A firm at the centre of a major row over a Covid PPE deal is being sued by the government for more than £122million.
The Department for Health and Social Care has issued breach of contract proceedings against PPE Medpro over a 2020 deal to supply sterile gowns.
The firm said the case will be "rigorously defended" and accused the government of a "cynical attempt to recover money from suppliers" who acted in good faith.
A statement issued by the firm said: "PPE Medpro will demonstrate to the courts that we supplied our gowns to the correct specification, on time and at a highly competitive price.
"The case will also show the utter incompetence of DHSC to correctly procure and specify PPE during the emergency procurement period. This will be the real legacy of the court case and it will be played out in the public arena for all to see."
The company has been at the centre of a major row after it was recommended to ministers by the Tory peer Michelle Mone.
Bombshell reports - denied by Lady Mone - then suggested the peer may have profited from the firm winning contracts to supply equipment during the pandemic.
Baroness Mone has taken a leave of absence from the Lords "to clear her name of the allegations that have been unjustly levelled", and therefore no longer has the Tory whip.
Rishi Sunak told MPs after she stepped back: “Like everyone else I was absolutely shocked to read about the allegations. It’s absolutely right that she is no longer attending the House of Lords."
But Keir Starmer asked in the Commons how she could "end up with nearly £30million of taxpayers’ money in her bank account", adding: “A Tory politician got their hands on hundreds of millions of pounds of taxpayers’ money and then provided duff PPE.
“And he says he’s shocked? He was the Chancellor - he signed the cheques! How much is he going to get back?”
The legal dispute relates to the £122million cost of one of the two contracts, plus the cost of storing and disposing of the gowns. PPE Medpro also won a second contract for £80.85million.
In a defiant statement, PPE Medpro claimed the department was fighting over "contract technicalities" such as whether gowns were single or double-bagged because it had "vastly over-ordered" protective equipment.
The firm said it had made "numerous attempts at mediation with DHSC" but "they didn't want to settle".
The PPE Medpro statement said: "Over a two month period, July through to end of August 2020, PPE Medpro supplied DHSC with 25 million sterile gowns.
"The gowns were manufactured to the correct quality, standards and specification set out in the contract, delivered on time and at a price that was 50% of what DHSC had been paying at the time."
But "by the end of 2020 it was clear that DHSC has vastly over ordered and held five years supply of PPE across the seven major categories including gowns" and because of limited lifespans for products "it was clear that the DHSC would never be able to use all the PPE they procured".
"Consultants were then brought in to pick over all the contracts and fight product not on quality but on contract technicalities that were never envisaged at the time of contract.
"For example, PPE Medpro's contract never specified double bagging of gowns. Yet it became clear in late 2020 that all the gown manufacturers who had correctly produced single bagged gowns were being unfairly challenged by DHSC.
"Despite numerous attempts at mediation with DHSC, it is clear they didn't want to settle.
"Too many gowns and other PPE items that will never enter the supply chain. That's why DHSC currently have 174 disputes with suppliers to a value of £4 billion. Most of this product will be incinerated or given away."
A DHSC spokesman said: "We can confirm we have commenced legal proceedings in the High Court against PPE Medpro Limited for breach of contract regarding gowns delivered under a contract dated June 26, 2020.
"We do not comment on matters that are the subject of ongoing legal proceedings."
