What’s Up with the Feds Seizing PPE Shipments to States and Hospitals?

LIEGE, BELGIUM - MARCH 23 : Arrival of a new shipment of 6 million surgical masks at the cargo area of Liege Airport. The masks will be distributed to hospitals and care workers by the military and the civil protecti... LIEGE, BELGIUM - MARCH 23 : Arrival of a new shipment of 6 million surgical masks at the cargo area of Liege Airport. The masks will be distributed to hospitals and care workers by the military and the civil protection services. Pictured on March 23, 2020 in Liege, Belgium, 23/03/2020 ( Photo by Vincent Kalut / Photonews via Getty Images) MORE LESS
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Let’s talk about these seizures of PPE goods by federal authorities. There are a number of instances of this and as I noted in the post below a number of reasons why it might be happening. There are numerous cases where orders placed by states or hospitals have been canceled after they have been outbid by federal authorities or federal authorities have ordered vendors to sell to the federal government. According to Kaiser Health News, those compelled sales appear to be pursuant to an executive order President Trump signed on March 18th under authorities granted by the Defense Production Act.

But what I’m more interested in are reports of federal authorities confiscating physical shipments en route to states, local governments or regional hospital systems. The most publicized case of this came at some point in March when, according to Massachusetts Gov. Charlie Baker (R), a shipment of 3 million masks ordered through BJ’s Wholesale was seized by federal authorities in the Port of New York. Baker did not say which agency confiscated the goods or under what authority. That incident was what led to the widely reported and successful effort to fly goods in from China using the New England Patriots jet.

Another case happened just yesterday when the top county official in Somerset County, New Jersey, Freeholder Director Shanel Robinson, announced that a shipment of 35,000 masks had been confiscated by federal officials. According to this report in the Franklin Reporter and Advocate, “As of early in the afternoon of April 3, Robinson said that the county was told the surgical face masks would be delivered that day, but that the federal government had taken the N-95 masks.”

It’s not entirely clear from the report. But this does not sound like the federal government outbid the county or forced it to sell but rather that the physical shipment was interdicted and seized by federal authorities. Robinson said that the vendor didn’t say which agency confiscated the shipment.

“This doesn’t even make sense,” said Robinson, according to the same report. “Part of the thing is, I know the government is monitoring large orders of equipment, but they had no idea where that was going. They’re on a watch for anybody ordering en masse. It’s not like we put in orders every week. We’ve been waiting on that order for two-and-a-half, three weeks.”

According to Robinson, the Governor and the state’s congressional delegation are pressing to get the order returned to Somerset County.

These are two instances. A number of others have been reported with varying levels of specificity. I have heard what I believe is a reliable report of a major non-governmental entity in the western United States having a major shipment seized by federal authorities at an airport in California.

There are two key issues to consider here.

One is that the federal government is telling states that they are responsible for getting their own supplies and should only appeal to the federal government in emergencies. (See the recent debate about who the federal stockpile is for.) But at the same time federal authorities are seizing shipments that states, local governments and major medical organizations have purchased. At best this is a contradictory and poorly communicated policy.

It’s also very unclear just who is seizing the supplies, what they’re being used for or who is getting access to them. The assumption seems to be that they are being handed over to FEMA for distribution to other parts of the country. As “>noted in the post below, this is not crazy in itself. There is a strong logic to the federal government assuming authority for all distribution of critical supplies during such a crisis. But it seems to be being done piecemeal and without any clarity about what’s happening. This has spurred a lot of suspicion about whether the goods are being handed over to the private sector distributors the White House Task Force is working with (as explained by Admiral Polowczyk on Thursday at the White House briefing) or whether they are being distributed to other parts of the country on a preferential basis. We simply don’t know. It’s unclear to me yet whether these suspicions are based on actual information received by those who have had their shipments confiscated or whether it’s just speculation and suspicion in a chaotic and frustrating situation.

In any case, we need to know more. States have been asking the federal government to take over the process of provisioning the country with these critical PPE goods. That at least would avoid states being forced to bid up prices by bidding against each other. After having FEMA swoop in and purchase ventilators that Colorado was in the process of buying, Gov. Jared Polis (D) said: “Either be in or out. [Either let] us know what we’re going to get and when we’re going to get them or stay out and let us buy them.” But these seizures of shipments are at best causing confusion for desperate states and hospitals. And they seem so haphazard that they are raising legitimate questions about whether they are being allocated to states in a preferential or politicized fashion.

We need to know more. If you see relevant press reports or if you personally know relevant information please contact us as soon as possible. Confidentiality assured.

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