FEMA Awarded A $55,000,000 No-Bid Contract For N95 Masks To A Bankrupt Company With No Employees And No History Of Ever Manufacturing Or Procuring Medical Equipment

FEMA gave a $55,000,000 no-bid contract to a bankrupt company with no employees for N95 masks – which they don't make or have – at 7x the cost others charge.https://t.co/59IXV4c1y3

— Jesse Lehrich (@JesseLehrich) April 16, 2020

Dear FEMA: I also have a non-existent company that is not recognized in Virginia (or anywhere else) with no employees and no expertise in the given field. While I would appreciate a gift of $55 million, my partner and I are willing to accept $30 million. I hope to hear from you soon. Thank you for your consideration.

Isaac Stanley-Becker, Desmond Butler and Nick Miroff, Washington Post, April 15, 2020:

The Trump administration has awarded bulk contracts to third-party vendors in recent weeks in a scramble to obtain N95 respirator masks, and the government has paid the companies more than $5 per unit, nearly eight times what it would have spent in January and February when U.S. intelligence agencies warned of a looming global pandemic, procurement records show. ...

Administration officials leaped into the fray late, then embarked on a voracious spending spree. Though U.S. federal agencies made a small number of relatively modest purchases before the second half of March, the government has ordered more than $600 million worth of masks since then.

The Federal Emergency Management Agency awarded a $55 million contract for N95s this month to Panthera Worldwide LLC ... One of its owners said last year that Panthera's parent company had not had any employees since May 2018, according to sworn testimony.

It also has no history of manufacturing or procuring medical equipment, according to a review of records produced as a result of legal disputes involving the company and its affiliates.

Panthera Worldwide's parent company filed for bankruptcy last fall, and the LLC is no longer recognized in Virginia — where it has its main office — following nonpayment of fees, which according to Virginia code results in "the existence of a limited liability company" being "automatically canceled." ...

According to its website, Panthera offers "elite training and mission support" for the U.S. military and other agencies. But in 2018, it entered into a 42-year lease handing over its principal asset — a 750-acre training facility in West Virginia — to a separate company that now operates the site. The facility features a mock village for training exercises in anti-terrorism and tactical operations.

"They don't have masks. They're not in that line of business," said Robert Starer, a Virginia businessman who leased the training center from Panthera's owners. "Is it possible that they have a relationship with someone in the world who could provide those masks? Who knows." ...

The FEMA contract with Panthera, which was awarded without competitive bidding, has a start date of April 1, according to a summary. Lizzie Litzow, a FEMA spokeswoman, said the Panthera contract is for 10 million masks, adding, "Panthera is not a manufacturer, they are a distributor of N95 masks."

The price that FEMA is paying Panthera per mask, about $5.50, is significantly higher than what the government pays companies such as 3M, which charges as little as 63 cents per N95 mask, with an average cost of about $1.50 for more advanced models, according to a price index. ...

Beyond the premium the federal government is paying to Panthera, the decision to award a contract to an insolvent organization with no apparent expertise in the given field struck experts as unusual.

"Something is amiss there," said Chuck Hagel, a former defense secretary and Republican senator from Nebraska. "This is not how the government procures training or any type of supplies. You just wouldn't do business with somebody like that."

In its bankruptcy filing, Panthera Enterprises estimated that it had as many as 99 creditors and said its liabilities could be as high as $50 million. ...

Purchasing records show the Trump administration has placed at least $628 million worth of orders for masks in recent weeks. HHS has placed more than $400 million in mask orders, and the Department of Veterans Affairs has placed orders worth about $82 million.

One of the biggest buyers is FEMA, which has transformed itself into the supply chain manager for the White House coronavirus task force. The agency proposed a deal in recent weeks to obtain an additional 114 million N95 masks from Nutratrade Australia, whose website says it specializes in bulk shipments of grains, dairy products and other foodstuffs. The FEMA proposal was for $591 million worth of N95 masks, at an average cost of $5.19 per mask, according to documents obtained by The Washington Post. ...

FEMA is importing most of the medical supplies through a process the Trump administration calls "Project Airbridge," and uses chartered cargo flights to slash delivery times and steer shipments directly to hospitals.

The government pays the cost of the flights, but it hands over approximately half of the supplies to large private medical supply companies, which then distribute them to their clients, according to FEMA.

Critics of the arrangement say it amounts to a lavish giveaway to the private companies ...