the world’s first plant-based medical mask as they and other Canadian businesses responded to Prime Minister Justin Trudeau’s March 2020 request for help manufacturing supplies.
That equipment is now gathering dust.
“You can’t compete with free,” Hunt said.
The federal government received more than 6,000 responses to Trudeau’s announcement, according to information that Innovation, Science and Economic Development Canada (ISED) posted online.
ISED, a sprawling federal department led at the time by former minister and Liberal MP Navdeep Bains, coordinated the program. Other federal organizations in the minister’s portfolio joined the effort, including the National Research Council of Canada, the Natural Sciences and Engineering Research Council, and six regional development agencies.
Hundreds of federal employees set up innovation challenges and grant programs that supported projects searching for new ways to detect and treat COVID-19.
According to the statement of claim, the government had a duty of care to the small- and medium-size businesses that retooled to make protective equipment for Canadians.
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“This promise came from the very top of our Canadian government and was supported and propagated through all the departments that dealt with the plaintiffs,” the statement of claim says.
According to the statement of claim, government representatives told CAPPEM and its members that federal ministries were investing for the long term.
Federal officials promised the group in June 2021 that a 10-year contract that would “rebalance the inequity of the Government of Canada contracting for PPE with foreign and multinational companies,” according to the statement of claim.
Last September a federal official again indicated the government would support the Canadian companies when the government replenished the National Emergency Strategic Stockpile of protective items, the claim says.
However, another official would later tell the companies the government would “not be procuring masks and respirators” from them for the strategic stockpile, the claim continues.
The government “instead supported foreign competition,” while denying the Canadian companies “fair and equitable access” to the Ontario and Quebec markets as well as the Canadian hospital market.
The claim also contends the government, through guidance provided by the Public Health Agency of Canada, “inappropriately misdirected” Canadians away from buying and using N95 respirators and medical masks in favour of “making, buying and wearing cloth masks.”
Ian McLeod, a spokesman for the Department of Justice, said federal lawyers are reviewing the statement claim in detail to determine next steps.
With files from The Canadian Press
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