Political link in COVID-19 contract
Company didn’t produce many of the supplies in deal
A company that failed to deliver millions of dollars’ worth of masks and ventilators to Maryland landed the contested deal with the help of a political connection, documents indicate.
An adviser to Republican Gov. Larry Hogan helped Blue Flame Medical LLC get its foot in the door with state purchasing agents. The company was founded in March by two Republican political operatives with no medical experience as the coronavirus swept across the country.
Tiffany Waddell, Hogan’s director of federal relations, sent an email March 29, introducing Blue Flame Medical co-founder Mike Gula to Ellington Churchill, the state’s secretary of the Department of General Services.
“Please meet a good friend of mine, Mike Gula,” Waddell wrote in the email, which was among more than 100 pages of documents the state released to The Baltimore Sun in response to a Maryland Public Information Act request.
Waddell wrote that Gula had a “direct link” to a manufacturer in China who could
provide supplies needed in the COVID-19 pandemic. Attached was an undated letter from the CEO of Hakim Unique Group in China, confirming a business relationship with Blue Flame, as well as a product list.
By April 1, Maryland and Blue Flame entered a deal for 1.55 million N95 masks and 110 ventilators for a total cost of $12.5 million. Blue Flame tried to get Maryland to pay 75% upfront, which state officials negotiated down to a 50% upfront payment, the emails show. Most of the goods never arrived.
An attorney for Blue Flame said the company never asked for help in connecting with Maryland officials.
“While Blue Flame didn’t solicit the introduction to Maryland, once introduced to DGS, it was an opportunity to try to help the people of Maryland,” said Ethan Bearman, a California-based attorney who has worked as general counsel for Blue Flame.
Churchill said that Blue Flame didn’t get any unique treatment based on how the state became aware of the company.
In the early weeks of the pandemic, the state was deluged with offers, Churchill said.
“We were receiving hundreds of hundreds of introductions,” he said. “Everybody and their brother knew somebody that was able or connected with someone that was able to provide personal protective equipment.”
Less than an hour after receiving Waddell’s email, Churchill forwarded information about Blue Flame to multiple DGS employees. He directed his staff to review the information and set up a conference call with Blue Flame’s Gula within 36 hours.
“He comes to us through the administration,” Churchill wrote in an email, using bold letters.
Churchill said that all prospective vendors are scrutinized for the quality and price of what they’re offering and the timeliness in providing it. Blue Flame gave sufficient proof that it had connections with manufacturers in China, he said.
He said all of the state’s other deals for coronavirus supplies have been successful. “This is the only transaction, of the 90 to 100 transactions, that ended in a manner that has been unresolved and unfulfilled,” Churchill said.
The Maryland attorney general and the U.S. Justice Department are investigating
Blue Flame, which also has had problematic deals with other states. California, for example, canceled a $600 million order for masks in March, according to news reports. Blue Flame sued its Virginia-based bank, alleging bank officials thwarted that deal.
Maryland officials have said the masks and ventilators it ordered from Blue Flame were supposed to be shipped by April 14. Blue Flame has maintained it had until June 30 to fulfill the contract.
Over the course of April, Maryland officials kept inquiring with Blue Flame about the status of the order. At one point, the state wrote a letter for Blue Flame to show to Chinese officials, ostensibly to help with customs.
By April 30, Maryland issued a “notice to cure” letter, essentially a legal warning to the company to make good on the contract. The state later canceled the contract, and Blue Flame has tried to get the state to honor the contract.
In late May, Blue Flame delivered 27 ventilators to a warehouse used by the state in Sparrows Point. Blue Flame officials say they later delivered another 10 ventilators, for a total of 37. State officials could not be reached late Thursday to confirm the additional delivery.
It’s not clear how Gula and Waddell knew each other, but both have extensive experience in the Washington political world.
Gula has worked primarily as a Washington-based fundraiser for Republican congressional candidates from several states. He also founded a company that helps arrange lobbying days in Washington for out-of-town groups.
Waddell has been Hogan’s director of federal affairs since late 2015, according to her online resume. Her earlier experience includes several legislative and political jobs in Washington, as well as two years fundraising for the Republican National Committee.
A Hogan administration spokesman did not make Waddell available to answer questions.
Gula did not respond to an interview request, but has previously said Blue Flame ran into snags in China, and intended to make good on the contracts.
Howard Waltzman, a Washington-based lawyer hired by Blue Flame, wrote to a congressional committee last month, saying the company didn’t anticipate the “massive global challenges” in the marketplace for personal protective equipment.
“Facing ‘Wild West’ conditions, Blue Flame endeavored to fulfill its customers’ orders in a timely manner,” he wrote. The company was “disappointed” it couldn’t fulfill all the orders.
Though Blue Flame delivered some ventilators to Maryland, the company “suspended further efforts” to get supplies to the state after Maryland moved to cancel the contract, the attorney wrote.
The company and the state are in settlement negotiations over the contract, and the state has not received a refund.
At the same time that the Department of General Services negotiated with Blue Flame, the Maryland State Police placed its own orders with the company for 400 N95 masks, 24 bottles of hand sanitizer, 40 surgical masks and 100 gowns. Blue Flame couldn’t provide the goods at the promised prices and refunded $7,145 to the police in May, according to information the company provided to Congress.
Members of Congress who are investigating Blue Flame expressed concern about the company in a statement, and blamed on the Trump administration.
“Blue Flame is a troubling example of what can happen when the federal government refuses to lead during a national crisis,” wrote U.S. Rep. Frank Pallone Jr. of New Jersey and U.S. Rep. Diana DeGette of Colorado. Both Democrats, Pallone is chair of the Committee on Energy and Commerce and DeGette is chair of the committee’s investigation subcommittee.
For a period of time after Maryland and Blue Flame signed the contract, Waddell served as a reference for Gula, according to the emails released by the state.
On April 3, Waddell wrote to an Alabama state government official confirming Maryland and Blue Flame had a deal. “Yes - MD did place an order/Blueflame yesterday. Mike Gula is a friend - I have known for years,” she wrote.
Waddell forwarded that email to Gula, who replied: “Thank you very much for replying so quickly. I know you are busy so thank you!”
Alabama placed orders for 700,000 N95 masks, 200,000 gowns and 50,000 gloves, but Blue Flame couldn’t deliver them “at the prices and within the schedule Alabama required” and refunded the state’s $1.8 million deposit, according to information Blue Flame provided to Congress.
“I have known Mike for years and the State of Maryland recently did an order with him,” Waddell wrote on April 9 to an Illinois foundation that was considering buying masks through Blue Flame.
Later that day, however, Waddell seemed less keen on serving as a reference. She wrote an email to Hogan’s top lawyer notifying him that she had asked Gula to stop sending out her name and contact information unsolicited as a reference.