Wrong Masks and ‘Missing’ Ventilators: NYC’s Billion-Dollar COVID Gear Bungle
At the height of the pandemic, the city issued $1.4 billion in emergency, no-bid contracts for crucial medical equipment — and got the wrong masks and lost track of deliveries, records show. “Stop this s—t!” one bureaucrat cried during an online meeting.
Last spring, frontline medical workers scrambled in vain to find proper surgical masks as the coronavirus swept through hospitals across the city.
Doctors, nurses and medical technicians were forced to reuse the same mask over and over — a dangerously ineffective method to stem infection from a virus that’s now taken the lives of more than 24,000 New Yorkers.
City officials jumped into action, signing more than $1 billion in emergency no-bid contracts with seemingly anybody who claimed they could produce high-quality masks and other crucial COVID gear — including ventilators.
Among them: Genuine Parts Company, an Atlanta-based firm that specializes in auto parts. The Department of Citywide Administrative Services (DCAS), which handles most of City Hall’s purchases, had bought parts for city vehicles from Genuine in the past.
According to internal records obtained by THE CITY, DCAS paid $348,000 for what was described by Genuine as 300,000 “non-Latex surgical masks” that were marked as “received” by the city on April 7. That was at the peak of the virus’ spread in New York City, when the seven-day average for daily hospitalizations hit 1,642, compared to this week’s 52.
But records show that when DCAS’ Bureau of Quality Assurance inspected the delivered goods, workers discovered not surgical masks but “disposable single-use non-surgical mask/dust mask/Not FDA approved.”
The items were nevertheless deemed “accepted due to public necessity.” DCAS paid full price and placed subsequent orders for more masks from the car parts dealer, records show. DCAS then “redirected” the masks — useless in emergency rooms — elsewhere for non-medical use.
The Genuine mask purchase is part of a disturbing pattern uncovered during an investigation by THE CITY of DCAS’ pandemic-spurred emergency buying spree.
During some of the most dire weeks of the crisis, THE CITY found, the agency lost track of key equipment from masks to ventilators — driving an exasperated DCAS official to declare in one early May meeting: “Stop this s—t! Stop this s—t! Fix the problem!”
DCAS records, internal emails and recordings of virtual staff meetings obtained by THE CITY paint a portrait of taxpayer-funded chaos:
- City taxpayers paid for millions of surgical masks that turned out to be non-surgical masks. By April, unopened boxes of masks hospitals didn’t want began to stack up in DCAS’ mammoth 300,000-square-foot Queens warehouse.
- At one point, DCAS lost track of 100 ventilators. “I don’t know how someone could misplace 100 of these items,” an agency supervisor said during a meeting.
- Millions of dollars of medical equipment wound up collecting dust in the storehouse long after the need for the devices had passed — including machines that could have been repurposed as ventilators.
- Boxes of equipment got lost in the shuffle, going missing within the storehouse or getting shipped out without anyone recording what was in them.
- One supplier of masks that didn’t meet surgical standards as promised was an electronics company headed by a major donor to Mayor Bill de Blasio’s campaigns. De Blasio appointed the donor earlier this year to the board of the city Economic Development Corp.
To date, DCAS has awarded $1.4 billion in contracts for COVID-related emergency goods — far more than any other city agency, records show.
As of Nov. 4, the agency had already paid out nearly half of that, with more payments in the pipeline, records show. That includes $78.5 million pre-paid without actual invoices from the vendors. The checks pre-paid to individual vendors with no invoices hit as high as $15.5 million.
An ‘Extraordinary Undertaking’
In a written response to THE CITY’s questions, Nick Benson, a DCAS spokesperson, described the scramble to procure COVID-related protective gear and medical equipment as unprecedented. The $1.4 billion in emergency COVID-related purchases was as much as DCAS usually spends on all items in a single year, he wrote.
“The volume we were receiving from vendors and donors across the world was larger than anything we’d ever experienced,” he wrote, describing the flood of purchases as “about 60 times greater” than average.
“All of this work was part of a truly extraordinary undertaking that required a sustained, 24/7 operation involving countless people across city government,” he added. “The city is incredibly proud of the heroic work its staff did under extremely high-pressure circumstances with life and death consequences.”
Benson insisted that the system set up to confront the crisis was adequate: “DCAS has a full accounting of everything that was delivered — by vendor.”
But records and interviews raise questions about whether DCAS can say for certain what taxpayers paid for in the early days of the pandemic — and whether all the purchased goods got to where they were supposed to go.
THE CITY’s investigation found that the reporting on whatever happened in the first two months was often apparently performed by guesswork rather than systematic accounting.
Asked if the agency can say definitively where every purchase order wound up, Benson wrote, “DCAS logged the receipt of all goods and distributed them to DCAS’s client agencies as needed.”
‘We are Missing 100 Ventilators’
Among the city’s crucial COVID-related purchases were ventilators. As the number of coronavirus patients began to fill up intensive care units in late March and into April, hospitals scrambled to find machines to provide oxygen to patients struggling to breathe.
At daily briefings, Gov. Andrew Cuomo and de Blasio often spoke of the frantic search for the life-saving devices.
DCAS began buying them from suppliers far and wide. One such contract was awarded on March 28 to McKesson Medical of Texas. The firm was to be paid $469,000 for 150 used Trilogy100 portable ventilators, records show.
Two weeks later, DCAS couldn’t figure out where most of them went, according to a recording of an April 17 virtual staff meeting.
During the meeting, Patrice Williams, a DCAS supervisor, revealed, “It looks like there was an additional 100 [McKesson] ventilators that were delivered that we, I guess, don’t know what happened with them. If they’re not physically in the storehouse and we don’t have any outbound transactions or anything going outbound that says that these 100 left, we are missing 100 ventilators.”
Williams said there were no inspection records for the McKesson vents, stating, “They could potentially be in the storehouse somewhere but I don’t know how someone could misplace 100 of these items.”
“They either left on an outbound transaction that’s recorded somewhere or they left by some other manner,” he added.
At the time, DCAS officials couldn’t tell whether 100 ventilators they believed had been shipped out of the storehouse were purchased McKesson vents or vents rented from another company, Garner Environmental Corp.
At the time, no records existed in the warehouse management system registering either the McKesson equipment or the Garner equipment as specifically arriving at the storehouse and then being delivered to a specific agency.
Ultimately, DCAS figured out that all of the Garner vents and the 100 McKesson vents had, in fact, wound up in hospitals after having the city Health + Hospital Corporation check serial numbers on the machines.
As of last week, 50 of the McKesson ventilators were still sitting in the storehouse, DCAS confirmed.
Benson said DCAS “categorically rejects this statement that the inventory system failed. DCAS expeditiously delivered ventilators to client agencies as they were needed. In addition to ventilators that were needed immediately, DCAS purchased back-up ventilators that remained warehoused until they were needed. Cross-checking serial numbers had nothing to do with ‘finding’ the ventilators because they were never lost.”
‘Just So Frustrating’
On April 8, at the height of the crisis, DCAS awarded the Pennsylvania-based QMES LLC a $10 million no-bid contract for 1,000 ResMed Aircurve 10ST breathing machines known as BiPAPs that could be repurposed as ventilators, records show.
During an email exchange in early May, DCAS supervisors realized nobody wanted these machines.
‘All of this is so confusing.’
Sara Ahluwalia, a DCAS supervisor, wrote, “I do not know if it is too late for this. But does H+H expect to use the resmeds? If not — would it possible (sic) to return this or is it too late?”
Another DCAS manager, Lawrence Siegel, responded that the BiPAPs were now in the city’s official “stockpile.”
“Uff [sic] all of this is so confusing,” Ahluwalia wrote back. “I thought H+H was the authority on the vents. If the hospitals won’t use them what’s the point of the stockpile for this item? Just so frustrating.”
Last week, DCAS confirmed that the full quantity of these items — all $10 million — remains sitting in storage.
The Department of Health and Mental Hygiene — which was in charge of distributing protective gear and medical equipment to hospitals — declined to answer THE CITY’s questions about why QMES BiPAPS were ordered in the first place. A spokesperson for Health + Hospitals did not respond to THE CITY’s questions about the purchase.
Benson also declined to answer that question, but did say, “Fortunately, at the pandemic’s peak this model of ventilator was not needed in intensive care units, but it was available if needed as a back-up option. These ventilators are [now] part of the city’s stockpile.”
De Blasio Donor Reaps Contracts
Surgical masks that turned out not to make the grade mark a prime example where, after deeming the orders “accepted,” DCAS discovered it hadn’t received what it had paid for.
In the case of the purchase from Genuine, the car parts company, Benson wrote, “Because there was an urgent public need for both medical and non-medical grade masks, the city opted to keep these masks for non-medical use.”
Benson said the masks passed a quality assurance review for non-medical masks, and the city paid what it had agreed to pay for surgical masks anyway — $1.16 each — “because of its competitive pricing and fast shipping. The initial order was shipped in just one day and fast shipping was beneficial to the city’s response efforts.”
Genuine did not return calls seeking comment.
A similar scenario unfolded with another vendor, Digital Gadgets, an electronics firm whose CEO, Charlie Tebele, along with family members, has been a frequent donor to de Blasio’s various political campaigns.
In late March, DCAS awarded $19 million in no-bid contracts to Digital for high quality N95 masks and lower quality KN95 masks. That included an $8 million contract for what the firm promised would be two million “surgical grade N95s,” according to internal DCAS documents.
The company also won a $91 million contract to provide DCAS with ventilators that was later cancelled because, Benson told THE CITY, the agency “decided to order a different ventilator model.”
Digital Gadgets — which previously supplied hoverboards to QVC — did deliver masks. But DCAS records reveal that the agency’s Bureau of Quality Assurance discovered the masks Digital delivered were not “surgical grade N95s” as promised and had not been approved by either the Food and Drug Administration (FDA) or the National Institute for Occupational Safety and Health.
In an April 29 email obtained by THE CITY, DCAS Chief Contracting Officer Adam Buchanan told Tebele, “In order to accept the masks you’ve delivered and plan to continue delivering, we will need you to provide documentation showing these masks have been tested and approved in accordance with” NIOSH and FDA standards for use as N95 masks.
N95s are top-of-the-line masks hospitals require staff to wear to help protect them from the virus.
No Proof of FDA Okay
Tebele, in his emailed response to Buchanan, promised to “forward the test reports” immediately. He wrote that another DCAS official had informed him the agency “still needed [the masks] and would decide how to appropriately distribute” them.
In response to THE CITY’s query, DCAS’ Benson wrote that the N95s received from Digital Gadgets “did not contain proof of FDA approval. Those masks were kept due to public necessity for use in non-medical settings.”
Benson stated that “outstanding undelivered N95 orders with Digital Gadgets were cancelled,” and that “to account for the N95s received without documentation of FDA approval, outstanding orders (from Digital) for KN95s were reduced in price from $2.84/mask to $2.42/mask.”
To date, DCAS has paid $25 million to Digital Gadgets for N95 and lower grade masks, including using $9 million pre-paid for the canceled ventilation contract to cover the costs, city officials say.
Digital Gadgets’ attorney, Harlan Lazarus, called DCAS’ statement that the masks were not FDA approved “misleading” and said the reduction in price for the KN95s was not due to the issue regarding the N95s.
“What happened here was, simply, that DG executed on its contract with DCAS,” Lazarus wrote in response to THE CITY’s questions. “DCAS has not advised DG of any open issue. Any suggestion in your reporting to the contrary would be false and untrue.”
The attorney contended the masks “were ‘cleared’ for their intended use per the Emergency Use Authorization issued by the FDA in effect at the time of this shipment. All DG shipments were subject to inspection for quality prior to DCAS’ acceptance and all DG supplied masks conformed to applicable rules and regulations in effect at the time of delivery.”
“Digital Gadgets worked with NYC to procure masks during this healthcare crisis,” Lazarus added. “We took care to follow every applicable rule and regulation. In a constantly evolving regulatory environment, we worked with NYC to make sure that its needs were met. At all times, Digital Gadgets acted honestly and fairly — any suggestion to the contrary is patently false.”
As THE CITY reported in August, Tebele and his family have donated more than $44,000 to de Blasio’s presidential ambitions and his 2017 re-election campaign. De Blasio appointed him to the city’s Economic Development Corp. shortly before DCAS awarded Digital’s COVID-related contracts last March.
‘I Don’t Understand’
As the virus peaked in the city, the supply of lower-quality masks that hospitals wouldn’t accept began to pile up in DCAS’ Fresh Pond, Queens, storehouse, according to a recording of an April 22 virtual DCAS staff meeting obtained by THE CITY.
Ahluwalia asked why more and more boxes of KN95s were beginning to take up space inside the storehouse.
“Did we figure out what’s going on with the KN95s? The commissioner (Lisette Camilo) said she was going to check on her supply call. Nobody’s taking them? I don’t understand.”
Another colleague chimed in, “You’re not going to get the hospitals to take anything.”
A third added, “We want to get them to the agencies. We have a lot of stuff at the warehouse. We have 60 boxes of KN95s and I’m not sure what the demand is.”
Then there’s actual surgical masks that wound up missing in action.
Shortly after the start of the pandemic, DCAS manager Williams asked about two cases containing 800 Halyard Health Fluidshield Type 3 Procedure Masks found underneath a desk inside the DCAS storehouse that later went missing.
In a May 1 email to Daniel Calles, director of DCAS’ Bureau of Quality Assurance, Williams wrote, “I just checked the (purchase order) tracker and (warehouse management system) and notice that nothing has been (recorded as) received.”
“We are trying to locate and will check with receiving if they have it,” Calles wrote.
In another email 20 days later, Ahluwalia also asked about the missing masks. Calles reported, “Receiving team has not been able to locate.”
He said he would check with the Department of Health and Mental Hygiene, which was in charge of distributing COVID-related medical gear.
Health officials couldn’t account for the masks either.
Six months after the cases of masks had arrived at the storehouse, an official “received report” for the items suddenly appeared in the system on Oct. 14, records obtained by THE CITY show.
“These cases (of masks) were not lost and were set aside for use by staff members at the city’s central storehouse,” DCAS’ Benson wrote.
Taking Stock of Inventory Problems
Throughout the advent of the pandemic, DCAS managers struggled to get control of the inventory arriving at the storehouse, according to meeting recordings and internal records.
Traditionally goods arrive, are formally logged in as “received” with an official document, then are inspected by workers. Workers then memorialize that inspection by writing down in the DCAS warehouse management system the specific quantity and quality of what they have inspected.
From March well into May, that didn’t always happen. Workers would do quick visual inspections of deliveries without systematically recording what they’d seen. Orders would often arrive without identifying information, such as purchase numbers.
In some cases, the items would be marked as “inspected” weeks and sometimes months after they’d arrived at the warehouse.
With the Genuine mask order, for example, DCAS records show two different inspection dates. One record reports DCAS’ supervisor David Peltz inspected the shipment on April 7 when it was marked as “received,” but another states, “inspection is completed by Peltz” on May 6.
DCAS’ Benson said the later date was when the inspection was actually entered into the warehouse management system. “There were lags in reports/data entry because [we] were receiving 60 times our normal volume of deliveries,” he wrote.
During the April 17 staff meeting, warehouse supervisor Cliff Francis reported that workers in DCAS’ Bureau of Quality Assurance (BQA) unit check items when they arrive at the storehouse, but when he’s asked what documentation exists to record that, he responds, “Technically nothing except what’s [written] on that box.”
Oftentimes there were blank boxes or boxes with Chinese characters none of the workers could read, according to a source familiar with the inspection process. These boxes would be recorded as “inspected” and later shipped out before an inspection could take place.
DCAS manager Williams asked Francis, “So then how is BQA entering inspection results once they receive the receiving record?”
Francis responds, “If there’s no receiving report, there’s no inspection.” At the time, receiving reports weren’t showing up for days after items arrived at the storehouse.
Days later, at an April 22 virtual staff meeting, Francis noted, “Some of this stuff that’s coming here, we don’t even know what the PO [purchase order] is, okay, until later on down the line. So how do I track this?”
Ahluwalia responded, “There’s been so many times where we’ve sent the product out the door and we have no receipt of inspection, right? From a liability standpoint, we should be inspecting everything.”
When she suggests “Can we start, like, a tracking sheet?” Francis suggested a jerry-rigged system of tracking inventory by “marking” each box with a “marker.”
Ahluwalia responds, “No there’s no marking with a marker. I need an Excel spreadsheet.”
And she concedes that because six weeks into the crisis the inspection data had not been tracked properly: “Going backwards, you can’t really fix anything.
DCAS’ Benson insisted that everything was inspected and all inspections were recorded.
But, he added, “Due to the life and death urgency involved, supplies were moved as soon as they cleared quality assurance. To accelerate this process, some paperwork and reports were finalized after items were loaded onto trucks and sent to client agencies instead of goods being held idle while paperwork was being completed.”
‘You’re Not on Mute’
By the first week of May, the storehouse system had improved somewhat, with workers now recording inbound items as “received” and “inspected” as they arrived. But as for what happened to goods transported out of the storehouse, the system was not yet fixed.
During a May 6 meeting, Mersida Ibric, a DCAS manager, asked, “In order to get the full inventory picture so I know what’s received, do we have everything that’s going out? Do we have that all tracked?”
Ahluwalia interjected, “No.”
Anson Telford, an assistant commissioner, added, “It’s not tracked in the system.”
DCAS staffers on the call explained that they were using “temp tickets” to track what was being shipped out of the warehouse — but that the information on those tickets was essentially useless for compiling a full and accurate inventory.
A worker on the call noted, “We probably should write stuff down.”
Ahluwalia exclaimed, “Stop this s—t! Stop this s—t! Fix the problem!”
Ibric responded, “You guys know you’re not on mute, right?”