Back in March, Michael Gula, a Republican fundraiser and campaign consultant based in Washington, D.C., raised eyebrows when he sent Dear Client letters to a number of his clients, announcing that he was folding his practice. He was getting into a new business… “hard-to-find medical supplies,” including coronavirus test kits and respirators.
He and a California based GOP operative, John Thomas, formed Blue Flame Medical, LLC. Formation papers either were filed or issued in Delaware on March 23, according to the Washington Post.
Gula then contacted someone he knew on the staff of Maryland’s Republican Governor, Larry Hogan. A week after the formation of the LLC, it had obtained a contract… obviously a no-bid one… from the State of Maryland for 1.5 million N95 masks and 110 ventilators. Pursuant to the contract, the State wired the company almost $6.3 million… half of the $12.5 million contract price. Blue Flame charged Maryland $4.52 per N95 mask. (I seem to recall that, until recently, the going rate was about 10% of that figure… in other words, about 40 to 50 cents per mask.) The charge for the masks totalled $7,006,000. The charge for Philips Respironics Trilogy ventilators was $41,000 each…. $4,510,000. (I do not know the “regular” cost of a Philips Respironics Trilogy ventilators, but I suspect that it is a good bit less than $41,000 a pop.)
The Purchase Order associated with the transaction described the goods as “EMERGENCY SUPPLY. COVID-19 RESPONSE.” The Purchase Order also stated:
PURSUANT TO COMAR 21.05.06.02, AN EMERGENCY PROCUREMENT SHALL BE LIMITED TO THE PROCUREMENT OF ONLY THE TYPES OF ITEMS AND QUANTITIES OF ITEMS NECESSARY TO AVOID OR TO MITIGATE SERIOUS DAMAGE TO PUBLIC HEALTH, SAFETY, AND WELFARE AS FURTHER DEFINED IN COMAR 21.01.02.01B
(COMAR means Code of Maryland Regulations.)
Once Blue Flame had secured its deal with Maryland, it added the staffer whom it had initially contacted to a reference sheet, or should I say tout sheet, that Blue Flame distributed to other State Governments (in other words, to potential clients with whom its principals had political connections). The staffer reportedly became aware of this and notified Micahel Pedone, chief legal counsel to the Governor.
Delivery was to occur by April 14. April 14 came and went, with no delivery by Blue Flame.
The State of Maryland made repeated demands. An attorney representing Blue Flame stated:
“I know Blue Flame Medical wanted to deliver the shipment in April. I know, too, of actions by the Chinese government. Their supplier in China wrote a letter to Blue Flame Medical informing them that the Chinese government interfered with the supplier’s ability to ship.”
On April 30, Maryland sent a notice-of-breach and demand-for-cure letter, giving Blue Flame 48 hours to provide proof that the ordered items were on their way. Apparently, Blue Flame did not provide a satisfactory response (if any at all). So, yesterday, Maryland canceled the contract.
The matter has been referred to Maryland’s Attorney General Brian E. Frosh, a Democrat, for review.
My take, and I will retract if I am wrong in any material respect: two Republican operatives decided to try to cash in on the Coronavirus Crisis by tapping into their Rolodexes and contacting fellow Republicans in State-Government offices. They had no background in the field of supplying “elements of medical,” and no established relationships with manufacturers or wholesalers. They cut a sweetheart deal with Maryland courtesy of one or more friends, took 50% down, and winged it, assuming that they would be able to buy the committed-for goods and to flip them for a healthy profit. When their efforts ran into a brick wall, they stonewalled the State of Maryland. Whether this is criminal behavior is debatable. It certainly is disgusting, even if it is not criminal.