House report accuses Trump administration of 'waste, fraud or abuse' in U.S. ventilator contract

Representative Raja Krishnamoorthi, a Democrat from Illinois, questions witnesses during a House Intelligence Committee impeachment inquiry hearing in Washington, D.C., U.S., on Tuesday, Nov. 19, 2019.

Jacquelyn Martin | AP | Bloomberg via Getty Images

The U.S. House Oversight Committee accused the Trump administration of "incompetent negotiating" for ventilators at the beginning of the coronavirus pandemic, saying it "squandered" more than $500 million in taxpayer funds for the essential equipment. 

"The waste of taxpayer funds caused by the Trump Administration's incompetent procurement efforts for ventilators could be as much as $500 million or more," according to a report released Friday by Chairman Raja Krishnamoorthi, D-Ill. 

The committee said the Trump administration mismanaged an existing contract with Philips Respironics, agreeing to pay $15,000 apiece for Trilogy EV300 ventilators this year after Philips repeatedly failed to deliver 10,000 Trilogy Evo Universal ventilators ordered in 2014 for $3,280 apiece, the report said.

The committee said there was no evidence that the Trump administration tried to negotiate a lower price for the ventilators. 

The original contract called for the 10,000 Trilogy Evo ventilators to be delivered to the U.S. government no later than June 2019, according to the report. 

"The Trump Administration mismanaged Philips' repeated failures to meet contractual requirements. It gave Philips three additional extensions, the last of which allowed for final delivery of the ventilators to be delayed until June 2021," the report said. "Had the Trump Administration held Philips to the terms of the Obama-era contract, the country would have had 10,000 ventilators that it needed when the coronavirus crisis struck."

Led by U.S. trade advisor Peter Navarro, White House officials instead negotiated a new contract with Philips, agreeing to pay almost five times the original price for the equipment, the investigation found. The new contract called for 43,000 Trilogy EV300 ventilators at $15,000, which is also higher than a third model, the Trilogy Evo, that sells at a market list price of $11,167.

The Trilogy Evo Universal and Trilogy Evo appear to be two separate ventilator products. But the committee concluded, "Aside from price, there is no discernible difference in either appearance or functionality between the Trilogy Evo Universal, the Trilogy Evo, and the Trilogy EV300," the report said.

"The Trump Administration's efforts constitute over half-a-billion dollars of waste, fraud, or abuse. Philips should return the excess so that it may aid the nation's response to the coronavirus pandemic," the report said. 

Frans van Houten, CEO of Netherlands-based parent company Royal Philips, said in a statement Friday that it has "been transparent about our production ramp up plans, pricing and allocation policies. We have cooperated and delivered the requested information to the subcommittee."

Philips Respironics is a subsidiary that sells sleep, breathing and respiratory care equipment.

Van Houten said the company doesn't "recognize the conclusions in the subcommittee's report, and we believe that not all the information that we provided has been reflected in the report."

Democrats on the committee said they conducted the investigation to determine why the country went without adequate numbers of ventilators during the "initial critical months" of the coronavirus pandemic.

The findings were based on documents and information collected from Philips Respironics, the report said.

A spokesperson for the White House didn't immediately return a request for comment. 

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