FEMA cancels controversial $55 million contract to a company that's never manufactured N95 masks after it failed to deliver the order

Facebook Email icon An envelope. It indicates the ability to send an email.

Email Twitter icon A stylized bird with an open mouth, tweeting.

Twitter LinkedIn icon

LinkedIn Link icon An image of a chain link. It symobilizes a website link url.

Copy Link lighning bolt icon An icon in the shape of a lightning bolt.

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .

• The Trump administration awarded a $55 million contract for N95 masks to a company with no experience producing medical supplies and whose parent company filed for bankruptcy protection last year.
• The Federal Emergency Management Agency on Tuesday told Insider that the contract was canceled after the company failed to deliver the masks after being granted multiple extensions on the order.
• Former Defense Secretary Chuck Hagel told The Washington Post that something was "amiss" about this order.
• The Centers for Disease Control and Prevention recommends that people cover their mouth and nose with a cloth when they're around others but says to "not use a facemask meant for a healthcare worker."
• Visit Business Insider's homepage for more stories.

Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview

The coronavirus pandemic has created a desperate clamber for vital medical supplies, like N95 masks, that has led the federal government to award massive contracts to third-party vendors to help fill the gaps.

In this chaotic effort to obtain supplies, the Trump administration awarded a $55 million contract to Panthera Worldwide LLC, a company with no expertise in the world of medical equipment, for N95 masks, The Washington Post reported in April.

This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .

But the masks were never delivered, and the contract was ultimately canceled.

"The Panthera contract for delivery of N-95 masks was canceled May 12 on the grounds of non-delivery," a Federal Emergency Management Agency (FEMA) spokesperson told Insider on Tuesday. "FEMA will continue to coordinate with our federal and state partners, along with private vendors and supply companies, to identify and deliver medical supplies to prioritized areas."

The contract was awarded to Panthera early last month, with a delivery date initially set for April 23, the spokesperson said. Panthera requested two extensions on the order in the time since, pushing the delivery date back to May 11.

On Monday, the company requested a third delivery extension of 96 hours, but this was rejected and the contract was canceled on Tuesday, FEMA's spokesperson said.

Panthera's parent company filed for bankruptcy protection last fall, and one of its owners last year said it'd had no employees since May 2018, The Post reported, citing sworn testimony. It's no longer listed as an LLC in Virginia, where its main office is, after fees went unpaid, the newspaper said.

Panthera, which describes itself as a tactical training company for the US military and other government agencies, has no record of producing medical supplies or equipment, The Post said.

The company's website says it "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."

Panthera's executives are being sued by a Virginia businessman who leased the company's primary asset, a training facility in West Virginia, The Post reported.

James V. Punelli, one of Panthera's executives, told The Post that the company was 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."

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

The Post reported that FEMA was set to pay Panthera about $5.50 per mask, decidedly more than what the government pays companies with an established background in producing medical supplies such as 3M, which charges about $0.63 per mask.

Chuck Hagel, a former defense secretary, told The Post something was "amiss" about this order. "This is not how the government procures training or any type of supplies," he said. "You just wouldn't do business with somebody like that."

A FEMA representative in April told Insider that there was nothing in the standard background checks conducted in relation to government contracts that indicated Panthera "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."

"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 representative said. "As with any contract if the company cannot deliver or delivers sub-standard product, the agency can use legal means against a company."

The representative said that the ordered equipment hadn't arrived yet but that Panthera had provided written confirmation that the masks were in the shipping phase of delivery.

Since mid-March, the government has purchased more than $600 million worth of masks, The Post reported last month.

The Centers for Disease Control and Prevention recommends that people cover their mouth and nose with a cloth when they're around others but says to "not use a facemask meant for a healthcare worker."