Are states in a bidding war over medical gear with the feds?

COVID-19, In The NewsAre states in a bidding war over medical gear with the feds?

Budget & Tax, In The News,  | Quick Take
Apr 2, 2020  | 11 min read | Print Article

This article by Amy Sherman first appeared in Politifact on April 1, 2020

IF YOUR TIME IS SHORT

  • Governors complain that they are competing with other states and federal agencies for medical supplies because of a lack of federal coordination.
  • A trade group for medical-device makers asked FEMA to centralize procurement and allocation of ventilators and other devices.
  • The federal government responded March 30 by creating a Supply Chain Stabilization Task Force under FEMA to help allocate protective gear and life-saving equipment to high-priority areas.
States have been clashing with the federal government over who’s responsible for ensuring that critical medical equipment and supplies get to the places that need them most amid the COVID-19 pandemic.

After declaring a national emergency over the health crisis on March 13, President Donald Trump directed governors to order their own ventilators, respirators and supplies, saying the federal government is “not a shipping clerk.” Governors in both parties shot back that Trump’s stance and a lack of coordination from Washington have left states bidding against one another and the federal government for access to critical equipment.

New York Gov. Andrew Cuomo said it was akin to competing on eBay with 50 other states and the Federal Emergency Management Agency.

“And you see the bid go up, because California bid. Illinois bid. Florida bid. New York bids. California re-bids,” he said at a March 31 press conference, echoing complaints he made a week earlier. “That’s literally what we are doing. I mean, how inefficient. And then FEMA gets involved and FEMA starts bidding. And now FEMA is bidding on top of the 50 — so FEMA is now driving up the price?”

We sought written evidence from government officials that they were outbid by the federal government or that companies were caught in bidding wars. We didn’t find any. But manufacturers of equipment and supplies are struggling with the flood of orders and figuring out how to speed them to the communities that need them most. At least four other governors have complained that states have been left to compete with one another for needed supplies because of a lack of federal oversight.

The Advanced Medical Technology Association, which represents manufacturers of ventilators and other medical devices, wrote in a March 24 letter to FEMA that companies are facing the challenge of allocating devices to the health care providers who need them the most, as well as state and local governments.

“Some of these potential purchasers should have a higher priority than others based on the acuity of patient needs in their areas,” wrote Scott Whitaker, the association’s CEO. “It is difficult for manufacturers to establish these priorities.”

Whitaker asked the administration to provide advice on how to allocate these products and to designate a lead agency to oversee allocation decisions.

The federal government responded to the chorus of complaints about bidding wars March 30 by setting up a FEMA supply chain task force to coordinate sourcing of supplies nationwide and help allocate equipment to high-priority areas.

A FEMA spokeswoman told PolitiFact that the agency is working to meet demand for equipment through new purchases, Defense Department allocations or from the Strategic National Stockpile.

“As we process orders through the supply chain, we are maintaining close coordination with governors to identify potential bidding conflicts,” FEMA said. “If a bidding conflict does arise, we will work closely with the state to resolve it in a way that best serves the needs of their citizens.”

Trump told states to find their own supplies

Trump’s national emergency declaration on March 13 should have put the feds in the driver’s seat at that time, said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan budget watchdog group. That declaration meant the federal government was stepping in to coordinate the nationwide response to the coronavirus.

“Simply directing states to procure what they can ignores the powers of the federal government and possibly puts states at odds with one another,” Ellis said. “It also could lead to the misallocation of resources.”

That doesn’t mean states can’t purchase items on their own, he said, but the federal government should provide direction.

“And if the direction is that states are on their own, the federal government shouldn’t turn around and compete with them,” he said, though he said he didn’t know whether that was occurring

On March 16, Trump told governors that they should try to get respirators, ventilators and other equipment themselves, according to audio obtained by the New York Times.

Three days later, he repeated those instructions.

“The federal government is not supposed to be out there buying vast amounts of items and then shipping,” he said March 19. “You know, we’re not a shipping clerk. …  As with testing, the governors … are supposed to be doing it.”

He added: “And we’ll help out wherever we can.”

Trump hears it from governors

But the federal government was actually making things worse, some governors said.

Massachusetts Gov. Charlie Baker, a Republican, told Trump on March 19 that he followed the directive for governors to buy their own supplies.

“On three big orders, we lost” to the feds, he said.

Former Vice President Joe Biden, the leading Democratic candidate for president, said he had spoken to a governor who he said tried to follow Trump’s directive to purchase supplies for her state, only to be outbid by the federal government.

“There’s supposed to be cooperation here,” Biden said in a CNN town hall March 27, without naming the governor.

Michigan Gov. Gretchen Whitmer, a Democrat, and Maryland Gov. Larry Hogan, a Republican, were among those pleading for better coordination from FEMA to ensure that supplies are distributed based on need. “The lack of any centralized coordination is creating a counterproductive competition between states and the federal government to secure limited supplies, driving up prices and exacerbating existing shortages,” they wrote in a joint op-ed in the Washington Post.

The breadth of the coronavirus crisis means there’s little precedent for how the ordering and allocation of supplies should play out.

Juliette Kayyem, a former homeland security official under President Barack Obama, described the pandemic as the first 50-state disaster. The past practice of mutual-aid agreements between states won’t be sufficient, she said, since states won’t want to share resources that they may need.

“With the coronavirus, state and federal authorities can talk a big game about unity of effort — we are all in this together — but the nation’s governance structure will make this more like musical chairs,” Kayyem, now a Harvard professor, wrote in the Atlantic. “No state wants to be the last one to secure necessary equipment.”

Complaints about supply bottlenecks had led to tense exchanges between Whitmer and Trump, who has called for governors to be more appreciative of the federal government’s efforts.

Whitmer said supplies of masks and ventilators have started to flow to Michigan from the federal stockpile, and Trump approved her request for a federal disaster declaration for the state.  Michigan reported 7,615 COVID-19 cases and 259 deaths through the end of March.

In Florida, where Gov. Ron DeSantis is a key Trump ally, officials directed their wrath at private industry instead of the federal government. The head of Florida’s emergency management agency, Jared Moskowitz, called the market for masks a “Ponzi scheme” and said on Twitter that he was urging supplier 3M to send supplies directly rather than dealing through costly middlemen.

3M referred PolitiFact to a statement that said it had received reports that people were fraudulently representing themselves as being affiliated with the company and charging “grossly inflated” prices for 3M goods, or selling counterfeit products.

The Trump administration itself has butted heads with the private sector over supply issues.

General Motors, which has halted all U.S. auto production amid the health crisis, assigned workers in mid-March to help build life-saving ventilators at an auto-parts plant in Kokomo, Ind., in partnership with medical-device maker Ventec Life Systems.

But Trump wanted the company to move faster. On March 27, he excoriated CEO Mary Barra on Twitter over the production timetable, and signed a memo directing his administration to use the Defense Production Act to require GM to prioritize federal contracts for ventilators.

In a statement that same day, GM said it was on track to deliver the first ventilators in April and ramp up to manufacture more than 10,000 a month. As company officials defended their “around-the-clock” work, Trump backed off, saying he was “getting very good reports about General Motors.”