In an effort to secure N95 masks for first responders and public health workers during the COVID-19 pandemic, the City of Austin has had to cancel deals with vendors that couldn’t deliver and return thousands of lesser-quality masks.
“Expediting large purchases during an emergency can be challenging – contracts can fall through and the City can end up paying more than it would like for certain urgently needed items, particularly when there is a shortage of supply,” a city spokesperson wrote in an email.
In the same exchange, the spokesperson said the city does not have a shortage of personal protective equipment. Still, since the start of the pandemic, the city has made emergency purchases of supplies like hand sanitizer and gloves, forgoing its usual process of vetting sellers.
A KUT analysis found the City of Austin has committed to spend nearly $5 million since Mayor Steve Adler’s first emergency order in mid-March on noncompetitive contracts for protective gear and testing, with much of this money going to businesses that have no history of working with the city.
Austin has awarded at least a dozen contracts to first-time vendors, including a California businessman who patented workout equipment and signed onto a nearly million-dollar deal to provide the city with hundreds of thousands of masks. The city also agreed to pay a local political strategy firm $100,000 to secure face masks.
KUT found that nearly all of the noncompetitive contract funds – about $4.9 million – have been designated for suppliers of goods and services that do not appear in the city’s database of previously paid vendors before the coronavirus outbreak.
“Sometimes speed has to take precedence to protect public health,” a city spokesperson wrote by email.
According to a COVID-19 testing plan the city submitted to the federal government at the end of May, Austin Public Health anticipates needing an ever-increasing number of masks and gloves at its testing site in North Austin; by July, the city hopes to have 800 N95 masks and 3,420 other masks per month.
And although a spokesperson said the city does not currently have a shortage of personal protective equipment, or PPE, records of contracts suggest the city has scrambled to fulfill these hopes; particularly when it comes to N95 masks, which the Centers for Disease Control and Prevention recommends be worn by health care workers.
Typically, when the city needs goods it relies on existing suppliers or invites companies to bid on a contract. Companies then submit their proposals, and the city can spend months evaluating them, weighing various merits of one against another.
In an emergency situation, like a pandemic, supplies run out quickly, changing the way municipalities make deals.
“All of those traditional supply chains are not available to state and local governments anymore,” said Rick Grimm, CEO of The Institute for Public Procurement. “So, they’re having to go to other, nontraditional, entrepreneurial supply chains.”
Under Austin’s emergency order, the city can make purchases and sign contracts without the typical accountability measures required for large-dollar deals, such as getting competitive bids and ranking companies based on their merits. The city’s purchasing office said in most cases it is continuing with the usual practice of waiting to pay suppliers until the promised goods have been delivered.
Because not every vendor is able to keep their promise.
In early May, the City of Austin agreed to pay $825,000 to Well-Core Inc. for 300,000 N95 masks. (The deal was part of a larger agreement that included the City of Houston). The man behind the company, Jaeson Cayne, made his name inventing and selling workout equipment and weight-loss snacks, including products he marketed on infomercials such as Abflex and Pounds Off Meal Replacement Bars.
Cayne told KUT he approached the City of Austin, offering to help secure N95 masks, even though he’d never done a job like that before.
“Because of the coronavirus, I wanted to see what I could do to help get masks out to the various cities and hospitals,” he said. The city agreed to go into business with him.
Cayne said he’s working for other municipalities, some far from Austin. In mid-May, he posted on a website called Go4WorldBusiness, asking for a million masks, at $3.10 each, to be delivered to Qatar; Cayne said he was working to secure the masks for a city in the Middle Eastern nation.
For Austin, Cayne said he’d been tracking down and talking to various 3M mask distributors, but as of late May he hadn’t been able to get his hands on any. He called the business of finding N95 masks “the Wild West”; one New York Times reporter describes a flood of would-be mask sellers rushing to fill gaps in supply left by overextended companies that regularly provide this kind of equipment.
Cayne told KUT he’d been approached by an alleged mask distributor from Nigeria who asked for a 50% deposit upfront. He called the guy’s bluff: “There’s always people that take advantage of the situation especially when you’re in a situation where there’s a need for something and people are emotionally tied to getting that taken care of,” he said.
In late May, Cayne said he felt confident about a mask distributor he’d found in Georgia, although he would not name the supplier.
But two days later, the city decided it couldn't wait any longer.
“The contract with Well-Core will be cancelled,” a spokesperson wrote in an email, relaying a message from city's Purchasing Office. “The contractor was unable to complete their obligations and deliver product.”
KUT requested copies of documents the city used to vet Cayne’s ability to acquire N95 masks; the city said it had no information to share.
Instead, a city spokesperson wrote in an email: “Well-Core appeared to have the required financial and operational resources to fulfill the order.”
Cayne is among at least four vendors promising N95 masks to the City of Austin who have not been able to deliver on their promises.
In early March, Austin agreed to pay Midland Scientific Inc. $1,209 for 800 N95 masks; but by early June, the city said it had canceled the contract because the company could not come through. (Midland did not respond to a request for comment.)
The city recently agreed to pay $810,000 to EnergyFundz, a firm in Houston, for an undisclosed number of N95 masks. The company’s president, Raya Guruswamy, told KUT on Tuesday the contract had since been absorbed by a “larger entity” he would not name and that he had yet to deliver any N95 masks as part of this deal.
Some dealers tasked with getting N95 masks to the city have delivered something – but not what was promised.
The city agreed to pay $88,000 in early April to MedtoMarket Inc. for 5,000 N95 masks and 100,000 nonsurgical masks.
But when the delivery came a month later, thousands of masks had to be returned; MedtoMarket had given the city KN95 masks instead. (N95 masks are certified in the U.S., while KN95 masks are certified in China.)
A city spokesperson said at the time that federal oversight agencies were warning many KN95 masks had either not been tested or had failed testing to prove they provided adequate protection.
The City of Austin has had luck with cloth masks. In one case, the city agreed to pay nearly $40,000 to Tom James Company & Subsidiaries Inc., a made-to-order clothing company in Tennessee, for 20,000 face masks. The company had not previously done business with the city, and its website advertises custom suits and shirts – not personal protective gear.
Tom James did not respond to a request for comment, but a company representative recently said in an interview posted to YouTube that its factories had started churning out 1 million nonsurgical masks a week.
“We were contacted by the government to start making masks because our factory workers are skilled and we have the tools and we have the materials to make masks,” Jared Meyers, identified as a clothier on the company’s website, said. “Obviously, they’re going to high-risk areas, which is awesome.”
That, apparently, includes Austin. The city said it has received all the masks asked for in this case.
Despite a number of contract cancellations and letdowns, the city maintains it has enough N95 masks.
“Because the supply chains have been improved and the market prices have stabilized, we now are in a much improved position than we were previously,” a spokesperson wrote Wednesday. “The State of Texas has also been extremely responsive to our request for assistance especially with PPE request.”
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