The government is suing a company that supplied it with personal protective equipment (PPE) for £122m plus costs.
PPE Medpro won contracts through the so-called VIP lane in 2020, after being recommended by Tory peer Baroness Mone.
The government is attempting to get its money back on one of the deals in the High Court, claiming the medical gowns supplied "did not comply with the specification in the contract".
PPE Medpro said it would "rigorously" defend the claim.
The company accused the government of a "cynical attempt" to recover money from suppliers who had acted in good faith and to contract specifications.
The government says along with the £122m contract, it has so far spent £6.9m on storage costs for the kit and each week it costs over £61,000 to store the gowns. It estimates the cost to dispose the gowns would be £4.7m.
According to legal documents seen by the BBC, the government claims the "the gowns did not comply with the specification in the contract" and could not be used in the NHS. It also accuses PPE Medpro of a "breach of contract and unjust enrichment".
A Department of Health and Social Care (DHSC) spokesperson said: "We can confirm that we have commenced legal proceedings in the High Court against PPE Medpro Limited for breach of contract regarding gowns delivered under a contract dated 26 June 2020.
"We do not comment on matters that are the subject of ongoing legal proceedings."
Labour's deputy leader Angela Rayner said: "After nearly a year of hiding behind a mediation process with a company linked to one of their own peers, Conservative ministers have finally been shamed into action to recover taxpayers' money after damning revelations, public outcry and Labour pressure.
"Time will now tell if the shoddy contracts they drew up are sufficiently robust to retrieve the public money they carelessly handed over."
The government has previously described the PPE Medpro medical gowns deal as an "underperforming" contract.
In a statement, the company said it was clear by the end of 2020 that the government had "vastly over-ordered" PPE and would never be able to use it all.
It said consultants had been brought in to "pick over all the contracts" on "technicalities".
"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 company said.
"The case will also show the utter incompetence of DHSC to correctly procure and specify PPE during the emergency procurement period."
The company said while it was examining the allegations made by the government it refuted all of them and said its case would "seek to dismantle" them and "make uncomfortable reading for both the government and DHSC".
The government revealed last year that Baroness Mone was the "source of referral" for PPE Medpro getting a place on the so-called VIP lane for PPE offers coming from ministers, officials or peers.
In other words, she recommended the company.
VIP lane offers were treated with greater urgency and were 10 times more likely to result in contracts than offers being made outside this route.
Baroness Mone contacted Lord Agnew, the Cabinet Office minister, about the firm and he directed the offer to the VIP lane.
She is taking a leave of absence from the House of Lords, meaning she will not sit as a Conservative peer. She says she wants to clear her name amid allegations she benefitted from the contracts.
In December 2020, lawyers for Baroness Mone said she "had no role or function in PPE Medpro, nor in the process by which contracts were awarded to PPE Medpro".
The House of Lords commissioner for standards has launched an investigation into her "alleged involvement in procuring contracts for PPE Medpro".
But the Commissioner's website says his investigation has been paused while the matter is investigated by the police or another agency as part of a criminal investigation.