Feds Spend Billions On COVID-19 Contracts, Often Without Fully Competitive Bidding
RACHEL MARTIN, HOST:
Think back to early spring. In March and April, doctors, nurses, hospitals all desperately needed masks. They needed face shields and other personal protective equipment - PPE. The U.S. government went to the market to get the medical gear, signing contracts worth $25 billion with hundreds and hundreds of companies. But did those contracts go to the companies with the best chance of delivering? NPR has looked into many of those contracts, and we are joined now by Cheryl W. Thompson of NPR's investigations team to talk about what she found out. Good morning, Cheryl.
CHERYL W THOMPSON, BYLINE: Good morning, Rachel.
MARTIN: OK. So, Cheryl, what contracts did you look at, and what were some of the key findings?
THOMPSON: We looked at a particular portion of all those contracts, ones where the government didn't require companies to go through a full competitive bidding process. More than 250 companies got contracts worth more than a million dollars - fit into that category. And my colleagues Joel Rose and Robert Benincasa and I reviewed those and then reached out to many of the companies listed to learn more. And one of the key findings is that many of these companies had almost no experience either manufacturing or delivering PPE, the personal protective equipment. It just wasn't their typical line of work.
MARTIN: OK. So no experience, and even so, they got multimillion-dollar contracts.
THOMPSON: Absolutely, they did. Some contractors had never worked in the medical field. One company was a school security consultant; another was a liquor importer. And that last one was a California contractor who imported vodka. That company got a $48 million contract from FEMA to supply KN95 respirator masks. I'm still waiting on an answer from the agency on what he has produced so far. But we also found many companies played the role of middlemen. They didn't make what the government needed, so they had to go find it, and it was often in China. And we also found that at least three companies formed just days before they got the contracts.
MARTIN: So why? I mean, aren't there rules in contracting that would require the government to pick companies with reliable track records?
THOMPSON: There are rules for contracting, for sure. And FEMA and other agencies do say they have a rigorous vetting process, and they look into companies with prior government contracting experience and other factors. But there's also a theory that, in a crisis, you just do what you have to do. Juliette Kayyem is a former official at the Department of Homeland Security, and she explains it this way.
JULIETTE KAYYEM: The theory is you go big or stay home. You just do a lot. Some of it may be mistakes; some of it may not. And then - but, you know, if it can solve the problem, no one's going to be mad at you.
THOMPSON: That's the theory, Rachel, but there's a price to pay - whether the government ends up paying too much or whether companies can't deliver.
MARTIN: And could you tell, Cheryl, whether companies were able to deliver, even given the lack of experience?
THOMPSON: Well, some did, some didn't. Or they couldn't deliver on time and needed an extension. And remember, Rachel, that this is - was at a time when it was urgent to get the equipment fast. So one example of someone who did deliver is Concourse Federal Group. That company got a $2 million contract with the VA to deliver things like masks and hand sanitizer. Geoff Perkins is the co-founder and president of that company.
GEOFF PERKINS: They're in crisis mode. We quickly moved into crisis mode to try to help them the best we could. Obviously, starting into a new business line, there's always a concern. Whether you're in a crisis like this or just normal, there's always unknowns - so, you know, is the PPE really going to get delivered on time, where we need it to be, of the right quality, of the right origin, etc.
THOMPSON: Perkins says, Rachel, that he only charged 5% above cost, but he delivered.
MARTIN: Right. So he did, but others didn't. What's the story with them?
THOMPSON: That's right. Others didn't, or either they were late. A number of companies we looked into had to request extensions. For example, I spoke to the owner of a three-person company in suburban Dallas who has two contracts worth up to $20 million to supply face shields. He had to bring in subcontractors to do the job, and he got FEMA to extend his delivery deadline. So the risk is that while a few companies without any prior experience can deliver, there are many, many more who won't.
MARTIN: Cheryl W. Thompson from NPR's investigations team. Thank you so much, Cheryl, we appreciate it.
THOMPSON: Thanks, Rachel. Transcript provided by NPR, Copyright NPR.