The Trump administration paid a bankrupt company with zero employees $55 million for N95 masks, which it's never manufactured

A woman walks into a pharmacy to purchase N95 face masks in advance of the potential coronavirus outbreak in the Manhattan borough of New York City, New York, U.S., February 27, 2020. REUTERS/Carlo Allegri

  • The Trump administration has awarded a $55 million contract for N95 masks to a bankrupt company with no experience in producing medical supplies.
  • The Federal Emergency Management Agency told Insider that the company, Panthera, is scheduled to deliver the masks on April 23.
  • Former Defense Secretary Chuck Hagel told the Washington Post something is "amiss" regarding this order.
  • The Centers for Disease Control and Prevention recommends people cover their mouth and nose with a cloth when around others, but says Americans should "not use a facemask meant for a healthcare worker."
  • Visit Business Insider's homepage for more stories.

The coronavirus pandemic has created a desperate scramble for vital medical supplies, including N95 masks, which has seen the federal government award massive contracts to third party vendors to help fill the gaps.

In the midst of this chaotic effort to obtain supplies, the Trump administration paid $55 million to a bankrupt company with no employees and no expertise in world of medical equipment for N95 masks, the Washington Post reported.Advertisement

The company, Panthera Worldwide LLC, filed for bankruptcy last fall and one of its owners last year said it had no employees since May 18, based on a sworn statement obtained by the Post. It's no longer listed as an LLC in Virginia, where its main office is located, after fees went unpaid.

Panthera has no record of producing medical supplies or equipment, and is a self-described tactical training company for the US military and other government agencies.

The company's website states: "Panthera Training provides elite, scenario-based tactical, aviation and intelligence training and instruction for Defense Department, State Department, Federal Agency and Law Enforcement teams who operate in sensitive environments worldwide, to enable those teams to meet their mission goals and requirements."
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But Panthera is currently being sued by a Virginia businessman who leased the company's primary asset - a training facility in Virginia.

James V. Punelli, one of Panthera's executives, told the Post that the company is working with military contacts to obtain the masks. "We've done [Department of Defense] medical training over the years and through those contacts with that community were brought sources of supply in order to assist in the COVID-19 response," Punelli said in a text message to the Post. "We made the connection with FEMA and offered these supplies to them." Advertisement

"We will provide these masks before May 1 for certain, in full and with a very high-quality product," Punelli said, telling the Post that the company is now registered as an LLC in Delaware.

The Federal Emergency Management Agency (FEMA) is paying Panthera $5.50 per mask, the Post reported, which is decidedly more than what the government pays companies with an established background in producing medical supplies such as 3M (the company charges about 63 cents per mask).

FILE PHOTO: Various N95 respiration masks at a laboratory of 3M in Maplewood, Minnesota, U.S. March 4, 2020.  REUTERS/Nicholas Pfosi/File Photo
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Chuck Hagel, a former defense secretary, told the Post something is "amiss" regarding this order. "This is not how the government procures training or any type of supplies. You just wouldn't do business with somebody like that."

A FEMA spokesperson told Insider that there was nothing in the standard background checks conducted in relation to government contracts on Panthera that indicated "this vendor isn't responsible."

"As with any contract, FEMA is bound by law to follow Federal Acquisition requirements and processes. Per these Federal Acquisition requirements and processes, the Contracting Officer conducted a contractor responsibility determination. The Federal Awardee Performance and Integrity Information System (FAPIIS) was examined and Panthera met the necessary requirements. The company did not appear on the Excluded Parties List System (EPLS)," FEMA said, adding that a review did not find Panthera showing "any delinquent federal tax (of more than $3,500) in the last three years."Advertisement

"FEMA does not enter into contracts unless it has reason to believe they will be successfully executed. The required review led us to conclude that Panthera would able to deliver on their contract," the FEMA spokesperson went on to say. "As with any contract if the company cannot deliver or delivers sub-standard product, the agency can use legal means against a company."

The spokesperson said that the ordered equipment hasn't arrived yet, but that Panthera has provided written confirmation the masks are in the shipping phase of delivery. The delivery is scheduled for April 23.

Since mid-March, the government has purchased more than $600 million worth of masks, according to the Post.Advertisement

The Centers for Disease Control and Prevention recommends people cover their mouth and nose with a cloth when around others, but says Americans should "not use a facemask meant for a healthcare worker."

New York state Gov. Andrew Cuomo on Wednesday said residents in his state, which has been hit harder than any other by the coronavirus pandemic, would be required to wear masks or face coverings in public when it's not possible to engage in social distancing. Do you have a personal experience with the coronavirus you'd like to share? Or a tip on how your town or community is handling the pandemic? Please email covidtips@businessinsider.com and tell us your story.

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