State Suspended Public Bidding And Spent $170 Million On PPE During Pandemic | Connecticut Public Radio
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State Suspended Public Bidding And Spent $170 Million On PPE During Pandemic

Jul 29, 2020

Neil Gilman makes football tackling dummies for a living. But when the pandemic hit, he had to get creative to save his business. He figured he’d try making medical gowns. And he started sending emails.  

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“When I contact these hospitals, I send them an email and I’m standing next to a football dummy,” Gilman said, referring to the picture of him in his email signature. “It’s like, who is this guy? What is he trying to sell us?”

Gilman is the owner of Gilman Gear, a Bozrah-based a manufacturing business with Connecticut roots extending back to the 1890s. Before the pandemic hit, Gilman’s small company focused on making sports equipment for a long list of teams at high schools, the NCAA and the NFL.

Then came COVID-19.

“Our athletic business had cratered,” Gilman said. “That whole marketplace was closing down … schools were closing, colleges were sending their students home, NFL teams were shutting down their complexes. We didn’t have a market to sell into.”

“We had to quickly pivot to another product line if we wanted to stay open,” Gilman said. “I decided that we were going to get into the manufacturing of medical gowns.”

Eventually, that pivot led him to the state of Connecticut, which would agree to pay him nearly $375,000 in purchase orders to Gilman’s company for thousands of gowns. 

“I’m not in this to make a quick buck,” Gilman said. “I’m in this to survive.”

Neil Gilman, owner of Gilman Gear, inspects a pile of surgical gowns. He says his company has produced 60,000 gowns since April for hospitals, assisted care facilities, dentist offices and emergency medical service workers across New England.
Credit Ryan Caron King / Connecticut Public

The 'Wild West' Of No-Bid COVID-19 Procurement

Since March, Connecticut officials have spent more than $170 million on personal protective equipment (PPE) purchased from more than two dozen vendors with companies connected across the globe. State officials stockpiled millions of pieces of gear, including Gilman’s gowns and other PPE like sterile gloves, goggles, surgical masks and face shields, which went to nursing homes, hospitals and state agencies.

All of those purchases were executed without a fully competitive bidding process. And that was by design.

“There was nothing ideal about the PPE supply chain in March and April and May,” said Josh Geballe, the state’s chief operating officer. “Even today it still has issues, but back then, in particular, it was the Wild West.”

As states competed for PPE, Gov. Ned Lamont signed executive orders authorizing the circumvention of the state’s normal competitive bidding requirements. The goal was to make sure the bureaucracy didn’t get in the way of public health.

Those orders authorized an expedited procurement process categorized in bureaucratic-speak as “standardization transactions.” Geballe said vendors were paid using a combination of funds from the federal government’s massive $2 trillion relief program known as the CARES Act and via reimbursements from the Federal Emergency Management Agency.

“The standardization process is one that’s established to provide purchasers ... the ability to waive a competitive bid process with approval from a group of commissioners and other executives in state government,” Geballe said. “In situations when … going through the full-blown competitive bid process isn’t logical.”

Since late March, records show the state Department of Correction, which serves as quartermaster for all of Connecticut’s PPE purchases, executed more than 150 of these no-bid purchase orders to acquire more than 200 million pieces of PPE.

'It's A Relationship Game'

Much of that PPE came from vendors with connections to China. 

“We worked every relationship we could find, in and around China,” Lamont told reporters while standing inside a Connecticut warehouse filled with PPE on May 12. 

“It was a little tricky. We had agents and my great friend Ray Dalio has strong relationships in China. It’s a relationship game,” Lamont said. 

Dalio is a Connecticut billionaire hedge fund manager and philanthropist. He declined an interview for this story. 

As he gestured to boxes of PPE, Lamont touted other Connecticut-Chinese connections, including Carl Kuehner, co-owner of BLT Management LLC, a Stamford-based real estate company. 

“We had to work with Carl Kuehner and his daughter Lexi in terms of putting together the supply chain. That gets it from the factory, through the bank, to the port, to the cargo shipping … and getting it distributed by truck to this state,” Lamont said.

Records show BLT received more than $15 million in PPE purchase orders from the state in April and May. 

When asked what experience Kuehner’s company has working with or sourcing personal protective equipment, his spokesperson, Caroline Hartman, responded via email.

“BLT will not be participating in this story,” Hartman wrote.

But other PPE suppliers were eager to talk. 

EASiBuy LLC is an Ohio-based company that runs online reverse auctions. That’s an auction in which qualified sellers compete for buyers, as opposed to a typical auction, in which buyers compete for a seller’s product. 

Since 2017, Connecticut has contracted with EASiBuy for a variety of goods, including road salt and office supplies. But when the pandemic hit, the market shifted, said EASiBuy CEO Travis Smith. Unscrupulous vendors demanded upfront cash payments and people would pay it, even at inflated prices. 

“The supply chain is strained, and there are a lot of bad actors,” Smith said. “There’s a ton of fraud out there.” 

As government buyers expressed hesitation, EASiBuy began to vet PPE vendors on behalf of cities and states. They would check certification paperwork, personally visit warehouses and request “proof of life” -- kind of like a movie villain holding a newspaper next to a blindfolded hostage.

“So, hey, give me today’s newspaper. I mean, this is how crazy this is. Today’s newspaper, you know, let me see it in front of the product,” said Smith. 

Smith said the majority of his company’s PPE work is connecting vetted vendors with government procurement agents. But as governments paused other purchasing to fight the COVID-19 pandemic, the immediate need for reverse auctions waned.

So then, his company decided not to just connect buyers and sellers. It started buying and selling PPE.

“This has been able to help us offset, so thank goodness we’ve been able to adapt,” Smith said. 

State records show Connecticut officials waived competitive bidding and issued EASiBuy nearly $39 million in no-bid purchase orders in late June for a wide variety of PPE, including masks, medical exam gloves and roughly $33 million for 10 million isolation gowns. The latter is from a supplier Smith’s company vetted and first connected with the state of California. 

“So [we’re] able to work with this factory who is based in China, shipping out of Shanghai into the port of Los Angeles and then trucking across,” he said.

“We’ve taken on a ton of risk,” Smith said, adding his company wants “nothing more than for this supply chain to clean up so we can go back to running reverse auctions.”

“I would have thought that it would have slowed down by now,” he said. “But obviously, based on what we’re all seeing out there, it’s not.”

'I Know A Guy Who Knows A Guy'

Josh Geballe said the state faced a fire hose of incoming offers for PPE in the early days of the pandemic. That left procurement officials scrambling to vet potential sellers at a time when PPE prices were ballooning and worldwide supply chains hinged on fast cash transactions.

“We were getting emails every day from random people saying, ‘I know a guy who knows a guy, who has a friend at a factory in China,” Geballe said. “We chased every single lead ... It was an all hands on deck moment. The supply chain had completely broken down.” 

One of those leads led to Guy Neumann.

Neumann said his remodeling business, GN Construction LLC, based in Hartford, was struggling in March and April as the coronavirus shuttered storefronts and fueled an astronomical rise in jobless claims. 

As he watched construction contracts vanish, Neumann said he had to get creative to save his company, so he contacted a childhood friend in China who is in the import business.

“I reached out to him,” Neumann said. He bought a bunch of masks. “I took a gamble and … I shipped over some surgical masks, right in the height of everything.”

Initially, Neumann believed his first shipments were tied up in China, but “one day UPS just showed up and dropped off like 25 boxes,” he said. “It was a very strange transaction to begin with.”

More transactions followed, and Neumann sold small shipments to buyers across the state.

“I started selling them through GN Construction,” Neumann said, adding he eventually acquired larger orders of PPE via his overseas contact. 

“That’s when I tried to find a bigger buyer and approached the state,” Neumann said. “I believe that the prices I gave the state were better than the prices the states were getting otherwise … I had no red tape.”

Records show the state issued a purchase order to Neumann’s business in May for $629,000. In return, the state got around 1.7 million surgical masks, which Neumann said were sourced from a manufacturer approved by the U.S. Food and Drug Administration. Neumann said he provided the state with requested paperwork to prove the masks were authentic.

“During every crisis there is opportunity,” Neumann said. “I figured I could just jump in and take a gamble. It’s something that everybody needs. It’s disposable masks, they’re well made.”

Cameron White works a sewing machine surrounded by piles of white disposable gowns and blue surgical gowns in the Gilman Gear factory in Bozrah.
Credit Ryan Caron King / Connecticut Public

'You Couldn’t Walk Through The Garage'

As companies like BLT and EASiBuy moved tens of thousands of units of PPE from Chinese ports to warehouses in Connecticut, Alan and Carri Barnett said their Stamford home was filling up with surgical masks. 

“You couldn’t walk through the garage,” Alan said.

Carri Barnett, a fashion designer who represents a contract apparel manufacturer in China, said she returned from a trip to that country in January when the pair began discussing getting into the PPE business.

The Barnetts decided to revive an LLC they registered in 2017, Point of Bleu, which the pair originally envisioned as a new fashion brand. At the same time they were pulling back their investments in the stock market, they began investing in surgical masks for essential workers. 

“We went into it with the idea of making a little bit of money and helping,” Alan Barnett said. “Our profit from this endeavor is less than 10 percent and we refuse to try to take any more.”

The Barnetts said they leveraged a pool of overseas factory and manufacturing contacts and, by early April, had shipped their first order of masks, selling them locally in Stamford.

But as more surgical masks continued flowing in, Carri Barnett said the pair found themselves looking for bigger buyers. They began to scan the newspaper, looking for agencies quoted as needing PPE. 

“And we just called the state,” she said. 

Alan Barnett said the state asked him for references, integrity-test results for the masks, and that he provide FDA registrations of the factories manufacturing the product.

Those calls eventually yielded a $7.3 million deal with Connecticut, including an ongoing order for a total of 12 million surgical masks that’s slated to extend until mid-September.

“We give them the production and transportation update every week, and everybody is on top of the whole thing,” Alan Barnett said.

'It's Been A Whirlwind Ever Since'

Bing Carbone is president of Modern Plastics in Shelton, which is a distributor and custom plastics fabricator. He said as the pandemic ramped up in mid-March, he called his boss. 

“We were talking about the PPE shortages at the time, one of them being the face shields,” Carbone said. “I said to him, ‘We’re a plastic distributor, so we have access to plastic materials. We’re also a manufacturer. So we know how to make things. … And I said, ‘What if we started to manufacture these plastic face shields?’” 

Carbone posted on his personal Facebook that the company was getting into the PPE business. Only a few hours later, he said his company had orders for half a million shields.

“It’s been a whirlwind ever since,” Carbone said. “We first started producing face shields back in March, and I ended up getting a few contact names within the state of Connecticut that I pursued via email.”

Those emails eventually led to several no-bid state purchase orders totaling more than $5 million. “We delivered on our promises for delivery and also on the quality of the product,” Carbone said, noting that the company is ISO-certified to mass produce medical equipment

Carbone said he’s sold face shields to Arizona, Florida and Maryland. He said business for Modern Plastics is “up over 400 percent.”

“We have produced well over 13 million face shields, and we have not had issues with any of them coming back to us in terms of quality,” Carbone said. “We do see this as a long-term part of our business at this point.”

Josh Geballe, Lamont’s chief operating officer, said so far, all of the PPE the state has received has been up to the expected standards. 

“The state hasn’t lost any money yet on any bad purchases,” Geballe said. 

But Geballe said as the global supply chain stabilizes, he’s hopeful suppliers the state has historically contracted with will begin to come back online.

“We were appreciative of every person who stepped forward,” Geballe said, “of every company who decided to retool their manufacturing line to start producing PPE, all of those efforts helped … Because many of them did pan out, even from very nontraditional sources, [and] turned out to be some very reliable suppliers [of] PPE.” 

'The Problem Is We Can’t Compete'

As his sports business flatlined, Neil Gilman hoped a trip to the hospital might revive it. 

“I went out and I got a sample of a[n] isolation gown from the local hospital,” Gilman said. “We took it apart and we made a pattern, our own pattern, and we used our own materials and sewed up some prototypes.”

Gilman shopped that prototype around and eventually landed his first contract with Yale New Haven Hospital.  

He refitted one of his sports equipment factories, bought more materials and hired more employees with a mandate: Make isolation gowns. 

In late May, Gilman landed several orders from a client he describes as his largest PPE buyer: the state of Connecticut. Records show several no-bid purchase orders issued to Gilman Gear worth around $375,000.

“Without the state of Connecticut we would not be able to sustain this PPE business,” Gilman said. 

Gilman said his company stepped up to manufacture PPE at a time when coronavirus shattered the usual PPE supply lines between local hospitals and overseas manufacturers. 

“But now, China has come back, and they’re exporting their products like crazy,” Gilman said. “And the availability of Chinese products or imported products is, again, very plentiful. The problem is we can’t compete.”

Neil Gilman said when he saw Lamont standing in that warehouse back in May touting thousands of surgical gowns sourced from China, he was upset.

“We should be developing a domestic source of supply,” Gilman said.

Still, he said that the state had to move fast to acquire PPE and that he was grateful to receive state purchase orders for thousands of gowns that he continues to deliver to the state weekly. 

And while he thinks those orders have saved his sporting gear business, he’s still left struggling to carve out a business in a global market dominated by imports that may only look more appealing to state buyers as emergency orders stay in place and supply chains eventually stabilize. 

“I think the pandemic really changed all the rules because you didn’t have the time to put out a bid. Everything was done on an emergency basis,” Gilman said. “We got some of the opportunities, but other ones we didn’t even know about.”