COVID mask suppliers sue feds for $5.4 billion over 'misleading' promise to purchase equipment

According to the Canadian Association of PPE Manufacturers, the feds are guilty of 'negligent misrepresentation.' Ottawa promised to 'rebalance the inequity of … contracting with foreign and multinational companies,' but that never panned out. Now, they face a $5.4 billion lawsuit.

  • By Alex Dhaliwal
  • February 16, 2024
  • News
COVID mask suppliers sue feds for $5.4 billion over 'misleading' promise to purchase equipment
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Ottawa is being sued a whopping $5.4 billion for ‘misleading’ suppliers on a promise to purchase equipment during the COVID pandemic.

According to the Canadian Association of PPE Manufacturers (CAPPEM), the federal government is guilty of “negligent misrepresentation.” 

CAPPEM President Barry Hunt told The National Post his members “feel shafted” by the unrealized federal contracts for personal protective equipment (PPE).

It cost 15 small to medium-sized businesses billions in foregone revenue and failed investments, reads a statement of claim obtained by the publication. 

The plaintiffs include the Big-Nano Corporation, Canada Masq Corporation, Canada Strong Masks, Layfield Canada Ltd., International PPE Supply Inc., Novo Textile Company Ltd., Orthopaedic Innovation Centre Inc., Penn Protective Equipment Inc., Padm Medical Inc., IPC Technologies Inc., Swenco Limited, Trebor Rx Corp., Roswell Textiles Inc., Roswell Downhole Technologies Inc., and Precision ADM Inc.

They attribute Canada's misrepresentations to $88 million in lost investment and a further $5.4 billion in projected failed marketing opportunities over the coming decade.

In response to the lawsuit, Department of Justice spokesperson Ian McLeod said government lawyers are determining next steps. They have yet to file a response. 

In its lawsuit, CAPPEM said its members were “enticed” to invest millions into the production of PPE, courtesy of their ‘special relationship’ with Ottawa in the early days of the pandemic. It centred on their pledge to support companies that “pivoted and retooled” their businesses to manufacture masks, ventilators and filtration materials through Canada’s Plan to Mobilize Industry. 

“Canadian companies are answering the call to provide critical support to our health care workers,” said Prime Minister Justin Trudeau in a March 2020 statement. “As the situation continues to evolve, the Government of Canada will be there to work with Canadian industry.”

Hunt said CAPPEM received word in June 2021 of a 10-year contract with Ottawa to make up for PPE purchases from the U.S. giant 3M and Québec firm AMD Medicom. But that never panned out for CAPPEM members, as the feds "did not contract" with the Canadian companies, alleges the claim.

During that time, the industry association said it received several assurances, including a government motion to “rebalance the inequity of … contracting for PPE with foreign and multinational companies.” 

And for the first few months of the pandemic, the federal government admitted to being woefully short on medical supplies, reported Rebel News.

Yet internal government records indicate that Health Canada closed three warehouses in 2019 to save $900,000 in leasing costs despite having a $675 million budget to maintain warehouses. 

They discarded 5.4 million high-grade N95 masks, 2.4 million surgical masks, and more than a million medical gloves and 3,010 surgical gowns as a result of the closures.

After Canada declared the COVID pandemic on March 11, 2020, the agency acknowledged its mistake. “We are facing a real crunch today,” said a March 20 staff email.

“We have received urgent requests for personal protective equipment, primarily N95s,” wrote staff. “The requests, particularly for N95s, far exceed our stockpile. The team is working on trying to triage, and we have modest stock coming in, but too late.”

Following the shocking discovery, Hunt beseeched his members had developed “the best products” in accordance with the “best standards.” 

“CA-N95 masks are hands down the best masks in the world,” he noted.

Public health managers have yet to explain why they failed to maintain stockpiles of medical supplies despite knowing their essential nature.

In a similar vein, the claim said a federal official indicated last September the government would support their members when PPE procurement took place to replenish their strategic stockpile.

“The stockpile is insurance,” said one briefing note. “Personal protective equipment is vital to the safety of front line health care workers across Canada,” read another.

However, another official later told the companies they would "not be procuring masks and respirators" from them, alleges the claim.

By late 2022, CAPPEM realized the promise to purchase PPE would not materialize. That December they received word from the director general of Canada’s National Emergency Strategic Stockpile that the government’s offer was no longer tender.

“The fact is that despite … the Government of Canada’s representation to support the domestic industry for the long-term, the Government of Canada refused to support Canadian SME manufacturers … and instead supported foreign competition against Canadian SME manufacturers,” reads the lawsuit.

In addition, the Department of Public Works acknowledged the federal government spent $720 million to rush order 40,456 ventilators they mostly never used, reported Blacklock's Reporter.

Of the tens of thousands of ventilators purchased, only 500 were used, learned the Commons government operations committee. Then-Public Works Minister Anita Anand said the feds received no refunds for the faulty ventilators.

"We're looking at 25,000 that are useless," testified Conservative MP Pierre Paul-Hu.

Canada Health & Medical news No More Masks COVID-19
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