By The Washington Post · Tom Hamburger, Juliet Eilperin · NATIONAL, BUSINESS, US-GLOBAL-MARKETS
The contract was canceled by Maryland officials earlier this month who said Blue Flame failed to deliver medical masks and ventilators on time. The firm's lawyer, Douglas Gansler, a former Maryland attorney general, said Thursday that Maryland officials made a mistake.
Gansler said 27 of 110 mechanical ventilators promised by Blue Flame were delivered Thursday to a Maryland Emergency Management Agency office in Sparrows Point, a sign of the company's good faith effort to fulfill its obligation.
Nick Cavey, a spokesman for the Maryland Department of General Services, acknowledged the delivery of 27 ventilators but said the state had not accepted it "pending legal deliberations. At this time, we continue to work through the very concerning legal issues surrounding Blue Flame, which is the subject of separate federal, state and congressional inquiries. We are awaiting more information from the company regarding the 1.55 million masks and remaining ventilators that the state ordered."
Gansler said the state has no grounds to kill the deal. "There is absolutely no defense for canceling this contract," Gansler said in an interview Wednesday night. He filed a claim with the state Department of General Services noting that the contract required delivery by June 30, a deadline he said the recently formed company is prepared to meet. "I would like to believe that the government will rescind the termination and reinstate the purchase order and get 1.5 million masks and 110 ventilators in to the state as the contract calls for."
Maryland Gov. Larry Hogan's (R) spokesman Michael Ricci said in an email Thursday that the state does not need additional ventilators now.
"There are currently 1,765 ventilators available in Maryland hospitals, well above our target," he said.
State officials have previously said the agreed-upon shipping date for the masks and ventilators was April 14, and the original order only referred to June 30 because it marks the end of the fiscal year. A Blue Flame invoice obtained by The Washington Post indicates April 14 as the shipping date.
The U.S. Justice Department launched an inquiry into Blue Flame less than a month ago after becoming aware of concerns from Maryland and California, where state officials contracted with the firm to deliver 100 million N95 medical masks.
California officials halted that contract and received a refund hours after the state wired a down payment of $457 million to a Blue Flame bank account in Northern Virginia.
State and local officials across the country have encountered problems as they have entered the global market to purchase mask, gowns and other medical supplies. In many instances, orders have fallen through or been secured only at inflated prices.
Although Maryland officials confirmed receiving subpoenas from federal prosecutors, Gansler said he had no information about the Justice Department inquiry and did not believe it would amount to anything.
"There is no allegation that Blue Flame Medical committed any crime of a civil or criminal nature," he said. In fact, the fledgling company already had established a record of delivering vitally needed products in a difficult environment, he said.
"There have been many obstacles created by the Chinese government and other foreign manufacturers that have prevented top quality products from entering the U.S." during the pandemic, Gansler said. "Yet Blue Flame Medical has been able to deliver. It delivered bulk orders of personal protective equipment to New York, Nevada and Florida - and there is going to be a major delivery to Chicago."
Blue Flame received a down payment of nearly $6.3 million from Maryland in early April and agreed to provide masks and ventilators within a few weeks, state officials said.
Gansler said that while there was hope of quick delivery, the contract states that the masks and ventilators will be delivered by June 30.
"Blue Flame can and will meet that obligation once Maryland reinstates the purchase order," Gansler said.
Blue Flame was started in late March by Michael Gula, a fundraising expert in national Republican politics and John Thomas, a California political consultant. Gula's firm raised money for Republican Sens. Marco Rubio (Fla.), Ron Johnson (Wis.), Patrick Toomey (Pa.) among others. He stunned clients in March when he suddenly announced he was leaving the political fundraising world to start a medical supply company, a field in which he had no experience.
Thomas recently worked as a strategist and fundraiser for Republican Don Sedgwick, who sought to run against Rep. Katie Porter, D-Calif., but lost in the March primary. The two GOP operatives incorporated their firm in Delaware on March 23 and a week later received the contract from Maryland.
The company made its initial pitch for the sale directly to a staffer in Hogan's office, according to one Maryland official. Gula then began using that staffer's name on a reference sheet to seek contracts with other states. The staffer referred the matter to the chief legal counsel for Hogan, Mike Pedone, on April 9. Several weeks later, Pedone referred the matter to the Maryland Attorney General's Office for review.
Gansler's formal request to restore the state contract detailed the company's communications with the state before and after the contract was signed. He said that the company's behavior revealed "no impropriety at all." But he faulted state officials for providing information about the cancellation of the contract to news organizations before letting the company know or hearing its response and commitment to meeting the terms of the contract.