California’s PPE marketplace filled with fraud and scams, according to investigation

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California’s PPE marketplace has been overwhelmed by hucksters and scams, according to a new investigation by the Sacramento Bee. Credit: Pixabay.

COVID-19 caught America flat-footed. The country didn’t have enough masks, gloves, or gowns, which causeda desperate scramble for personal protective equipment (PPE). Hospitals, cities, states, and the federal government all competed against each other for goods.  In some cases, they outbid each other on eBay, and used armed guards to protect supplies from poachers. Here in California, Gov. Gavin Newsom opened an online marketplace to buy and sell PPE. Suddenly, anyone could sell extra N95 masks, used ventilators, and even body bags. Soon, the site was overwhelmed with fraudsters and dodgy PPE, according to an investigation by the Sacramento Bee.

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When COVID-19 hit, America was caught flat footed. Masks, gowns and gloves were in short supply. Hospitals, cities, states and even the federal government were bidding online against each other in a desperate bid to fill the gap. 

California Governor Gavin Newsom opened an online portal to buy and sell personal protective equipment like N95 masks, used ventilators, even body bags. But the site was overwhelmed with dodgy PPE and oversight was sparse. 

KCRW spoke with Jason Pohl, an investigative reporter for The Sacramento Bee.

KCRW: The intention sounds good, a place for the honest buying and selling of items. What went wrong?

Jason Pohl: “April 4th, when the governor announced this new portal, there was a mad dash to acquire everything from N95 masks to basic gloves and face shields to circumvent this shortage of supplies. Governor Newsom’s administration launched a supplies portal. Basically, a way for people that had anything in their closets to donate masks and then also to lure in bigger businesses that might be producing this equipment.

It got rolling really quickly. And within a couple of weeks, we're talking about thousands of entries that were being slotted into this portal.”

KCRW: Was there no way to ferret out the good stuff from the bad stuff, was no one looking at this from a quality perspective?

Jason Pohl: “At that point in April, it was an all hands-on-deck approach. At one news conference, I distinctly remember Governor Newsom saying if anybody had an extra ventilator, the state would take it, because there's such a shortage of these very basic supplies and necessities in responding to the pandemic. 

...Those donations were entered into this portal, this sort of gateway into the state system for procuring these things. There was a whole team of people who were vetting these entries. They were very quickly overwhelmed with just the vast number and the variety of things.”

KCRW: So you could go on this site and say, ‘Oh, I see someone's offering a couple of ventilators, I'll just buy it from this person” and none of it had been vetted?

Jason Pohl: “Not quite like this. This is a portal where anybody who had supplies could say ‘I have this, State of California. Will you take this from me in one instance?’ For example, we saw some of these really giant mask manufacturers say: ‘instead of California, we can produce 100 million masks for you. Will you take us up on this offer?’

On the opposite end of the spectrum, we had individuals who found a couple of masks in a closet, and they'd say: ‘State of California, I have two N95 masks leftover from wildfires. Do you want these?’ The state would go through all of these submissions and decide which ones were needing a follow-up phone call or might actually result in a future contract.”

KCRW: How many contracts were entered into by the state?

Jason Pohl: “This has been the million dollar, maybe billion dollar question. There were, at least 400 so-called ‘no-bid contracts’ that the state entered, in response to the pandemic. That means that they did not go through the normal public vetting processes that other major contracts go through…

Those 400 contracts run the gamut from massive deals, as well as other contracts for services, to all sorts of different things. In terms of the portal, [the supplies request website] we don't actually know how many submissions resulted in a contract. Even the state … suspected very few even got a follow up phone call… because there were so many shady offers and sometimes bizarre offers…”

KCRW: So what are some of the companies selling this PPE?

Jason Pohl: “BYD is a California connected company with a production plant in China. Typically, they produced buses and other vehicles. They modified a factory and had a line on producing masks that were so desperately in need. 

The state entered into an ultimately $1 billion contract with BYD for these masks. Interestingly, within three days of the governor launching the supplies portal, a BYD entry shows up. On that third day, the governor announced on Rachel Maddow’s primetime show, there was a new mask deal being finalized. These things, sometimes, move very quickly...” 

KCRW: I remember there was some kind of mystery about how he [Newsom] entered into this deal. Is this actually how he did it? He just saw them on the online portal?

Jason Pohl: “We don't know exactly how this all worked out, the timing of it. What we do know is, within a couple of days of this portal being opened up. BYD made an entry, all of a sudden there was a deal.”

KCRW: It's interesting that we don't know, even now, how much money the state has spent on this and whether or not it actually got what it wanted from this money. Where is the oversight?

Jason Pohl: “The emergency services director, in an oversight hearing last month, was asked about this very thing.  His response was, the state has not lost a single penny in any of these deals. That's because a lot of these contracts have clauses where payment will not be made, unless the product is received. It's not like this money was going out the door and you're waiting for supplies to land on your doorstep. It's actually quite the opposite.”

KCRW: So where are we now with this online marketplace?

Jason Pohl: “... We're told that the process for vetting and screening has been improved… 

The state says if we see a second wave of infections, for example, or some sort of strain in resources, the supply chains in place now… will make it so we don't end up in a similar circumstance. I think a lot of that though, remains to be seen.”