A $139-million project to fight HIV-AIDS, launched by Prime Minister Stephen Harper in a glitzy photo-op with Microsoft's Bill Gates, began to flounder within months, says an internal report.

Red tape and turf wars choked off the flow of money, and a vaunted plan to build a vaccine plant in Canada was effectively sidelined within a year, suggests the newly released analysis.

"Very significant delays … have put into question the extent to which the initiative can achieve the expected results within the remaining time frame," says the report, completed last August for the Public Health Agency of Canada.

The $62,000 study, commissioned from Goss Gilroy Inc. consultants, examined the effectiveness of the Canadian HIV Vaccine Initiative, created with great fanfare four years ago.

A copy of the document was obtained by The Canadian Press under the Access to Information Act, after a five-month delay.

Made headlines in 2007

The prime minister won headlines across Canada when he announced the project on Feb. 20, 2007, a smiling Gates at his side.

"Through today's initiative, Canada, in partnership with the Gates Foundation, will provide the resources needed to help realize an HIV-AIDS vaccine, which could one day spare millions of people from this horrific disease," Harper said.

The Bill and Melinda Gates Foundation pledged $28 million to the five-year project to pay for its keystone: a pilot manufacturing facility for trial batches of HIV vaccine.

The federal government pledged $85 million in new money, plus $26 million re-allocated from another HIV-AIDS program, for a $111-million commitment. Of that total, $60 million was earmarked for the manufacturing facility.

But the Goss Gilroy report says the grand plans quickly became entangled in a cat's cradle of red tape. Among the many problems:

There was "little evidence of collaboration" among the five federal departments and agencies running the project.

It took eight months to move the re-allocated $26 million from one HIV program at the Public Health Agency of Canada to another.

Money drawn from the Canadian International Development Agency was caught in interdepartmental limbo, helping to delay a grant program by more than two years.

A secretariat created to oversee the project was soon "over-staffed" with bureaucrats, according to observers, but lacked anyone with technical expertise in HIV vaccines.

By March 2009 — two years into the project — only $2 million of a planned $16-million annual budget had been spent. And a year later, just $5 million of a $34-million budget had been spent.

Facility to produce HIV vaccine shelved

The most high-profile failure was a decision not to proceed with the pilot facility to produce HIV vaccine in Canada.

The Goss Gilroy report suggests stakeholder support for the facility seriously eroded in September 2007 when an international trial of a promising HIV vaccine was cancelled. The plug was pulled on the so-called STEP trial, with some 3,000 participants, when the vaccine was found to be ineffective.

Program officials and others told Goss Gilroy that the unexpected cancellation immediately raised red flags about the proposed Canadian facility — but few had the appetite to question it so soon after Harper's photo-op.

"Given the high-profile announcement ... with the particular focus on the pilot scale manufacturing component and the Bill and Melinda Gates Foundation's support for it, it did not seem appropriate to open the question of the rationale for this component at that time," says the report.

"The majority of respondents felt that the need for this facility should have been reassessed after the failure of a promising HIV vaccine candidate in the fall of 2007."

'Time, effort and money wasted'

Meanwhile, four groups applied in mid-2008 to establish the pilot facility — only to be told on Jan. 22 last year that none of them had made the grade. Weeks later, Ottawa announced it was cancelling plans for any such facility.

"A great deal of time, effort and money were wasted on a giant photo-op for the prime minister," says Terry Duguid, who headed a Winnipeg-based consortium that spent $750,000 applying to operate the pilot facility. "It was just incompetence of the highest order."

Duguid now is campaigning as the Liberal candidate in Winnipeg South, a Tory riding in the last Parliament.

The House of Commons health committee held hearings on the cancellation in April last year, where another applicant was critical of the process.

"There was a fairly frequent shifting of timelines and delays for reasons that were not explained clearly," testified Ted Hewitt, vice-president of research at the University of Western Ontario in London.

Hewitt declined to comment on the Goss Gilroy report, the findings of which were not available to the health committee.

The committee reported last fall that witnesses questioned why the government did not review the need for a vaccine facility sometime before April 2008, when it issued the formal invitation for applications, given the collapse of the STEP trials.

"I think Canada's reputation has taken a big hit," said Duguid.

Initiative extended 4 years

Last July, Health Minister Leona Aglukkaq extended the initiative by four years, to March 2017, in recognition of the lengthy delays, though with no additional funding.

About half the money saved from cancelling the vaccine facility will go to a program to reduce the transmission of HIV from mothers to their children in developing countries.

The "over-staffed" secretariat is also being dismantled, replaced with a co-ordinating office expected to be set up this spring, said Charlene Wiles of the Public Health Agency of Canada, noting the Goss Gilroy report's other findings have also been dealt with.

"All of the recommendations of the report have been addressed," she said.

A spokeswoman for Harper called Canada a world leader in combating HIV.

"We are always looking for ways to improve initiatives, which is why we've recently created a new co-ordinating office that addressed earlier concerns of project implementation," Nina Chiarelli said in an email.

About 2,500 new cases of HIV are confirmed each year in Canada, and about 58,000 Canadians are living with HIV/AIDS.