Letter to Michael E. Horowitz, Pandemic Response Accountability Committee Acting Chair - Rep. Speier Leads Letter Requesting PRAC Investigation into Suspect Federal Contracts

Letter

Dear Mr. Horowitz,

We write to request that the Pandemic Response Accountability Committee (PRAC) investigate
the hundreds of federal contracts entered with first-time federal contractors related to COVID-19
response efforts, including many contractors ill-suited to provide the critical services needed.

The country was woefully unprepared for a global health crisis. The failure to respond in a
timely manner has already cost more than 100,000 Americans their lives. There has been a
complete breakdown in the federal procurement process, as evidenced by the scramble to build
up the Strategic National Stockpile to ensure hospitals workers and other frontline workers had
access to personal protective equipment (PPE), and efforts to relieve Americans' hunger and
save farmers who have been harmed by the disruption in the supply chain.

According to an in-depth analysis by ProPublica, 345 first-time federal contractors have been
promised at least $1.8 billion in federal contracts related to the COVID-19 pandemic. Of those
345 contractors, more than half of the companies did not have to compete for their contracts,
compared with 32 percent of overall pandemic-related contracts. The lack of competition paired
with the lack of a federal law to prevent price-gouging not only increases the risk of price
gouging, but also for fraud and faulty products.

At a time when the federal government should be relying on trusted vendors, it instead is
awarding multi-million-dollar contracts to companies completely outside the industry for which
the contracts were entered. For example, CRE8AD8, a San Antonio, Texas-based event planning
company was awarded a $39.1 million contract through the U.S. Department of Agriculture 's
Farmers to Families Food Box Program, which was created to buy excess produce and meat from America's farmers to provide food to food banks and nonprofits across the country. CRE8AD8
received one of the largest contracts under the program, whereas Brothers Produce, a Houstonbased produce distributer with decades of experience, was passed up for a contract.

Not only are contracts being awarded to companies attempting to do work completely outside of
their industries, contracts are also being awarded to companies that were formed mere weeks or
even days before applying for a federal contract. A former White House aide received a $3.24
million contract to supply respirator masks to Navajo Nation hospitals in New Mexico and
Arizona. Zach Fuentes LLC was created just eleven days before it was awarded a contract
through the Indian Health Service (IHS). The Navajo Nation has been rocked by the pandemic.
On June 1, the Navajo Department of Health reported 5,348 positive COVID-19 cases and 246
known death.9 Yet the IHS reported that 247,000 of the masks delivered by the company, at a
cost of around $800,000, may be unsuitable for medical use and another 130,400 are not the type of masks specified in the procurement data.

Fillakit, LLC, which incorporated in Florida at the end of April 2020, received three federal
contracts totaling $10.5 million just a week later from the Federal Emergency Management
Agency (FEMA) to supply swabs and containers for COVID-19 testing. Not only was the
company recently formed, but it is owned by Paul Wexler, a businessman who has been accused
of fraudulent practices by the Federal Trade Commission. The charges stem from his
telemarketing firm allegedly conducting illegal robocalls and making unauthorized charges to
consumers' bank accounts. Wexler eventually settled the case and was banned from debt relief
services, but not from being a federal contractor. As of May 22, FEMA reported that it had paid
nearly $400,000 to Fillakit for one delivery, but the company had less than six weeks to deliver
on the rest of the contract.

While payment of federal contracts is contingent on performance and companies may have to
pay the difference if their failure to deliver causes the government to use a more expensive
contractor, it is simply unacceptable for the government to enter into contracts with unreliable,
unproven vendors. We understand that the unprecedented circumstances call for new and
innovative solutions, but that does not mean due diligence must be abandoned.

As part of PRAC's review of the trillions of taxpayer dollars appropriated to address the
pandemic response, we request your review provide information to address the following
questions:

1. How many federal contracts related to the COVID-19 pandemic were awarded to firsttime federal contractors?
2. What was the vetting process used by federal agencies before contracts were awarded to
companies without prior existing relationships with government agencies?
3. Of the federal contracts related to the COVID-19 pandemic that were awarded to firsttime federal contractors, how many of those contracts were fulfilled and how many were
later rescinded for failure to deliver?
4. Did the number of first-time companies awarded federal contracts related to the COVID19 pandemic play a role in the federal government's delay in getting much-needed
resources, such as personal protective equipment and testing supplies, to states and
localities?
5. How many federal contracts related to the COVID-19 pandemic were awarded without
competitive bidding?
6. How many federal contracts related to the COVID-19 pandemic were awarded to
companies to deliver goods and services which were outside the scope of their regular
course of business?
7. What changes can be made to the federal procurement processing the future to ensure
funds are going to vetted, reputable companies that are able to deliver on the contracts?

Thank you for your consideration and assistance with this request. Please contact Rachel
Marshall (Rachel.Marshall@mail.house.gov) from Congresswoman Speier's office with any
questions.