The company that Gov. Mike Parson on Friday said cheated taxpayers as the state tried to secure a supply of protective masks agreed Monday to refund $9 million received as an advance payment.
NMS LLC promised to return the money during a meeting with Sandy Karsten, director of the Department of Public Safety, and Jim Remillard, acting director of the State Emergency Management Agency.
Karsten announced the agreement Monday during Parson’s daily coronavirus briefing.
In briefings last week, Karsten described three deals for N95 and KN95 masks. She reported that one vendor, who had received an order for 3.9 million masks at a price of more than $16.5 million, was unwilling to refund the state’s advance payment after the masks failed fit tests.
Over the weekend and on Monday, Karsten and Remillard met several times with the vendors, she said.
"During those talks it became clear the vendor was not opposed to and was never opposed to refunding the state," Karsten said.
The state will continue to do business with all three vendors but will not order any more KN95 masks, she said.
Karsten has not identified the company publicly and on Monday again declined to do so when asked a question submitted by the Tribune.
NMS LLC is a company created March 20 by a partner in a politically connected St. Louis law firm. In early meetings about the order and the issue of a refund, NMS LLC was represented by another politically connected firm, Dowd Bennett, and former Gov. Jay Nixon participated in at least one meeting with state officials seeking the refund, sources told the Tribune.
In an interview Sunday, Karsten held out hope for the resolution obtained Monday.
A meeting Saturday morning between state and company representatives without attorneys present made progress toward a resolution of the issue, Karsten said Sunday.
"Yesterday our communication was positive and we were moving in a direction that is agreeable to the state," Karsten said.
The Tribune identified the company through online state records and other reporting.
Using Karsten's description of deals made for N95 and KN95 masks, the Tribune identified NMS LLC as a vendor on the Missouri Accountability Portal. In the interview Sunday, Karsten confirmed the identification.
Another vendor identified by the portal as receiving a large payment, Eclat Commerce of Hacienda Heights, California, refunded its advance money.
It is unknown who owns NMS LLC.
It was organized March 20 by Brian McGovern of McCarthy, Leonard and Kaemmerer, according to records held by the Secretary of State's office. The law firm, which has the name of former Missouri Senate Minority Leader and longtime lobbyist Tom McCarthy first in its title, is also the firm that represents the University of Missouri in its conflict over unionization by graduate assistants.
LLC creation filings are not required to name any owner or partners. The paperwork lists an organizer and many attorneys list themselves in that spot for filings on behalf of clients.
McGovern did not respond to requests for comment sent via email and telephone.
Before placing an order, even in the emergency, the state is trying to screen potential vendors, Karsten said.
"We do reference checks on vendors and we also try and make sure they have the wherewithal to procure and provide what they have contracted to," she said.
Karsten confirmed Sunday that Dowd Bennett is representing NMS. Dowd Bennett has other high-profile politicians in its offices, including former Sen. Jack Danforth. The firm represented former Gov. Eric Greitens during the 2018 impeachment inquiry.
Reached Sunday, Nixon declined to speak publicly about the company and said he would relay a message seeking comment.
Karsten first revealed the state had received what it considers defective masks during Parson's April 13 daily briefing. The State Emergency Management Agency was recalling 48,000 masks sent to law enforcement and firefighters.
"We will do everything in our power to recoup the money that was paid in advance that was required by the vendors to obtain these masks," Karsten said at that time.
N95 and KN95 masks are among the most sought-after pieces of protective equipment for protection during the coronavirus pandemic. They are supposed to seal around the wearer’s face and filter out 95 percent of particulate matter.
Each state is scrambling to secure supplies of protective gear during the COVID-19 pandemic. Some have been dramatic, such as the 126-mile drive by an assistant Illinois state comptroller to deliver a $3 million check to someone waiting in a McDonald's parking lot.
State Auditor Nicole Galloway, the only Democrat in statewide office, on Wednesday called for Karsten to provide her office details of the deal, including the name of the vendor, the potential for other shipments of masks to be substandard or defective and the process for evaluating masks before they are distributed.
Galloway also asked for details on whether the state had recovered its money. She set a deadline of this Wednesday to provide the information.
At Parson's daily briefing Wednesday, Karsten answered some of those questions. The masks were purchased with state disaster funds, did not fit and were being sent to an independent lab for further evaluation, she said.
Two vendors had made refunds to the state, she said Wednesday.
Additional details came Friday. Karsten said the state had made three deals for N95 or KN95 masks. One was for 360,000 masks for $1.1 million. The state received 88,630 masks and the vendor agreed to make a refund and picked the masks up Friday from the state warehouse.
Eclat Commerce promised 5 million masks for a price Karsten described as "more than $16.5 million." The company was unable to deliver the masks on a timely basis, a company representative who declined to let his name be used said Sunday.
The state received a refund of its $7.7 million advance on Wednesday, he said.
NMS LLC promised to deliver 3.9 million masks, for a price that Karsten also described as more than $16.5 million The first 101,000 masks were being distributed when the state was forced to recall them.
The Department of Health and Senior Services found they did not meet the specifications, director Randall Williams said Friday.
"The masks have to have the ability to seal and be of a construction that the virus cannot enter through the mask and that was not felt to be the case," Williams said.
Parson on Friday made it clear he intended to pressure the vendor to remit the state's cash.
"We got cheated here in this state and we are going to go out there and try to get our money back and hold people accountable," Parson said.
To back up the state’s evaluation of the masks, a sample was sent to an independent lab for assessment. Karsten said she will make public the results of the independent laboratory assessment when they are received.
The state received $1.2 billion from the federal government last week for its COVID-19 response and is anticipating $900 million more, State Treasurer Scott Fitzpatrick said Saturday.
Even before the arrival of that cash, the state has been making numerous emergency purchases to prepare first responders and medical personnel to be in contact with potentially contagious people. The money is often delivered under pressure to seal a deal, FItzpatrick said.
"We definitely had instances when we had to do wire transfers on a condensed time frame," Fitzpatrick said.
In many instances, buyers are left with no choice but to take what is delivered.
Nationwide, there have been repeated instances of vendors diverting orders to customers willing to pay more. There are numerous instances of substandard or defective gear being delivered.
CoxHealth in Springfield kept a shipment of masks it determined were not up to design standards.
The hospital had paid seven times the normal price for 100,000 masks.
"It’s like the wild, wild West," CEO Steve Edwards told the Springfield News-Leader.
One of the reasons the state used NMS and the other vendors who were not able to deliver masks that met state standards was the issues found by Edwards and others seeking protective gear, Karsten said Monday.
Normal purchasing procedure would be to test goods offered by vendors before placing an order, she said.
"This has been anything but under normal circumstances," she said. "In an effort to try and get PPE to all those first responders and law enforcement across the state, who said they didn’t have it, we were trying to get in line quickly, because as this market changes often we would find we were ready to pull the trigger on an order and it was gone."
Galloway has said her office will use its power to watch over state accounts to monitor how the money is spent.
State Rep. Kip Kendrick, D-Columbia, said Saturday that he's not satisfied with what the public has been told about the deal for the masks.
"Clearly that is very problematic," Kendrick said.
He wants an investigation conducted quickly and for protective gear for public safety workers to be delivered quickly as well.
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