States battle for coronavirus protective gear in a market driven by chaos and fear
WASHINGTON – The text messages and emails come in the middle of the night from strangers claiming to be middlemen and manufacturers. Deals are cut quickly; millions of dollars are wired overseas. Sometimes the supplies arrive; other times, the too-good-to-be-true offers prove to be just that.
When President Donald Trump told governors last month that the federal government was “not a shipping clerk,” he left states and local governments to fend for themselves in a global market for protective gear in which sellers have all the power, and confusion and chaos dominate.
In interviews, state and local officials around the country depicted a market that even the most seasoned say has astonished them by its logistical challenges, lack of transparency, and potential for fraud.
Prices of surgical gowns, gloves and N95 masks have skyrocketed. The masks, which used to sell for between 50 cents and a dollar apiece, are now on offer for $5 or $6, officials said.
Government employees have been told that if they don’t pay 50% of the cost upfront, and the rest before the shipment has even arrived, they will lose deals to other bidders. Fearful of having orders seized by the federal government, desperate city and state officials have called members of Congress and other elected officials to ask them to sweet-talk U.S. customs officials.
The experience has been an emotional roller coaster for state and city officials. Working on the scantest of information and often with brand-new suppliers, they have had to disregard longstanding rules in order to act quickly. Too much hemming and hawing, and they could wind up with nothing to show for their efforts.
But without careful investigation, they might buy defective equipment, endangering hospital workers, police officers and paramedics.
“It has been crazy,” Illinois Assistant Comptroller Ellen Andres said.
Late last month, working through a broker, officials in her state thought they had secured 1.5 million N95 respirator masks, only to learn that they would lose the first shipment to another bidder if they didn’t pay within 24 hours. With a check for $3.5 million in hand, Andres sped north in her car from Springfield, Ill., to meet the broker at a Mcdonald’s parking lot. She completed the transaction with little time to spare.
“By doing things this way, we are driving up costs for taxpayers,” Andres said. “We have lost ventilators, at the last minute, to the state of New York. And I know that Illinois has probably swooped in on some other states. It’s not the way to do this.”
One of the many hurdles states face is the emergence of middlemen and brokers who hold themselves out as specialists in connecting American buyers to foreign manufacturers. Some are legitimate actors working around the clock to track down supplies; other are opportunists cashing in on a global pandemic.
The task of telling them apart has fallen to hundreds of government procurement employees who are trained to take their time and typically have little experience navigating China’s manufacturing industry.
To protect themselves from fraud, some states and cities have refused to work with sellers they don’t know or those who demand payment upfront. Others said they don’t have that luxury.