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After Maryland contract canceled, state lawmakers call for more oversight of emergency pandemic spending

After a contract is cancelled, there are calls for more oversight of the millions the state of Maryland is spending during the coronavirus pandemic. The contract with Blue Flame Medical LLC included N95 respirators, like those shown in this April 20, 2020, photo in Illinois.
After a contract is cancelled, there are calls for more oversight of the millions the state of Maryland is spending during the coronavirus pandemic. The contract with Blue Flame Medical LLC included N95 respirators, like those shown in this April 20, 2020, photo in Illinois.(Stacey Wescott / Chicago Tribune)

After Maryland officials terminated a contract with a politically connected firm, lawmakers are calling for greater oversight of the millions of dollars the Hogan administration is awarding to companies through emergency purchases during the pandemic.

“I appreciate the Governor’s quick actions to protect Marylanders, but we need to safeguard taxpayer dollars from unscrupulous companies, no matter what their connections," said House of Delegates Speaker Adrienne A. Jones, a Baltimore County Democrat. "I’ve asked [the] Appropriations [Committee] to take a longer look at this issue in the coming months.”

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Gov. Larry Hogan, a Republican, last week asked the attorney general’s office to investigate Blue Flame Medical LLC, which the state paid to provide millions of dollars’ worth of medical equipment that never arrived.

The Hogan administration signed a $12.5 million deal April 1 with Blue Flame for 1.5 million N95 respirator masks and 110 ventilators. The masks and ventilators were supposed to ship April 14, according to documents provided by the state. The state paid half of the money up front, but the goods never arrived, and Maryland formally canceled the contract Monday.

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Blue Flame received the money as part of a push to quickly award dozens of contracts worth more than $230 million to companies that supply emergency equipment and supplies needed in the pandemic.

Mike Ricci, a spokesman for Hogan, said the state has not had similar issues with other vendors.

“With this exception, all vendors have provided up-to-date information regarding order status, and even in some cases, we have been able to expedite orders,” Ricci said.

Some of the larger deals include a $28.5 million contract with Vanguard LED Displays Inc. to supply ventilators, a $13.5 million contract with Empire Managed Solutions to provide surgical masks, and a $16 million contract with Warwick Equipment & Supply Co. for outfitting tents, state records show.

State Sen. Jill P. Carter, a Baltimore Democrat, said she’s concerned small businesses and minority contractors might be cut out of the process as the Hogan administration moves quickly to award contracts.

“I’m certain Blue Flame is not the only politically connected company to benefit from the state’s emergency procurement process,” Carter said. “The process has no oversight with everything funneled through [Maryland Emergency Management Agency]. We should create a nonpolitical Emergency COVID-19 Contracting Oversight, Equity, Accountability & Transparency Board to ensure efficient use and distribution of available resources, as well as inclusion.”

Blue Flame was founded just weeks ago by Mike Gula, a former fundraiser for Republican candidates and consultant whose resume shows no experience in the medical field.

A spokeswoman for Maryland Attorney General Brian Frosh, a Democrat, confirmed receiving a referral from the governor’s office about the contract.

Blue Flame officials did not respond Monday to requests for comment from The Baltimore Sun, but defended themselves over the weekend. They said via text that they had trouble getting supplies out of China and have kept Maryland officials apprised of the situation.

A sudden rise in demand for masks, gowns, gloves, ventilators and testing supplies because of the coronavirus pandemic has left hospitals and states scrambling to find suppliers.

Gula started Blue Flame in late March with John Thomas, also a Republican consultant and former candidate, according to multiple news reports.

Ricci, a spokesman for Hogan, said Blue Flame won the contract by emailing a “pitch to an administration official who was an acquaintance.”

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“Our procurement team had no knowledge of or previous working relationship with Blue Flame principals,” Ricci said. “While Blue Flame Medical was referred to [the Maryland Department of General Services] as a new entity, [the department] vetted Blue Flame’s proposed partner, Hakim Unique Group, and found them to be a legitimate consulting firm based in Hangzhou, specializing in medical management.”

Hangzhou is a port city in eastern China.

Ricci said state officials made at least nine attempts in April to obtain information from Blue Flame and did not receive reliable answers.

“This is unlike any experience we have had with vendors throughout the pandemic,” he said.

Patrick Moran, president of the American Federation of State, County and Municipal Employees Maryland Council 3 union, which represents correctional officials and other state employees, said many of his workers are still without protective gear.

“A lack of planning and transparency is going to lead to more first responders getting sick and those they oversee dying,” Moran said. “If there were ever a time for honesty and competence, it is now.”

Emergency state contracts of more than $50,000 must go before the Maryland Board of Public Works within 45 days of being awarded. That means the first of the emergency contracts awarded during the pandemic should go before the panel this month.

Hogan has earned national acclaim — and criticism from Republican President Donald Trump — for leveraging his connections with South Korean officials to buy 500,000 coronavirus tests from a South Korean company.

The state still needs to obtain swabs and other supplies to put many of the tests into use, and has been rolling them out in “high-priority hot spots” such as nursing homes and at a test site on the Eastern Shore targeting poultry industry workers.

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