Trump and his top aides have played favorites in awarding coronavirus contracts and allocating scarce resources.
In early March, Mike Bowen, the executive vice president of the medical mask manufacturer Prestige Ameritech, found the perfect way to drum up some federal business: He went on Steve Bannon's podcast, which is highly popular at the White House.
"If the government wants to throw some money at it, we can hire more people and build more machines," Bowen said during an appearance on the "War Room" podcast co-hosted by Bannon, who was the chief executive officer of Donald Trump's presidential 2016 campaign. "We're kind of out there on our own, and we are doing everything that we can possibly do on our own."
A month later, at the explicit request of the White House, Prestige Ameritech had a $9.5 million contract with the Federal Emergency Management Agency. It then won another deal with the state of Texas and was given 50 National Guard members, deployed by Republican Gov. Greg Abbott, to work shifts at its suburban Fort Worth manufacturing facility.
Bannon told NBC News that his team connected Bowen to Peter Navarro, a top economic and trade adviser to Trump, who, like Bowen and much of Trump's political base, has long been upset about the movement of U.S. factories to Mexico and Asia.
Prestige Ameritech's deal with FEMA is one of only two that NBC News could find in the history of the federal contracting database that says explicitly that a White House ordered it up — "directed by the White House," according to the notes entered by a contracting officer.
"There's a big operation over there doing sourcing," Bannon said. "Navarro and all the guys listen to the show every day."
For the White House, the episode is a perfect example of how the president's coronavirus task force cut through red tape to reward a domestic manufacturer at a time when supplies are limited and the task of obtaining them from overseas is fraught with rapidly rising trade barriers and the risk of receiving substandard products.
But it also shows something else: how Trump and his top aides have played favorites in awarding contracts and allocating scarce resources.
Using the unilateral authority of the White House, Trump and his aides have consolidated power in a period of national crisis, picking winners and losers based in part on personal relationships, ideological affinity and partisan loyalty.
Ultimately, that favoritism has created a two-track system of haves and have-nots in what Trump calls the "war" against the coronavirus, a model revealed in dozens of interviews that NBC News conducted with federal, state and local officials, health industry professionals, emergency response veterans working on the crisis and current and former White House officials.
Put simply, the fight for survival among businesses related to the COVID-19 fight — and for a slice of the billions of dollars going out the door — is about political influence.
Most of the decisions are made by members of Vice President Mike Pence's coronavirus task force, which works closely with White House senior adviser Jared Kushner's innovation team and a series of sub-task forces that are primarily charged with acquiring and distributing scarce goods. Because there are so many genuinely needy entities and there's so little to give, those decisions are zero-sum trade-offs, just like the awarding of a limited supply of federal contracts to the many businesses vying to take a piece of the action.
There's growing evidence that Trump and his aides are using his authority over both the contracting and allocation processes for political gain. It's easy to chalk that up to partisanship, but the record suggests that while Trump favors GOP allies the most, he is more interested in bringing politicians and businesses into his fold than in following the straight axis of the Republican-Democratic divide.
Much of the flexibility in who gets supplies comes from a secretive "adjudication" process in which senior political appointees have the power to circumvent formulas designed to apportion test kits, ventilators, masks, gloves, gowns and other personal protective equipment based on evolving needs.
"There's a lot of politics involved," said a person familiar with the adjudications. "Senior leadership from [Capitol] Hill can call up and say 'ship 500 ventilators' and 500 ventilators go out."
At the same time, front-line responders in big cities and in some Democratic states, from Phoenix to Detroit to New York, are scrambling to put together homemade gear because they can't get government-issued equipment and the masks, gloves and gowns they're trying to buy on the private market are often being delayed or rerouted. Most of the sources experienced in various aspects of emergency management who spoke to NBC News say the politicization of the disaster response is unprecedented in modern history.
Here are a few examples:
*Key allies are rewarded: Sens. Cory Gardner, R-Colo., and Martha McSally, R-Ariz., two of their party's most politically vulnerable lawmakers, have been able to claim credit publicly for using their influence with Trump to secure ventilators for their states. Gov. Ron DeSantis, R-Fla., who presides over a state that is both Trump's official home and crucial to his re-election hopes, says the president has delivered everything he needs. Meanwhile, other big jurisdictions across the country say they are scrambling to find test kits and personal protective equipment.
*The politics work as reward and punishment: Kushner has praised the president for being "very, very hands-on" in determining where goods are shipped, and Trump said over the weekend that he might withhold federal support for the states of governors who don't accede to his request that they loosen stay-at-home restrictions.
*Those outside the circle are vulnerable: Last week, it took the intervention of a powerful Democratic House chairman to stop federal agents from seizing a shipment of personal protective equipment acquired privately by a Massachusetts hospital system. Frustrated state and municipal officials complain frequently — almost exclusively on the condition of anonymity to avoid hurting their prospects of getting future aid — about reports that expected shipments have been rerouted or seized by the federal government.
*Some hard-hit states are left scrambling for White House workarounds: Two Democratic governors, J.B. Pritzker of Illinois and Gavin Newsom of California, as well as Republican Gov. Larry Hogan of Maryland, have cut deals with foreign suppliers to go around the White House's system. Some state-level officials say they have concluded that the White House's moves to corner the market on medical supplies has made it impossible for them to acquire what they need.
Senior administration officials say the acquisition and allocation systems are free from political influence, even as Trump talks openly about the importance of deference to him in the process.
"It's outrageous that the media would ask or even speculate that the resources being delivered by the federal government to the states is somehow based on politics," Judd Deere, a White House spokesman, said in a statement emailed to NBC News. "This is about saving lives, and the Trump administration has been working with governors and their teams since January on COVID-19 coordination. Every level of government needs to deliver data-driven solutions and that is what President Trump is doing in partnership."
But a federal government veteran of national emergency response said the influence coming from 1600 Pennsylvania Ave. is unparalleled.
"I've never seen anything directed by the White House like this before," said the source, who insisted on anonymity out of fear of retribution.
'Very, very hands-on in this'
Even when Trump has delivered on requests from governors, senators and other politicians, the importance the president places on personal relationships — and the ways different officials play to that tendency — underscores the degree to which the allocation of goods isn't based purely on need.
Big and small decisions on allocating hard-to-get testing kits, protective equipment for emergency workers and lifesaving ventilators are often made based on the personal intervention of political heavyweights on the coronavirus task force — including Pence and Kushner — according to federal officials familiar with the process.
At one point in early April, Trump called Kushner, Kushner said at a White House briefing, and told him that friends were relaying concerns that public hospitals in New York didn't have enough protective gear. Kushner called the CEO of the city's public hospital group to confirm what was needed and then had the coronavirus task force's top supply-chain official ship a month's supply of masks.
"The president has been very, very hands-on in this," Kushner said at the time.
In late March, Pence, a former governor of Indiana, spoke to his successor, Republican Eric Holcomb, by phone, Holcomb said at a news conference later that day. Holcomb said he needed more tests for the state, where the federal government's focus on hotter spots like New York meant lab workers weren't able to get diagnostic equipment. The number of tests available to Indiana has expanded rapidly since then, and the state has loosened its restrictions to allow families of covered workers to get tested.
"I was able to share with him what our concerns were," Holcomb said at the news conference.
Last week, Trump suggested that he would use the threat of holding back support for states if governors don't abide by his request to open up their economies by relaxing stay-at-home rules.
"They need the federal government not only for funding — and I'm not saying take it away — but they need it for advice," he said. "They'll need, maybe, equipment that we have. We have a tremendous stockpile that we're in the process of completing. We're in a very good position."
From the perspective of the White House, Pence's task force and Kushner's innovation team, working with various sub-task forces, have acted as catalysts to get supplies to the recipients who really need them as quickly as possible. They have used their powers to subvert governors and other officials who are claiming they need more than they really do, according to a senior administration official who spoke on the condition of anonymity to discuss internal matters.
But critics at various levels of government describe a new system that is neither fair nor transparent — and one that has enabled Trump to consolidate power. At the state and local levels, the White House often creates new complications in the search for protective equipment.
First, the federal government has driven up prices on equipment and outbid state, county and city governments, as well as hospital systems, on the open market — a move that wasted the time of smaller bidders and increased costs for anything they could get.
Then, with scarce goods in hand, Pence's task force and Kushner's innovation team struck deals with U.S. suppliers and distributors that give the White House discretion to route and reroute goods at a moment's notice, which has resulted in state and local officials' complaining that their shipments are being intercepted by the federal government.
And, most recently, Trump and his Chinese counterparts have initiated matching export restrictions on personal protective equipment, choking off an alternative source of needed goods. After Trump issued an executive order to block U.S. companies from sending protective equipment overseas without the federal government's assent, China imposed a new rule requiring one of its agencies to inspect equipment for quality control before it can be shipped.
That has left millions of items sitting in U.S. warehouses in China, The Wall Street Journal reported last week.
"We're essentially f-----," said an official who is leading his state's supply-chain effort.
States of rebellion
Pritzker, who has clashed publicly with Trump, is one of several governors who have decided they can't rely on Trump to help — or even to stay out of the way.
He quietly chartered flights bearing masks and gloves from China to Chicago to prevent Trump from interceding, according to the Chicago Sun-Times.
"The supply chain has been likened to the Wild West, and once you have purchased supplies, ensuring they get to the state is another Herculean feat," Pritzker press secretary Jordan Abudayyeh told the paper.
Hogan of Maryland, a rare Republican who has criticized the White House response effort, recently struck a deal with South Korea to provide a half-million coronavirus test kits. Despite Trump's admonition that states should find their own supplies, the president criticized Hogan for the move, which took supplies off the market.
"If there were an easier way, we certainly would have taken it," Hogan said Tuesday on MSNBC's "Morning Joe." "The president said the governors are on their own and they should focus on getting their own tests, and that's exactly what we did."
Increasingly, the task force and the innovation team are communicating directly with mayors and business leaders and undermining governors and other politicians who say they aren't getting what they need. For example, when Louisiana Gov. John Bel Edwards, a Democrat, said at a news conference this month that hospitals in the state needed more ventilators to help COVID-19 sufferers breathe, Trump aides quickly called the CEOs of the state's most prominent hospital systems. Hours later, at his own news conference, Trump said the hospital chiefs "feel that they currently have enough ventilators."
He thanked Warner Thomas, the CEO of Ochsner Health, Louisiana's largest nonprofit hospital system, and said he would deliver 230,000 surgical gowns. Trump said he would honor a request made by Thomas in place of the ventilators sought by the governor.
Trump and his top aides are particularly proud of a series of partnerships they have formed under the name Project Airbridge, which has laid claim to much of the available personal protective equipment around the world.
In broad terms, the project works like this: The federal government underwrites the cost of shipping freight on FedEx, UPS and other private air carriers, usually from factories operated by U.S. companies in Asia, so they can be distributed by U.S. companies. Under the agreements, the federal government gets to put part of the shipment in the Strategic National Stockpile and direct where half of the companies' remaining goods go, while the companies deliver the rest to the customers of their choice.
"It's actually been an amazing story, the cross-supply-chain collaboration that's gone on between otherwise competitors," said Blair Childs, a senior vice president of Premier Inc., a health consulting firm that has been involved in the project.
By gaining the ability to direct half of the goods on the planes, political officials have even more discretion in directing or diverting shipments. State and local officials say they have little visibility into how the system works, often becoming acquainted with it when they see Trump congratulate a Republican senator in a tough race, like Gardner of Colorado, for securing ventilators or protective equipment, or when the company they bought items from informs them that the federal government laid claim to the stock at the last minute.
'Directed by the White House'
The federal contracting process is supposed to be devoid of political influence — so much so that there are prohibitions on contractors' making donations or expenditures in connection with federal elections. Typically, big contracts are bid out, and there's significant competition for federal dollars.
But in emergencies, there are workarounds to accelerate the process. The rules for competition can be waived, and vetting can be less strict. The unprecedented nature of the current crisis, in which emergency declarations have been made for more than 50 jurisdictions — all the states, plus the District of Columbia and some U.S. territories — means the bottom-up system of federal contracting has largely been turned on its head.
In the case of Prestige Ameritech, the $9.5 million contract was awarded without competition under a waiver for urgent and compelling needs that also requires agency officials to "request offers from as many potential sources as is practicable under the circumstances," according to federal contracting records and regulations.
But the White House wanted Prestige, according to notes in the contract, which is publicly available on government websites.
"The procurement of N95 Model 1860 Respirators is directed by the White House to protect New York hospital employees AND other hospitals throughout the United States from the potential biological harm from COVID-19 during emergency response services," the description of the contract requirement says. Oneko Dunbar, the Homeland Security Department official listed as the user who entered the contract, did not reply to NBC News' request to discuss the work.
On April 8, the day after the last modification to the deal, Texas authorities announced that they would be deploying members of the state's National Guard to work at Prestige Ameritech's headquarters. The company says it is the largest domestic surgical mask manufacturer and will now be able to produce 2 million masks a week.
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But turning soldiers into a private-sector labor force doesn't sit well with National Guard expert Dwight Stirling, who called the situation "disturbing" in an email to NBC News.
"Ordering service members to help a company make a product — even an important product like masks — upsets the delicate balance the Founders established for use of the military," said Stirling, CEO of the Law and Military Policy Center, who is a JAG officer in the California National Guard and a law professor at the University of Southern California. "Not only does the arrangement have the appearance of official endorsement, giving Prestige an unfair advantage over its competitors, it creates public confusion as to the role and mission of the military generally. Simply put, there are many other ways for Governor Abbott to increase mask production that don't involve directing service members to work on the factory floor."
In the only other agreement with a similar notation that NBC News could find in the 11 years or so of online disclosure of federal contracts, one that was first reported by ProPublica, the Trump White House was named in March as the authority seeking a $96 million deal with the Canadian company AirBoss of America. As ProPublica reported, the deal calls for the delivery of 100,000 respirators and filters to New York and other locations by July 31, and it isn't clear why the White House was eager to award the no-bid contract to the company.
Chris Bitsakakis, president and chief operating officer of AirBoss of America, said in a statement to NBC News that the coronavirus task force was just one of a long list of entities the company contacted to offer access to its respirator systems, purifiers, and accessories.
"We reached out to groups including the WHO and the Pan American Health Organization, as well as the State Department, the Centers for Disease Control and Prevention, the Army Medical Research Institute of Infectious Diseases, HHS, FEMA, the FAA, the National Guard Bureau, and the White House Coronavirus Task Force, along with numerous other federal and state emergency agencies in the United States," Bitsakakis said. "A number of groups, both domestic and international, have responded with orders. The FEMA contract was awarded to our company because of our proven track record."
That may be true, but FEMA officials noted in the contract that the acquisition was "ordered by the White House."
Prestige Ameritech did not reply to NBC News' questions about its federal contract.
Winners and losers
While White House officials say the disaster response has been apolitical, the actions they have taken and the words Trump and other Republican politicians have used strongly suggest that political relationships are a key factor in the distribution of equipment.
"Will be immediately sending 100 Ventilators to Colorado at the request of Senator Gardner!" Trump said in an April 8 tweet, referring to one of the handful of Republicans in danger of losing a seat in November.
The state isn't among the top dozen in per capita or overall infections or deaths from COVID-19, and it actually reduced its request for assistance from the federal government's Strategic National Stockpile. But at the time of Gardner's request, state officials believed FEMA had stepped in to stop 500 ventilators from going into the state — with the end result appearing as if FEMA had stopped Democratic Gov. Jared Polis' attempt to buy 500 ventilators from a private company while the president gave 100 back in the name of a Republican senator he is trying to help politically.
The position of the White House is that the data coming from states has been spotty and that requests don't always match need, according to senior administration officials familiar with the thinking of the president's team. They say a major effort is underway to allocate resources based on accurate information from lower levels of government and the private sector. But neither the coronavirus task force nor White House officials have made information about the state-by-state dispersal of resources available to the public.
Gardner's office did not respond to NBC News' request for an interview on his efforts to secure lifesaving equipment for his constituents.
Colorado's Republicans aren't the only ones crediting White House intervention for their state's supplies. McSally of Arizona, who has a tough matchup against former astronaut Mark Kelly in November, thanked Trump and Pence publicly for delivering on a request for ventilators.
"I spoke with @realDonaldTrump on Wednesday afternoon to request additional ventilators from the Strategic National Stockpile," McSally tweeted April 10. "Today, POTUS delivers with 100 ventilators headed to AZ. Thank you to President Trump and @VP for hearing our call."
During a time of scarcity, the routing of supplies in one direction means they aren't going somewhere else, and FEMA has priority over other customers under certain circumstances. Local officials in various parts of the country have complained that shipments they were expecting were either seized or rerouted by the federal government.
The city of Phoenix struggled for weeks to get a supply of protective equipment after ordering $4.2 million of goods in late March. Mayor Kate Gallego's communications director, Annie DeGraw, told NBC News on Wednesday night that the city has been taken care of for two or three weeks. But just last week, Phoenix's fire chief, Kara Kalbrenner, told NBC affiliate KPNX that Phoenix's order had been "hijacked" by federal authorities. In similar cases, state and municipal officials have been reluctant to discuss the topic because of their fear that doing so will harm their ability to secure help from the White House.
A FEMA spokesperson said the agency was "not seizing or taking personal protective equipment (PPE) from state or local governments, hospitals, or any entities who are lawfully engaged in transactions through which these resources are distributed."
"We take all accusations of seizure very seriously and support Attorney General Barr’s Hoarding and Price Gouging Task Force," the spokesperson said in a statement to NBC News. "If a hospital believes this has happened to them, it should be reported to the governor. If a governor believes that this has happened to their supplies, it should be reported to the FEMA Region. If a company decides to cancel on a state contract in favor of federal one, FEMA will work with the company and the state to resolve the matter in a way that best serves their people."
Whether it's the Justice Department's anti-hoarding unit stopping shipments or companies rerouting them at the behest of a White House task force with control over where much of the private distribution is directed through Project Airbridge, officials at the state and local levels remain deeply frustrated that they can't tell whether the administration is doing more to help or harm their efforts.
Even in the hardest-hit areas, the federal government's deals with distributors haven't led to more protective equipment arriving at hospitals, according to an industry consultant. That's evident from pictures of health professionals working in garbage bags and homemade masks.
"Something's not adding up," the consultant said.
In a letter published in the New England Journal of Medicine on April 17, Andrew Artenstein, the chief physician executive and chief academic officer at Baystate Health in Massachusetts, described the harrowing experience of going through a broker — and repelling the FBI and the Department of Homeland Security — to get masks for hospital workers.
"Hours before our planned departure, we were told to expect only a quarter of our original order. We went anyway, since we desperately needed any supplies we could get," Artenstein wrote. "Before we could send the funds by wire transfer, two Federal Bureau of Investigation agents arrived, showed their badges, and started questioning me. No, this shipment was not headed for resale or the black market."
Artenstein persuaded the agents to let his team take the boxes of masks back with them, but he learned that the Homeland Security Department was "still considering redirecting our PPE." It took the intervention of Rep. Richard Neal, D-Mass., the powerful chairman of the tax-writing Ways and Means Committee, to put the question to rest.
"Once he was in touch with the various federal agencies, they were accommodating and released the equipment to Baystate," Dylan Opalich, a spokeswoman for Neal, said in an email to NBC News.
Meanwhile, in Florida — a state that is crucial to Trump's plans for winning re-election — DeSantis has had difficulty with such "gray market" transactions, but he hasn't had a problem getting what he wants from the administration. Last week, he said Florida was due to receive 1 million N95 masks from the federal government after he sought help from the president's team.
"That's been a real, real problem," DeSantis said of finding quality goods at a reasonable price on the open market, "but I'm glad we were able to work this out with the White House."
Date Posted: Sunday, April 26th, 2020 , Total Page Views: 865
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