NY pays Silicon Valley Engineer 69 Million Dollars For Ventilators Which Were Never Delivered

NEW YORK (VINnews) On March 27th, as the desperate shortage of ventilators for coronavirus patients became more widely known, President Donald Trump posted on Twitter to urge Ford and General Motors to “START MAKING VENTILATORS, NOW!”

Buzzfeed News reports that one of the thousands of replies that the tweet attracted struck an equally urgent tone: “We can supply ICU Ventilators, invasive and noninvasive. Have someone call me URGENT.”

Three days after Yaron Oren-Pines sent this reply, New York paid him $69.1 million for 1,450 ventilators — an astonishing $47,656 per ventilator. Not a single ventilator ever arrived, the state since terminated the contract, and is now trying to recover its money pic.twitter.com/NscQxXZcoC

— BuzzFeed News (@BuzzFeedNews) April 29, 2020

Its author was Yaron Oren-Pines, an electrical engineer in Silicon Valley. A specialist in mobile phone technology, he currently has just 75 followers on Twitter and no apparent experience in government contracting or medical devices.

But three days later, New York state paid Oren-Pines $69.1 million. The payment was for 1,450 ventilators — at an astonishing $47,656 per ventilator, at least triple the standard retail price of high-end models.

Times-Union data revealed that it was the second-largest purchase made by the state of New York for coronavirus-related medical supplies. In normal circumstances state laws prohibit payment for goods and services until they are received. However Gov. Andrew Cuomo had suspended those rules last month to meet the urgent need for ventilators, N95 masks, gowns, and other personal protective equipment after models in early March predicted that as many as 40,000 breathing devices would be needed. The state spent $686 million in five weeks; 22 of the largest 25 payees had never been paid before by the state.

However, not a single ventilator ever arrived from Oren-Pines’s company.

A state official, speaking on background because he was not authorized to publicly discuss the terms of the deal, told Buzzfeed News that New York entered into the contract with Oren-Pines at the direct recommendation of the White House coronavirus task force.

Nearly a month later, New York has terminated the contract, and the state is now trying to recover all of the money it paid the Silicon Valley electrical engineer. Officials refused to say how much the state had been able to get back. “We are in discussions on a few remaining issues,” said Heather Groll, a spokesperson for the New York Office of General Services, part of the inter-agency effort to help New York get supplies.

Oren-Pines responded that “neither me nor my company is providing any comment on this,” and then hung up. He did not respond to subsequent text messages.

The episode underscores the extent to which the fear of overrun hospitals prompted politicians around the country — and particularly in New York — to turn to untested and at times unqualified vendors.

“We had no choice but to overturn every rock to find ventilators and other needed equipment,” said Rich Azzopardi, a senior adviser to Cuomo, referring to the state’s scramble to find critical medical equipment as the pandemic overtook New York.

“States were forced to fend for themselves to purchase lifesaving supplies to combat a global pandemic and with all modeling showing a more severe spread of this virus with more hospitalizations and more fatalities,” Azzopardi said. He added that the state has since been able to meet most of its needs and is now reevaluating some contracts and canceling others, while going through with other contracts as it tries to build up stockpiles to help prepare New York for any future emergencies. A 25-member team now works overtime to vet potential vendors. In some cases, it has begun paying for orders before they are fulfilled.

Between March 19 and April 27, the Health Department cut 77 checks for $1 million or more for medical supplies, for a total of nearly $735 million, state records show. Some of the recipients are established health care suppliers, such as Henry Schein, a huge, publicly traded distributor with $10 billion in annual revenue and a long history of contracting for New York state.

But the overwhelming majority of the payments were made to an eclectic mix of firms, many with little or no apparent experience in medicine: upscale fashion and other apparel brands; Chinese iron ore and tool importers; a company that sells hair and wrinkle removal products; a number of private equity and investment firms; and even the Qatar Fund for Development, the state-run foreign aid arm of the petroleum-rich Persian Gulf nation.

Was Oren-Pines recommended by the White House? A New York state official said that “The guy was recommended to us by the White House coronavirus task force because they were doing business with him as well. I think everyone was genuinely trying to help each other out and get supplies.” The New York official added that he was unaware of whether Oren-Pines got a federal contract; federal databases show no record of any such deals.

A spokesperson for the White House referred a request for comment to the office of Vice President Mike Pence, who chairs the task force. A spokesperson for Pence, Katie Miller, said in a statement that “The White House Coronavirus Task Force was never informed of this contract and was not involved in it at all.”

Groll, the spokesperson for the New York Office of General Services, did not answer a series of detailed questions from Buzzfeed News about the transaction with Oren-Pines other than to say it had been “terminated” and that “a bulk of the money was returned to the state.”