For Dean Kamen, PPE Supply Brings Millions Of Dollars While N.H. Acts As Middleman In Special Deal
Dean Kamen sold $83 million worth of PPE with the State of N.H. acting as a ‘middleman’ in a unique arrangement with the Segway inventor.
On April 12, 2020, a FedEx cargo plane pulled into Manchester-Boston Regional Airport, loaded with badly-needed personal protective equipment.
“The state of New Hampshire got a great Easter present this morning,” said Gov. Chris Sununu, as members of the New Hampshire National Guard unloaded the plane.
The coronavirus was spreading in New Hampshire. A global competition for PPE supplies was heating up.
Dean Kamen, perhaps the state’s most famous inventor and businessman, spearheaded the shipment of PPE, containing more than 91,000 pounds of gloves, gowns, face shields and masks.
The Easter Sunday arrival of PPE would be the first of dozens of transactions between Kamen and the government. Fifteen months later, the politically connected Bedford resident has sold $26 million worth of PPE to the state, and at least another $56 million to the federal U.S. Department of Veterans Affairs. He’s done so through a unique arrangement that no other private vendors have access to, an arrangement that hasn’t been previously reported.
Even though Kamen is selling PPE to the VA in Washington D.C., that’s not who he’s billing, at least not directly.
Through public databases, invoices, and interviews, NHPR found that the state and federal governments created a unique repayment structure only available to Kamen. He is able to sell goods to the VA, without registering as a federal vendor, while also fast-tracking his repayment. These transactions also didn’t come before the state’s Executive Council, which typically approves contracts valued at more than $10,000, due to the state of emergency in New Hampshire.
“I never have a plan. I react to opportunities.”
Last April, during the press conference on the tarmac, Sununu and Sen. Jeanne Shaheen, praised Kamen for arranging the delivery. Dressed in his signature bomber jacket, Kamen stepped to the podium and described how the shipment came together.
“Anybody that knows me knows I rarely have a plan,” Kamen said. “I never have a plan. I react to opportunities.”
Kamen said his company DEKA (which created the Segway in the early 2000s, as well as a number of other high-tech products) imports some of its supplies from China. Kamen says he worked the phones with his contacts on the ground there to locate PPE. He worked other connections, too, asking Fred Smith, the CEO of FedEx, to supply an airplane. Kamen even fronted the money.
“I told my finance guys: keep wiring money to a far-off place, and they did,” said Kamen.
Both the federal and state governments, as well as Kamen, say the arrangement was put in place to ensure speedy delivery of materials during a global health pandemic that left supply chains in tatters. However, the repayment system appears to have remained in place long after other PPE vendors also stepped in to supply goods to the state.
“[Kamen] wants to support veteran health care, and the Department of Veterans Affairs,” Deb Kramer, acting assistant undersecretary for health for support at the Veterans Health Administration at the Department of Veterans Affairs, told NHPR.
According to Kramer, Kamen and New Hampshire filled a crucial need early in the pandemic, providing the VA with materials that protected veterans and their health care staff around the country, ultimately saving lives.
Kamen’s Unique Financial Arrangement
Under the financial arrangement, when Kamen sells goods to the VA, such as a $17.5 million transaction for surgical gowns in November 2020, his company, Manchester-based DEKA, submits an invoice to the State of New Hampshire. The state then requests payment from the VA, which in turn repays the state, which then pays Kamen.
In short, the State of New Hampshire acts as a ‘middleman’ in these transactions.
In an interview, Kramer with the VA declined to say why the financial arrangement was implemented.
“I think you would have to ask New Hampshire that, because they are the ones that have the relationship with Mr. Kamen,” she said.
But Jake Leon, spokesperson for the state’s Department of Health and Human Services, said the arrangement was put in place at the request of the VA.
Leon declined to make anyone from the state health department available for an interview for this story. He added that the state believes this is the first and only time New Hampshire has ever acted as a financial go-between for a private contractor.
Kamen’s Bipartisan Political Connections
When NHPR asked Kamen about this financial arrangement, he said it comes down to speed: He would get repaid quicker if he didn’t have to register as a federal vendor and submit invoices directly to the VA.
“You can kind of circumvent all that regulatory stuff if your state gets it because there is a much easier, more direct way that the federal government and the state government can exchange contracts and money,” Kamen told NHPR. “So I called our governor, and said, ‘Hey governor!’”
‘Calling the governor’ isn’t a metaphor for Kamen. He’s long been friendly with Sununu. In 2019, the pair flew to Dubai together for a conference. A spokesperson for Sununu said the governor “was happy to help facilitate in order to protect our veterans across America by leveraging the state’s existing relationships with DEKA.”
Kamen is also close with Shaheen. The two recently worked together to get a commemorative coin through Congress, with a portion of the sale financially benefiting FIRST, a Kamen-founded robotics non-profit for youth. In 2018, ARMI, a different non-profit venture led by Kamen and funded by the federal government, paid Stefany Shaheen, the senator’s daughter, $120,000 for consulting work, according to tax filings.
A Risk, and a Profit?
Regardless of his contacts, Kamen pointed out that he’s on the hook financially if a planeload of goods shows up defective or is of poor quality, the same risks any other PPE vendor is taking, he said.
But if he took a risk, did he also take a profit?
“I think on all the stuff for state, I committed to saying, just cover our costs, and I think the cost of my people in the field,” said Kamen in response to whether he profited from the arrangement. “For the VA, I think there was a price, there was a structure, and we were meeting...again, I’m not an accountant. We didn’t go into this to make money.”
Kamen didn’t clarify if or how much he profited from these transactions. A spokesperson also later declined to answer the same question.
Prices for PPE have shifted rapidly during the pandemic, due to a lack of supply, intense demand, and unpredictable freight costs. Invoices obtained through a Right to Know request show that Kamen’s goods were more expensive than some suppliers but lower than others.
In September 2020, for example, DEKA charged the VA $6.25 per unit for what’s known as a ‘Level 2’ surgical gown. That same month, the VA awarded a contract for eight million gowns to a different vendor, Akiva Technologies, at a per unit price of $1.17 per gown. But another vendor, Grand Traverse Economic Development, was charging New Hampshire even higher prices at that time: $8.75 per gown.
Both the VA and the State say they believe what Kamen charged was fair, and because of the state of emergency, normal rules that required companies to submit competitive bids were on hold.
‘Clever Work-Around’ or Special Treatment?
Drew Cline, president of the Josiah Bartlett Center, a free-market think tank, has criticized a special tax break that Kamen’s ARMI project successfully lobbied for in New Hampshire. But when NHPR asked Cline about this deal, he didn’t see a problem. He said “it really doesn’t sound like a sweetheart insider deal to benefit a friend of a politician.”
“It sounds like some folks on both sides, trying to work out a solution that would get product that was needed in an emergency quickly, and coming up with a clever workaround,” Cline said.
Asked about why he thought that workaround was in place for so long, Cline proposed it was likely “a case of inertia setting in, and it just keeps rolling.”
But not everyone sees this financial arraignment as an innovative workaround.
“What the f—k is the VA doing to use the State of New Hampshire as a purchasing agent?” wondered Charles Tiefer, a professor at the University of Baltimore School of Law, when told of the arrangement.
Tiefer authored a textbook about government contracts and looked into shady contracting during the second Iraq war. He said he’s never heard of the federal government contracting for goods this way.
“April 2020 was a very special and awful time,” said Tiefer. The financial arrangement, at that moment, may have made sense, he added. But he questions why it would be in place for so long, noting that the normal invoicing and procurement systems exist to protect the taxpayer.
“There is special treatment here being given either for no good reason, or for some bad reason,” he said.
It isn’t even clear if these transactions are still happening. A spokesperson for the governor said “the state has not assisted the VA in PPE procurement in months,” and that the last transaction on the state’s books was recorded in March. But in June, the VA said it was still purchasing nitrile gloves from Kamen. Kamen himself said in July that he was still selling PPE. A DEKA spokesperson didn’t respond to a request for clarification.
For his part, Kamen doesn’t regard the financial maneuver as special treatment—or at least not anything special that he requested.
“Well, I never asked for any,” he said. “We’re not in the PPE business. I had no reason to ask them for any special treatment. If anything, they were asking us, ‘Hey, can you get another load?’ ”
And so, load by load and $83 million later, Kamen has served as a key supplier of PPE for both the state and the VA. It’s an arrangement that all parties to the deal say has worked out well for them.