Kushner Airlift Moves Millions of Masks While Details Are Secret

A program created by Donald Trump’s son-in-law Jared Kushner has airlifted millions of gloves, masks and other coveted coronavirus supplies into the U.S. from overseas -- but it isn’t clear who’s getting them and at what price, or how much private-sector partners are earning through the arrangement.

Kushner’s “Project Airbridge” provides transportation via FedEx Corp. and others for supplies that medical distributors, including McKesson Corp. and Cardinal Health Inc., buy from overseas manufacturers, mainly in China. Once a supplier’s goods arrive in the U.S., the companies must sell half the order in government-designated hotspots. They sell the rest as they see fit.

A FEMA Airbridge delivery of PPE supplies at Chicago O’Hare International Airport.

Source: FEMA

The U.S. government provides the air transportation for free, to speed the arrival of the products. The six distributors keep the profits, if any.

The program has won praise from some states, where officials say it provided hard-to-find supplies at a critical time in the Covid-19 outbreak, even if it met a fraction of demand.

“We are very supportive of Airbridge and other federal programs that can provide PPE to our first-line responders,” said Colorado Governor Jared Polis, a Democrat. “But it doesn’t meet our full needs.”

Other governors and lawmakers have raised questions, saying they have no visibility into how supplies are distributed and the government has only limited power to direct it. The program appears to run largely outside the standard federal channels for competitive bidding, disclosure and transparency -- the government hasn’t documented how the products are sold, how prices are determined or which hospitals and other customers receive the supplies.

Senate Questions

The House Oversight Committee is seeking answers, and Democratic Senators Elizabeth Warren and Richard Blumenthal wrote to the medical supply companies this week requesting details about their participation in Kushner’s program. “The American people need an explanation for how these supplies are obtained, priced, and distributed,” they said.

The letter went to all six participating distributors: McKesson, Cardinal, Medline Industries Inc., Henry Schein Inc., Owens & Minor Inc. and Concordance Health care Solutions.

Jared Kushner

Photographer: Evan Vucci/AP/Bloomberg

McKesson issued a statement saying that its work with the government “reflects our commitment” to fighting the pandemic, but declined to answer specific questions. The other five companies declined comment or didn’t respond.

“Providing free flights for supplies sold by the private sector may help, but it is not a substitute for a comprehensive federal response to this crisis,” Representative Carolyn Maloney, a New York Democrat who chairs the Oversight committee, said in a statement. She said her panel seeks to “understand how our taxpayer dollars are being spent and whether supplies are reaching those who need them most.”

Project Airbridge has become a fixture at the president’s news conferences, where Trump regularly ticks off the number of flights it’s completed and the millions of pieces of gear it’s delivered. Its development is characteristic of an administration that’s shown little patience for the traditional processes and pace of government. Slow to prepare for the coronavirus outbreak, Trump turned to Kushner in March to try to quickly fill shortages of vital medical gear.

In Trump’s telling, the nation is fortunate Kushner stepped in, because the program relieved a bottleneck causing shortages of protective gear at the front lines of the U.S. coronavirus outbreak, the largest in the world. The country has had more than 1 million documented cases of the disease and at least 61,000 deaths since February.

Kushner’s program is not the only way medical supplies are imported into the country. The U.S. government has bought gear on its own, and states, hospitals, medical suppliers, retailers and others have placed their own orders. The president has encouraged states to source and buy most of their own medical equipment, and Kushner has described the federal stockpile as a backup.

Suppliers and middlemen trying to keep hospitals equipped say that securing a flight out of China has become their biggest logistical hurdle, with a surge in demand doubling and even tripling prices for the limited number of cargo planes handling shipments.

For about $69 million in flight costs so far, the Airbridge project has flown at least 746 million pairs of gloves, 71 million surgical masks and 10 million surgical gowns to the U.S. market, mainly on planes operated by FedEx Corp. and United Parcel Service Inc., according to the Federal Emergency Management Agency. The program has also brought in about 2 million thermometers, 768,000 N95 masks and 562,000 face shields.

The Department of Justice said it would not mount an antitrust challenge to the “collaborative efforts” of the distributors “to address supply needs arising from the COVID-19 pandemic,” for which, DOJ said in a statement, the companies “should be applauded.”

‘Young Geniuses’

Airbridge is run out of FEMA, but its leadership includes what Trump has referred to as “military people and young geniuses.” That includes Kushner and his longtime friend, Adam Boehler, the chief executive officer of a new government agency created in 2018, the U.S. International Development Finance Corp. Navy Rear Admiral John Polowczyk, a logistics expert who is Trump’s top adviser on the medical supply chain, also helps direct the effort.

Speaking Wednesday on Fox News, Kushner said he took “a custom-tailored approach” to Airbridge because the U.S. health care system is mostly run by private firms or non-profits, not government.

“We created a control tower approach with the private company distributors in order to make sure that we can be as efficient as possible, and it’s been quite successful,” Kushner said.

FEMA says the effort has slashed shipping time to two days, from the 30 to 40 days that a conventional sea shipment would normally take.

Still, Airbridge accounts for only a small portion of the protective medical gear sold in the U.S., according to a person at one of the participating companies who spoke on condition of anonymity. The person said the company sells Airbridge supplies at prices consistent with what customers have previously paid.

Polowczyk said the administration doesn’t want to try to direct distribution. “I’m not here to disrupt a supply chain,” he said on April 2, shortly after the program was struck up. “I’m putting volume into that system.”

A spokesman for Medline Industries Inc., one of the distributors involved, told CNN that it sells some items transported by Airbridge at a loss.

The White House declined to provide any information on prices charged by the distributors, nor did it offer any accounting of the products brought into the U.S. or their final destination -- even for the half of the products designated for areas the government considers hotspots.

“Why isn’t there transparency?” Representative Ted Deutch, a Florida Democrat, said in an interview. Deutch and colleagues have introduced legislation that would require the White House to report on the program and other elements of the medical supply chain every two weeks.

“If they’re so willing to hold press conferences touting the importance of putting together this program to bring a hundred cargo planes worth of equipment to the United States in this time of a global pandemic, then they ought to be willing to answer some basic questions about what’s coming,” he said. “How much it costs, where it’s going, so that we can make sure that every life that can be saved is being saved.”

Some health-care executives are similarly concerned.

“There does need to be more transparency here, because this is the sort of thing that people investigate and wonder about,” said Blair Childs, a senior vice president at Premier Inc., which helps 4,000 member hospitals purchase supplies. “What are they paying? Is it a competitive price?”

FedEx, UPS Contracts

Under Airbridge, FEMA pays the cost of shipping and ensures that the U.S. gets the supplies quickly. The goods are transported by FedEx, UPS, Landstar System Inc. and Radiant Logistics Inc., according to FEMA. The agency doesn’t know the specific contents of shipments until the cargo is loaded, the agency says.

FedEx received a $60 million sole-source shipping contract for the program while UPS was awarded a “not competed” contract for “warehousing and distribution” worth as much as $9.8 million, according to data compiled by Bloomberg Government. Total figures for the program remain unclear.

Bonny Harrison, a FedEx spokeswoman, said the cost of the flights is consistent with market rates. The company’s coronavirus work includes flights of supplies, distribution and collection of test kits and shipment of other things like swabs, she said. UPS did not respond to a request for comment, Landstar declined comment and Radiant referred questions to FEMA.

The program plans to shift cargoes to lower-cost sea freighters once the need for equipment isn’t as urgent, an administration official said. The person wasn’t authorized to speak publicly about Airbridge and asked not to be identified. Airbridge had completed 89 flights with 21 more scheduled, FEMA said, but the number of total flights has ticked down over the past week.

Terms of the shipments can vary. If they’re ordered by the six participating medical supply companies, those firms retain control of the goods throughout, with the understanding that they have to sell half to hotspot regions. There are no other known constraints on the distributors.

Under the agreement with participating companies, the U.S. government can take up to 20% of supplies it finds on its own, while the companies distribute the remaining 80%. Project Airbridge has flown in at least 18.6 million masks and respirators procured by FEMA, the agency says.

Pence Call

Governors discussed Airbridge in an April 24 call with Vice President Mike Pence. While Polis has complimented the program, another governor said allowing private distributors to manage deliveries means the equipment isn’t necessarily going where it’s most needed.

“The White House has not delivered what it has said it would deliver,” Illinois Governor J. B. Pritzker, a Democrat who has sparred with Trump, said on April 20. Allowing companies to distribute the supplies is “a far cry from delivering to the states so that we can distribute to, for example, a nursing home that has an outbreak.”

A spokesperson for Washington Governor Jay Inslee, a Democrat, said the program “appears fairly small-scale,” and that the state doesn’t know how the distributors decide where to sell the supplies.

Buyers in New Jersey have received about two million pieces of equipment through Airbridge, according to a person familiar with the matter.

“To classify it as significant might be a bit of an overstatement,” Patrick Callahan, superintendent of the New Jersey state police, said Friday. “We’ll take everything we can get.”

--With assistance from Paul Murphy, John Tozzi, Riley Griffin, Vincent Del Giudice, Elise Young, Dina Bass, Shruti Date Singh and Thomas Black.

To contact the reporters on this story:
Josh Wingrove in Washington at jwingrove4@bloomberg.net;
Daniel Flatley in Washington at dflatley1@bloomberg.net;
Shira Stein in Arlington at sstein51@bloomberg.net

To contact the editors responsible for this story:
Alex Wayne at awayne3@bloomberg.net

Justin Blum

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