WASHINGTON – U.S. Senators Ben Cardin and Chris Van Hollen (D-Md.) joined all members of the Senate Democratic Caucus in raising serious concerns about the Trump Administration’s reliance on private companies to distribute desperately needed medical supplies during the Coronavirus pandemic. Although the President has declared a national emergency and mobilized the Federal Emergency Management Agency (FEMA) to help distribute supplies, FEMA is currently relying on private companies to distribute masks, N95 respirators, gowns, gloves and other critical supplies to states, without clear guidance from the federal government on which areas or facilities should be prioritized. This practice raises serious questions about the use of taxpayer dollars, the government authorities delegated to private companies, and if their involvement could result in supplies not being delivered to the areas that need it most.
“While we agree that the existing supply chains and unique capabilities of the commercial market should be used to the greatest extent practicable, the process the task force has decided to use is, at best, opaque and inefficient,” the Senators wrote. “We are concerned that the federal government is using taxpayer dollars to bring supplies to the United States, just to have six private distributors step in and sell those very supplies to desperate states, tribes and health care systems for a profit. In the private market, states, tribes, federal agencies, hospitals, and other entities must all compete for the same supplies, where resources are allocated according to existing commercial relationships or the highest bidder instead of greatest need.”
In a letter, the Senators expressed concern that, without sufficient oversight, the Administration’s strategy for distributing medical supplies is vulnerable to waste, fraud, and abuse. Currently, only half of the supplies procured by the federal government are distributed to areas considered to be “hotspots” by medical experts, with the other half left to commercial distributors to deliver wherever they choose. Earlier this month, the Department of Defense transferred more than 5 million desperately needed N95 respirators to FEMA, which then turned them over to private companies for distribution, rather than working with state emergency management offices to coordinate delivery to localities with the greatest need. The Senators raised concerns that private businesses’ commercial interests could lead to allocation according to the highest bidder, rather than on a basis of need.
The Senators requested detailed information on how private distributors are allocating medical supplies to Coronavirus hotspots through programs like “Project Airbridge,” and how the Administration is using its authorities under the Defense Production Act to guide distribution efforts. The Senators are also seeking information on the oversight efforts conducted by FEMA – including details on how the federal government is ensuring the delivery of supplies to communities with the greatest need and the Administration’s strategy to prevent favoritism or price gouging by private companies.
Text of the letter is copied below and available here:
April 10, 2020
The Honorable Michael R. Pence
Vice President of the United States
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500
Dear Mr. Vice President:
We write to you today about the Trump Administration’s decisions regarding the procurement and distribution of critical medical supplies – particularly the use of the commercial sector – to states, localities, and tribes in need. We fear that, absent sufficient oversight and direction, the arrangement the Administration is using to deliver personal protective equipment (PPE) such as masks, N95 respirators, hospital gowns, and gloves to communities in need leaves the federal government open to potential fraud and inefficiencies while Americans are combatting the Novel Coronavirus (COVID-19) pandemic. We urge you to clarify and adjust your policies on the acquisition and distribution of critical medical supplies to ensure that the American people receive clarity on the process and much-needed support as quickly and effectively as possible.
We are troubled by the lack of information that the Federal Emergency Management Agency (FEMA) and the Supply Chain Stabilization Task Force (Task Force) have provided regarding their reliance on the private sector to distribute medical supplies and PPE, including those transported from abroad as part of “Project Airbridge.” Although FEMA is paying to bring much-needed medical supplies into the United States, upon arrival, FEMA is allowing private distributors to deliver these items to hospitals, nursing homes, and health centers based on existing contractual relationships with minimal guidance on which areas or facilities should be prioritized based on need. Only half of the allocated supply is sent to areas considered to be hotspots, while the other half is given to distributors to fill existing orders in their “normal supply chain.”
In addition to PPE purchased or transported by FEMA, we recently learned that the Department of Defense handed over 5 million N95 respirators for distribution to states that are in desperate need of these supplies. Instead of working with state emergency management offices to help distribute to the localities that need them most, FEMA decided to give these Department of Defense-owned N95 respirators to a private company to distribute according to their own supply chains. The Administration’s delegation to the private sector will likely delay delivery and create serious ethical concerns.
While we agree that the existing supply chains and unique capabilities of the commercial market should be used to the greatest extent practicable, the process the task force has decided to use is, at best, opaque and inefficient. We are concerned that the federal government is using taxpayer dollars to bring supplies to the United States, just to have six private distributors step in and sell those very supplies to desperate states, tribes and health care systems for a profit. In the private market, states, tribes, federal agencies, hospitals, and other entities must all compete for the same supplies, where resources are allocated according to existing commercial relationships or the highest bidder instead of greatest need. We are concerned that this process is not directing critical materials to the jurisdictions that need them most, because the private distributors that FEMA has selected to deliver these materials may be inclined to instead take commercial considerations into account or simply not service all of the necessary localities in the country. The Administration should not be deferring to the private sector to make allocation and distribution decisions to respond to the COVID-19 crisis at the expense of the health and security of our citizens.
In this critical hour, FEMA should make organized, data-informed decisions about where, when, and in what quantities supplies should be delivered to states – not defer to the private sector to allow them to profit off this pandemic. We agree, in principle, that the private sector should be utilized to help deliver these materials to states, localities and tribes. However, allowing these distributors to determine the allocation of resources that the government has purchased or transported to the United States should not be permitted. To provide clarity and transparency on how the Administration is managing resources to respond to this crisis, we request that you answer these questions as soon as possible, but no later than April 17:
1. For the fifty percent of materials delivered to “hotspots,” how are private distributors allocating those medical supplies, such as those delivered to the United States through “Project Airbridge”?
- Please provide all current state, county, and tribal priority lists that the Administration has developed for PPE and medical supplies.
- How is a state, county, or tribe’s “need” for medical supplies determined?
- Please describe each factor involved in any analysis for need and their relative weight in the allocation decisions, potentially including but not limited to infection rates, hospitalization rates, fatality rates, currently available medical supplies, and requests made.
- How are the PPE needs of first responders and law enforcement being addressed in this analysis?
2. Why is the Administration giving supplies owned by the Department of Defense to private distributors to make decisions about where they go, instead of sending them directly to areas in need?
3. Please list the distributors that are receiving supplies from medical supply acquisition efforts by the Administration, including through “Project Airbridge.” Additionally, please provide copies of any Memoranda of Understanding or similar agreements that the Supply Chain Stabilization Task Force or FEMA has executed with commercial distributors on the delivery of PPE for COVID-19 response.
4. What oversight is FEMA conducting of medical supply distributions by the private sector?
- When the Administration permits distributors to sell acquired supplies in the commercial market, how does it ensure that these distributors are not marking up prices and that they are delivering the supplies to critical hotspots?
- How is FEMA ensuring that the commercial distributors selected are not prioritizing companies that they have existing or preferred business relationships with as opposed to those hospitals, nursing homes, or health care facilities with the greatest need?
- How is FEMA directing PPE to areas or localities of the country that are not serviced by the commercial distributors it has selected to use?
- How is FEMA ensuring that the distributors are not charging shipping costs for transport provided by FEMA from other countries to the United States?
5. How, if at all, is the Administration using the authorities granted by the Defense Production Act to direct private sector supply distribution efforts?
- Has FEMA requested that the Department of Defense (DOD) use appropriated Defense Production Act Title III funds, authority, or expertise to expand the industrial base which could supply government and private sector PPE and other medical equipment needs in the upcoming months? If not, why not?