The US Government Is Spending Millions Of Dollars To Respond To The Coronavirus Crisis
Dozens of government contracts awarded in recent weeks reveal how the administration is trying to deal with the spread of the virus.
WASHINGTON — The Trump administration has awarded dozens of government contracts to businesses in recent weeks in an effort to stop the spread of the novel coronavirus and show how the federal government is planning to spend millions of dollars to respond to the growing crisis.
The recent flurry of contracts, some awarded without an open competition, reflect the urgency with which the US government is attempting to contain the coronavirus outbreak, which the World Health Organization recently declared a pandemic. COVID-19, the disease caused by the novel coronavirus, has already killed more than 3,100 people in China. Congress has approved an $8.3 billion emergency spending package to help agencies like the Centers for Disease Control and Prevention fight the spread of the virus, and President Donald Trump declared a national state of emergency to free up billions more in funding.
Between the start of this year and Monday, the Department of Health and Human Services has issued $5.8 million in contracts mentioning the term “coronavirus” — more than all of 2019 combined. (Coronaviruses are a family of viruses that have been around for years; the novel coronavirus, which originated in Wuhan, China, in 2019 is the current strain.) When the term “COVID-19” is added, the total hits $7.3 million. Government-wide spending mentioning just “coronavirus” sits at $7.5 million — higher than any of the 10 preceding years.
Government departments and agencies are making plans to buy everything from cleaning wipes to respirator masks, and the total number and value of the contracts will undoubtedly increase in the weeks ahead as the number of cases increases. The figure also leaves out many contracts connected to the outbreak that don’t explicitly mention the coronavirus in their description.
Earlier this month, FEMA said that due to the “significant increase of the COVID-19 virus,” it was looking for disinfecting wipes and sprayers, as well as “the ability to immediately deploy personnel to provide and administer disinfectant cleaning services” for FEMA facilities in Oregon, Alaska, Idaho, and Washington state, which has been home to a recent coronavirus outbreak.
“The contract is currently being competed and we can’t comment on contracts being competed,” a FEMA spokesperson said.
The government is also looking to purchase masks to deal with the outbreak. Last week, the Department of Veterans Affairs said it was paying a Florida-based company $338,234 for special air purifying masks as part of the “COVID-19 response.” Neither Veterans Affairs nor the company, Native Instinct, returned a request for comment.
Veterans Affairs has awarded Native Instinct more than $519,000 in other contracts since the outbreak began for more breathing equipment and an “emergency diesel generator w/ trailer,” among other things, but it’s uncertain if the items are connected to the coronavirus response.
The Treasury Department’s Bureau of the Fiscal Service also said last week that it was spending $13,878 on a “bulk order” of 3M-brand “respirator masks.” The name of the contractor was not provided. The Fiscal Service did not answer questions about whether the masks were connected to the coronavirus response.
The urgent spending presents a possible windfall for contractors who land deals to provide the government the goods and services it needs to quickly handle an outbreak that threatens to kill scores of Americans. But urgency, especially if combined with understaffing or lack of experience, can also lead to poorly sourced or written contracts, as evidenced during past national crises.
“Unfortunately there are lots of examples of waste, fraud, and corruption when the government spends money quickly,” said Sean Moulton, a senior policy analyst at the Project on Government Oversight who specializes in government spending. “But the problems that lead to poor spending decisions in emergency situations have been around for years — poor planning and preparation, inadequate competition, and minimal accountability and transparency. We issued a report after Hurricane Katrina (almost 14 years ago) detailing these problems that is still directly relevant today. We haven't adequately addressed these shortcomings for hurricane response spending much less for other emergencies.”
“Obviously in disaster situations the urgency of need necessitates a fast contracting process,” Moulton said. “That is why we have continually encouraged Uncle Sam to fully review and vet disaster response contractors ahead of time and have contracts and rates in place for goods and services. Such steps, plus including contract provisions for additional oversight and accountability of performance and billing, will ensure that taxpayers are not being gouged by profiteers.”
There’s a lot we still don’t know about the coronavirus outbreak. Our newsletter, Outbreak Today, will do its best to put everything we do know in one place — you can sign up here. Do you have questions you want answered? You can always get in touch. And if you're someone who is seeing the impact of this firsthand, we’d also love to hear from you (you can reach out to us via one of our tip line channels).
One of the contractors hired to help respond to the coronavirus outbreak has experience with a poorly written contract. Bruce Wagner, whose company Rapid Deployment has received more than $26 million in contracts from HHS since early January, runs a second company whose deal with FEMA after Katrina came under scrutiny by a government watchdog.
FEMA paid that company, Clearbrook, more than $76 million to provide base camps for first responders to live in after the storm ravaged Louisiana in 2005. But later that year, the Department of Homeland Security’s inspector general said it had “identified several significant problems with the contract and its billings,” and urged FEMA to stop paying Clearbrook until the issues were fixed. The inspector general’s office later issued a review recommending that FEMA disallow $16.4 million in charges that Clearbrook had billed.
A lawyer who responded to questions from BuzzFeed News on behalf of Wagner said that Clearbrook is “a separate and distinct company from” Rapid Development and that the issue with the FEMA contract has been resolved.
“After a lengthy internal review by the Office of Investigator General, with Clearbrook’s full cooperation, no penalties or charges were levied against Clearb[r]ook and the contract was final billed and paid, with interest, by the contracting agency,” attorney John P. Browning said in an email Thursday.
FEMA directed questions about the contract to the Inspector General’s Office, which didn’t respond to a request for comment. HHS did not respond to questions for this story, either.
In more than two dozen recent contracts and modifications with Rapid Deployment, the government lists many of the emergency services it has hired the Alabama-based company to provide, including meals, port-a-potties, generators, and more at US quarantine sites. Hundreds of Americans who were possibly exposed to the virus abroad have been repatriated and subject to two-week quarantines at military bases across the country.
The largest single contract awarded to the company so far is valued at $16.2 million and was sole-sourced, according to publicly available documentation. “Any delay in the contract award would have resulted in serious injury to the agency's mission and to the lives of hundreds of citizens/repatriates arriving in the United States, or to individuals within the United States that interacted with the repatriates that may have come into contact with 2019-nCoV,” CDC officials wrote when justifying why an open bidding process wasn’t an option. “The time available to solicit and issue award could easily be measured in hours/days.”
At the time, the officials said the “core nature of the services to be provided are commercial in nature — housekeeping and providing food/drinks,” and listed four military bases in California, Texas, and Hawaii as the locations needing the services. The government listed additional military bases in California, Texas, and New Jersey in other contracts awarded to the company.
Rapid Deployment — which said it has also done work in “Iraq, Lebanon, Yugoslavia, Nigeria and other countries, conflicts, and disasters” — has been hired to provide everything from janitorial to laundry services at the bases. “All operations and contract performance is being achieved as planned,” Browning said.
The tasks share similarities with Clearbrook’s responsibilities after Katrina, a storm that killed more than 1,000 people and ravaged New Orleans. At the time, the company provided “food and lodging to hurricane Katrina disaster responders at seven base camps throughout Louisiana,” the DHS inspector general said in its first writeup on the contract in November 2005.
Over a year later, the Inspector General’s Office published a longer review of the Clearbrook contract. “As a result of FEMA’s haste to establish base camps, and the shortage of trained and experienced contracting officials, the Clearbrook contract was not effectively awarded and administered, leading to contractual deficiencies, excessive billings, and questionable costs of $16.4 million,” the February 2007 report read.
The $16.4 million were charges for “staging costs” that the Inspector General’s Office concluded should have been included in the fixed rate for the camps. “There was no evidence that direct costs could be billed separately,” the report said.
But nearly three years later, FEMA had yet to recoup the money, according to a local news report. FEMA had responded to the audit in 2008, saying it wouldn’t pursue a claim because most of the billings were supported by documentation, the story said.
Wagner’s company is among several helping the US government respond to the coronavirus crisis. In late February, the US Army published a notice announcing its plans to sole-source the purchase of a medical testing device known as the Panther Fusion platform, acknowledging issues with the CDC’s tests for the virus.
“The deployment of the U.S. CDC Emergency Use Authorization assay has been plagued by problems with reagents, thus delaying implementation of testing in U.S. civilian and DOD laboratories,” read the notice from late February. It said that as a result, current testing systems were slower and limited in their “ability to scale up to high-volume testing required in the dynamically changing epidemic situation.” The Panther Fusion platform “can be implemented for rapid coronavirus detection,” the notice said, adding that “Gen Probe is the sole manufacturer and distributor of the Panther System.”
The Army did not respond to questions about the notice.