Inside Florida's frenzied, failed dash to dole out $600 million in no-bid mask deals

Apr. 7--When Florida belatedly realized last week that its COVID-19 problem was going to cascade into a statewide crisis, the state Division of Emergency Management embarked on a frantic, frenzied attempt to buy N95 masks, the gold standard in hospital protective equipment, negotiating more than half a billion in purchase orders in just the past week.

The biggest deal by far was a $225 million purchase order -- 30 million masks at $7.50 a piece -- agreed to March 30. It was brokered through a Miami lobbyist, Manny Reyes, son of the Miami commissioner, Manolo Reyes. In normal times the masks might cost anywhere from 58 cents to $1.25 per unit.

The deal fell apart for the same reason dozens of other deals have dissolved: the state's chaotic and cutthroat procurement process clanging up against a drained national supply.

Every state is scrambling for the same thing now. New public health models released Sunday predict that COVID-19 cases will continue to climb in Florida and across much of the nation for the rest of the month. But Florida's late start in obtaining medical supplies may have put it at a distinct disadvantage.

Florida's emergency order took effect March 10, but by the time Gov. Ron DeSantis asked for a national disaster declaration from President Donald Trump on March 23 the state had signed orders for fewer than three million N95 masks, a review of Florida purchasing data through Monday, April 6, shows. The shortage of the masks, which protect against airborne particles, has forced healthcare workers to reuse masks, considered an unsafe practice.

After online publication, the Florida Division of Emergency Management provided the Miami Herald with information about additional mask purchases it had made. The documents showed that the division had purchased a little more than 500,000 additional masks before March 23 than the state purchasing data showed. In total, the state appears to have purchased roughly 3.5 million N95 masks before the governor's March 23 national disaster declaration request.

Last week, when the governor issued the statewide April 1 stay-home order, the state finally ramped up its shopping spree on the private market, signing a flurry of agreements to acquire as many as 90 million N95 respirator masks, according to purchasing data on the state's FACTS.fldfs.com site.

Florida's attempted acquisition of masks trailed the federal government's, even though DeSantis and the president have reportedly been in regular contact. The federal government inked $380 million worth of contracts on March 21, the bulk of which were directly with 3M and Honeywell, two of the biggest manufacturers of the masks.

The longer the state waited, the more it would have to pay. Florida's purchase orders last week priced the masks on average at more than $6 each, more than double the $2.60 per mask the state had been paying for masks earlier in the month.

But many of those purchase orders, like the deal involving Reyes, vanished into thin air.

"All of those deals have fallen apart," said Jared Moskowitz, the director of the Division of Emergency Management.

He added that the state's FACTS website was inaccurate because it did not include a comprehensive list of active and canceled orders for COVID-19 supplies and that the state would be updating the site to reflect which orders are still active.

Moskowitz said the surge in purchasing orders came after the state's early orders never arrived and they realized that the national market -- and the distribution network of 3M -- was dysfunctional.

With the state expected to see a surge of positive cases reach its peak on April 21 -- two weeks earlier than initially anticipated -- and plateau indefinitely, the state is now desperate to build up supplies and Moskowitz is willing to "pay whatever it takes," he said.

"We're in crunch time now and every minute that you spend on the phone haggling and trying to get the best deal is a minute that commodity goes somewhere else," Moskowitz said Monday in an interview.

Despite the recent rush to source masks and sign deals, much of the effort has been for naught.

None of the 90 million masks promised in the flurry of orders have materialized, Moskowitz said. And, as 1,720 Floridians are hospitalized and testing is dependent on protective gear, only a handful of the recent deals -- totaling 33 million masks -- are still alive, DEM officials said.

Florida's efforts have come in the wake of a mad rush by governors in some of the earliest-hit states to obtain the precious supplies, often competing against each other and the federal government. Massachusetts Gov. Charlie Baker even called in a favor from New England Patriots owner Robert Kraft to use the team's plane to ship 1.2 million masks from China.

The strategy, sources said, has been to over-commit in purchasing orders to meet the state's need. So how many masks does Florida need? One agency estimate indicates that in South Florida alone, which comprises the majority of the Florida cases, there is an outstanding need for just 1.2 million N95 masks.

That stands in contrast to a 2015 study by researchers at the Centers for Disease Control and Prevention and other federal agencies, which estimated that the United States would need between 1.7 billion and 3.5 billion N95 masks in the event of an influenza pandemic in which 20 to 30 percent of the population became infected. In Florida, which represents just under 7 percent of the U.S. population, that would translate to 111 to 228 million masks, and that's not taking into account Florida's larger-than-average elderly population, which could push the state's needs even higher.

In the absence of a sufficient stockpile, the Division of Emergency Management has used the governor's executive order to hand out purchase orders with little oversight and no bidding. The process leapfrogs over the laws intended to prevent bidding wars that drive up prices and protect against phantom vendors.

When state officials arrived at one warehouse to pick up an order, they found the warehouse empty, Moskowitz said. Another time, they were told a shipment was arriving on a cargo plane but when they checked the flight details, the flight didn't exist.

"Our warehouses are completely empty after we've signed hundreds of millions of dollars of purchase orders, only to come up with thin air and cargo planes that don't even exist," Moskowitz told CBS news in an interview last weekend.

"It's shady as hell, that's for sure," DeSantis said last week.

Moskowitz directed his criticism at the supplier, conducting media interviews and using his Twitter account to accuse 3M of mishandling its distribution chain, allowing a black market to emerge, and encouraging profiteering in a pandemic.

"3M has not filled pending orders," he told Fox News. "We are getting dribs and drabs from other vendors."

In the wake of the chaos, the president last Thursday signed a Defense Production Act order, specifically aimed at requiring 3M to prioritize orders from the U.S. government.

The company has defended its efforts, saying the company and its employees "have gone above and beyond to manufacture as many N95 masks as possible for the U.S. market." It says it is cooperating with the Trump administration and is investigating reports of price gouging and black marketeering for the N95 masks.

Meanwhile, as Moskowitz launched his media campaign, he also spent the week trying to secure missing masks, gowns, testing kits and swabs and arrange for the construction of emergency hospitals as the state prepares for the inevitable surge of positive cases and a hospital system near capacity. His office receives more than 500 emails a day of solicitations from both shady and legitimate vendors.

He has also turned away deals, claiming fraudsters have attempted to sell the state counterfeit product. He hired a string of engineering, military and emergency management supply companies to assist in the sourcing -- all of whom would get a cut of the proceeds if the products materialized.

"Whoever can send me a deal -- a law firm, a broker, a distributor, a lobbyist -- I'll take it because if that deal could save a life, that would be great," Moskowitz said. "But how many of those deals have come through? Zero."

One of those wishful transactions began as a good deal that kept getting better.

Manny Reyes, the Miami lobbyist, was approached by the client of a Miami lawyer who claimed he could get access to five million of the highly coveted masks.

He registered as a vendor and the client said he now had access to 30 million masks.

Destined for hospital rooms and drive-up testing facilities where shortages are rampant, the supply would more than compensate for Florida's growing gap of the precious medical supplies.

The proposed price tag: $225 million, or $7.50 each, paid with a combination of state and federal funds.

Moskowitz and his purchasing team welcomed the gargantuan deal because they had learned that if the masks materialized, the odds of the entire order being fulfilled were slim.

The delivery date was being worked out, but state officials imposed conditions: They needed to inspect the product, verify the legitimacy of the masks, confirm the count and do what is known in the procurement business as "proof of life."

Instead, the deal never breathed.

"It was a total fake," Reyes said.

His would be one of the growing list of "canceled" purchase orders that started and stopped as people tried to cash in and the state desperately tried to fill orders.

"I'm not in this business but some somebody said 'I've got these masks and Florida needs them can you help?' " he said. But when the source of the masks couldn't supply details about their location, saying first they were in California, then Florida, and he kept changing the story, Reyes canceled the purchase order.

"It's not worth it," Reyes said. "It's like the Wild, Wild West."

Meanwhile, hospitals and healthcare providers have been scrambling to secure enough masks for their providers.

Broward Health is asking the community to donate personal protective equipment and the Cleveland Clinic Indian River Hospital has launched a community campaign to get people to contribute supplies or make a donation to fund research.

Healthcare workers have called for the federal government to coordinate a national campaign to find enough protective gear for the duration of the crisis.

"If healthcare workers begin getting sick in large numbers because of lack of protection, the whole system to care for the public can collapse," said Dale Ewart, acting executive vice president for 1199 SEIU United Healthcare Workers East. "The shortage of masks and respirators is similar to the early problems with lack of testing, which could only be resolved by federal government action."

Mary Ellen Klas can be reached at [email protected] and @MaryEllenKlas

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