3M billed govt $7.63 for $.85 earplugs. Now has $1 billion COVID contract

The company that has been awarded the largest single COVID-19 federal contract once boasted it charged the Defense Department $7.63 for earplugs that cost 85 cents a pair to produce.

That company, 3M, was awarded a $1 billion contract on April 15 for “medical and surgical instruments, equipment and supplies,” by the Federal Emergency Management Agency. The IDIQ contract — “indefinite delivery, indefinite quantity” — was awarded without taking competing bids from other vendors.

It is also the largest federal contract 3M has been awarded among at least 47 others it has signed with various federal agencies to produce protective gear for the COVID-19 outbreak such as medical gloves, gowns and particularly respirator masks. The masks are critically needed for doctors, nurses, first responders and essential workers.

A FEMA official, speaking on condition of not being identified, said that the contract would cover the cost of procuring additional N95 respirator masks, some of which would be obtained under the Defense Production Act. Contracts awarded under DPA have fewer requirements for public reporting.

But the lack of transparency raises questions about whether U.S. taxpayers will be overcharged for the equipment, as they were for the earplugs, said Mandy Smithberger, director of the Center for Defense Information at the nonpartisan government watchdog group the Project on Government Oversight.

“Already we’re talking about an inherently risky contracting vehicle,” Smithberger said, referring to the open-ended IDIQ award. “The risk of overcharges will increase when you don’t have transparency for a company that has a track record of ripping off taxpayers.”

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