Public Records Request Reveals CA Sent Half-Billion$ to Newly Formed Mask Manufacturer

California recently made a $1 billion purchase for millions of surgical face masks from a new and unvetted company. You may have heard about it.

California Globe wrote on April 13, “There are many questions surrounding the government reaction to the COVID-19 virus, and especially in California, where Gov. Gavin Newsom just approved spending $1 Billion of taxpayers funds on masks from Chinese company BYD.”

“We’ve been competing against other states, against other nations, against our own federal government for PPE — coveralls, masks, shields, N95 masks — and we’re not waiting around any longer. And we’re no longer interested in the progress that we were seeing in the past,” said Gov. Newsom in an MSNBC interview. “In the last 48 hours we have secured — through a consortia of nonprofits and a manufacturer here in the state of California — upwards of 200 million masks on a monthly basis that we’re confident we can supply the needs of the state of California, potentially the needs of other western states.”

Ten days later, April 23rd, on behalf of California Globe, attorney Craig Alexander filed a California Public Records Request with Gov. Gavin Newsom’s administration, and involved agencies, for the communications and contract the governor made with Chinese company BYD for 200 million surgical masks.

It’s been interesting since that request for documents was filed. We’ve received a dribble of information. But on Thursday May 7th late in the day, we received the contract with BYD, with minor redactions, along with every member of the Legislature and Capitol media.

It was only recently revealed that the state of California wired nearly $500 million dollars for masks to a company that had been in business for three days.

“The recipient: Blue Flame Medical LLC, a Delaware-based company headed by two Republican operatives who jumped into the medical supply business on March 23. The pair — Mike Gula from Washington, D.C., and John Thomas of Southern California — had vowed, in their words, to help “fight Covid-19 with the industry’s broadest product selection from hundreds of suppliers,” Calmatters reported about the deal before the BYD deal.

The original deal with Blue Flame was cancelled within 6 hours, with no reason given.

California Globe heard from a source that minutes after the money was wired to Blue Flame Medical LLC, the Controller received a call from the bank warning that the bank account the money went to had only been opened the day before.

And the documents and communications between state agencies involved in the transaction reveal that there were concerns that the company providing the masks had not yet been vetted. The Department of General Services was mentioned as being responsible for the vetting:

“Within hours of the enormous wire transfer, the deal was dead and California was clawing its money back — $456.9 million, nearly half of what the Legislature had allocated for the state’s pandemic response.”

The payment to Blue Flame and cancellation of the deal six hours later were revealed in copies of checks, wire transfer receipts and emails California Globe obtained through the April 23rd public records request. But there is much more to come.

The Office of Emergency Services was the responsible agency for the deal with BYD, and possibly Blue Flame.

A learned source told me:

“In order to send the up-front money State Officials willingly and knowingly circumvented state regulations, at least 5 times. The funds were recovered, but our Gov has implied by obfuscation that no violations occurred, in both deals.”

“The Governor cut a deal with BYD for masks at $3.30 each, and three weeks later the mayor of L.A cut a deal for fewer masks at .80 cents each. And I believe his are certified.”

“The BYD gear the State purchased is not certified for use. Certification is a Federal process. Certification requires copious pages of documentation by the declared maker, along with testing records and data. While not specifically requiring manufacturing facilities and procedures be inspected it should be assumed some standards are subject to certification under penalty of perjury. Enforcement after the fact seems problematical. In any case I doubt processing for Certification is simple, swift or will be accomplished without rancor. I would expect a bond or financial statement would be required by the Feds.”

“Assuming certification is granted what is the warranty or reimbursement protocol between the State and the manufacturer? This should be easy for our Governor, & Chief Purchasing agent, he speaks often of policies and protocols.”

Notably, the State claims authority to quarantine individuals, forcibly if necessary. If the State has such authority why has it not been used with the homeless?

What was BYD offering that was different from Blue Flame, since neither company had any prior experience manufacturing masks, and why was the outlay of upfront money less with Blue Flame?

California Globe received the documents and many communications, and will continue to report on this deal.