Select Subcommittee Releases New Evidence of Trump Administration's Failure to Address Supply Shortages

WASHINGTON, April 1 -- Rep. Carolyn Maloney, D-New York, chair of the House Oversight and Reform Committee, issued the following news release:

Chairman James E. Clyburn and all Democratic Members of the Select Subcommittee on the Coronavirus Crisis sent letters to the Department of Health and Human Services, the Department of Homeland Security, the Federal Emergency Management Agency, and the National Archives as part of an ongoing investigation into the Trump Administration's efforts to procure and distribute personal protective equipment (PPE) and other critical supplies during the pandemic. The Select Subcommittee also released new documents obtained in this investigation.

"These documents provide further evidence that the Trump Administration failed to react quickly to the coronavirus pandemic in Spring 2020 despite urgent warnings, failed to implement a national strategy to alleviate critical supply shortages that were putting American lives at risk, and pursued a haphazard and ineffective approach to procurement in which senior White House officials steered contracts to particular companies without adequate diligence or competition," wrote the Members. "In order to understand what went wrong over the last year, correct these errors, and prevent them from recurring, the Select Subcommittee is continuing to investigate critical failures in the previous Administration's approach to procuring and distributing supplies."

The letters, which follow up on an investigation launched on July 14, 2020, highlight the following new evidence obtained by the Select Subcommittee:

President Trump Failed to Heed an Urgent Private Warning in Early 2020

* On March 1, 2020, then-Assistant to the President Peter Navarro wrote a memorandum to President Trump warning him of the urgent need to "STAY AHEAD OF VIRUS CURVE." He stated that the country was facing "a very serious public health emergency" and explained: "Over the last month, I have presented the Task Force with action memos to combat the virus swiftly in 'Trump Time,' but movement has been slow." Mr. Navarro's memo advocated specific steps that the Administration could take to address the looming crisis, including mobilization of supply chains, developing point-of-care diagnostics, and increasing capacity to develop treatments. The memo emphasized: "In some cases, there is already SOME movement BUT the movement is NOT fast enough."

* After this memo was sent, President Trump continued to publicly downplay the danger of the virus to the public and refused to mobilize a coordinated response to procure supplies that were needed to protect Americans, stating on March 19, 2020: "The Federal government is not supposed to be out there buying vast amounts of items and then shipping. You know, we're not a shipping clerk."

Under President Trump, White House Officials Pursued an Ineffective, Ad Hoc Approach to Supply Contracts

In the absence of a coordinated national plan, various White House officials pursued ineffective, ad hoc approaches to procuring certain supplies, including pushing federal agencies to award contracts to particular companies, sometimes without adequate diligence or competition. For example:

* Mr. Navarro exhorted agency officials to rush a $354 million no-bid contract for pharmaceutical ingredients to a newly formed company, Phlow Corporation:

* On March 20, 2020, Mr. Navarro wrote to then-Director of the Biomedical Advanced Research and Development Agency (BARDA) Rick Bright and HHS Assistant Secretary Dr. Robert Kadlec: "My head is going to explode if this contract does not get immediately approved. This is a travesty. I need PHLOW noticed by Monday morning. This is being screwed up. Let's move this now. We need to flip the switch and they can't move until you do. FULL funding as we discussed."

* On March 26, 2020, Mr. Navarro sent an email to Phlow's CEO and officials at FEMA and HHS: "Phlow needs to be greenlit as soon as humanly possible. ... Please move this puppy in Trump time."

* On April 4, 2020, a Phlow consultant commented, "Navarro's 'if your contracting people mess this up, you're fired' email to Rick and Kadlec several weeks ago was a big deal. CC'ing Navarro cranks up the pressure."

​​​​​​​​​​​​​​

* The Trump White House pushed a failed $765 million loan to the Eastman Kodak Company (Kodak) to manufacture pharmaceutical ingredients, even though the company had no experience in the field and conceded it could not meet Food and Drug Administration (FDA) safety standards:

​​​​​​​

* On March 20, 2020, Kodak wrote to the White House to offer assistance in manufacturing chloroquine and hydroxychloroquine. Kodak acknowledged in emails to HHS and FDA that it lacked the capacity to meet FDA's requirements for current good manufacturing practices (cGMP) and would "need a waiver from the FDA's cGMP requirements."

* Despite this acknowledgement, the White House continued to push the proposal. On April 2, 2020, Kodak executives met with White House officials to discuss Kodak "making the starting materials...as many and as fast as possible." Mr. Navarro's staff also entered into discussions with Kodak executives about increasing the size of Kodak's loan request, which initially was just $15 million.

* On July 28, 2020, Kodak signed a letter of intent with the U.S. International Development Finance Corporation (DFC) for a $765 million loan to manufacture pharmaceutical ingredients. The planned agreement was put on hold days later, after the Select Subcommittee, the Financial Services Committee, and the Oversight Committee launched an investigation.

​​​​​​​​​​​​​​

* The White House pushed a $96 million proposal to supply powered respirators from AirBoss Defense Group (ADG), without any apparent due diligence or competition:

* On March 22, 2020, retired General John "Jack" Keane--a paid consultant to ADG who President Trump had recently awarded the Presidential Medal of Freedom--sent an email to Mr. Navarro stating, "sent you a catalog of items that ADG can provide, all needed for fight vs CV19. They can surge." Mr. Navarro replied, "On it."

* The next day, ADG submitted a $96 million proposal to the White House to supply powered respirators. Mr. Navarro responded that the company should "consider it done" and instructed ADG to begin delivery, even though no contract had been executed and Mr. Navarro had no authority to issue federal contracts.

* An ADG executive later sent an email describing a March 25, 2020, call: "I received a call from Mr. Navarro and Dr. Hatfield [sic] telling me that 'your government appreciates what you can do, and now we need you to trust your government and begin to execute.' 'We will get you on contract as quick as we can. Everything you have requested is ok.'"

* ADG's initial delivery of respirators included a packing slip addressed to the White House, stating: "Verbal order of Peter Navarro, Asst to President for Trade & Manufacturing Policy." White House officials then pushed FEMA to finalize the non-competitive contract. ​​​​​​​​​​​​​​​​​​​​​​​​​​​​

The Trump Administration Relied on Outside Advisor Rather than Career Professionals to Arrange Contracts

* Documents indicate that Mr. Navarro worked with at least one outside advisor, Steven Hatfill, to negotiate key supply contracts on behalf of the federal government, rather than relying on career federal procurement and public health experts. Dr. Hatfill is an adjunct professor at George Washington University and an associate of Stephen Bannon who endorsed hydroxychloroquine as a coronavirus treatment after FDA revoked the drug's emergency authorization--a view Mr. Navarro praised.

The Select Subcommittee's letters seek additional documents and information on the Trump Administration's procurement efforts in response to the pandemic. These document requests are necessary because the Trump Administration repeatedly obstructed the Select Subcommittee's investigations last year.

Click here to read the letter to Archivist of the United States David S. Ferriero (https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2021-03-30.Select%20Sub%20to%20Ferriero%20re%20NARA%20Supply%20Chain%20.pdf), who is the custodian of presidential records from the Trump Administration.

Click here to read the letter to HHS Secretary Xavier Becerra: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2021-03-30.Select%20Sub%20to%20Becerra%20re%20Supply%20Chain%20.pdf

Click here to read the letter to DHS Secretary Alejandro Mayorkas and FEMA Acting Administrator Bob Fenton: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2021-03-30.Select%20Sub%20to%20Mayorkas%20Fenton%20re%20DHS%20FEMA%20.pdf

Click below to read the new documents released today:

Memo from Peter Navarro to President Trump: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/PHLOW_SSCC_0017388_Redacted.pdf

Documents from Phlow Corporation: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FINAL%20PHLOW%20COMPILED.pdf

Documents from Eastman Kodak Company: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/documents/FINAL_KODAK_COMPILED.pdf

Documents from AirBoss Defense Group: https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FINAL%20AirBoss%20Compiled%202.pdf