Trump gave an agency $100 million to fight Covid. Here’s what happened.

Trump gave an agency $100 million to fight Covid. Here’s what happened.
Laura Strickler, NBC News
Wed, November 17, 2021, 9:38 AM

A federal agency that was run by a college friend of Jared Kushner and assigned $100 million to spend on fixing the Covid supply chain crunch has so far failed to invest a single dime, according to a new government watchdog report.

In 2020, the Trump administration directed the International Development Finance Corporation (DFC) to loan out $100 million in Pentagon funds through the CARES Act to "finance the domestic production of strategic resources needed to respond to the COVID-19 outbreak, and to strengthen any relevant domestic medical supply chains."

Companies were encouraged to apply for financial backing to help increase U.S. distribution of ventilators, vaccines, medical testing supplies, Personal Protective Equipment (PPE) and other relevant products. According to a new Government Accountability Office report, 178 applications flooded into the agency’s downtown Washington office but no money flowed out.

The agency’s portal for loan applications has now been paused and its authority to make Covid-related loans ends on March 26.

Adam Boehler, briefly a college roommate of President Donald Trump’s son-in-law and adviser Jared Kushner, ran the International Development Finance Corporation starting in fall 2019. The DFC had been created with bipartisan support in 2018 to help steer private investment to government-funded projects in the developing world.

Boehler had worked in the private sector starting health care companies. He was appointed by the Trump administration to run the Health and Human Services’ Center for Medicare and Medicaid Innovation, then served as a senior adviser at HHS before he was appointed to the DFC in 2019.

After the onset of the pandemic in 2020, when public health officials were scrambling to find gloves, gowns and N-95 masks, DFC expanded its role to focus on boosting the domestic supply chain via an executive order by Trump.

The agency told the GAO last month, however, that its loans had been delayed by significant interagency reviews, that the proposed projects were complex and required environmental assessments, and that it had trouble hiring staff to evaluate the proposals.

The author of the GAO report, Chelsa Kenney, told NBC News the lack of loans created an “expectations gap” in terms of performance. She said it’s her understanding the agency has whittled the 175 applications down to eight but has still not provided any funds.

DFC spokesperson Pooja Jhunjhunwala said, “While we appreciate the work GAO has allocated to this audit, it inaccurately portrays DFC’s particular role given the program includes management and close participation from multiple agencies across the government. … DFC is neither the lead agency nor provides the loan disbursements to companies.” Jhunjhunwala said DFC had accepted the watchdog’s recommendation that it track the cost of reviewing the proposals, but rejected the recommendation that DFC evaluate the Covid loan program.

A letter from the agency responding to the draft report pointed to other federal agencies as also bearing responsibility for the program. The agency’s current acting CEO, Dev Jagadesan, wrote, “While this report is correct in conveying that the DFC CEO has authority over some key operational, administrative and program decision making functions, it must be noted that the most key programmatic authorities, including budget authority over transactions and administrative costs and approval on project eligibility and technical requirements, reside with the interagency partners for this program: DOD and HHS.”

Jagadesan also disagreed with the auditors’ recommendation that his agency should evaluate the program’s effectiveness.

Said the GAO’s Kenney, “Here we are two years in and without an evaluation we can’t really understand if this is a tool to address these needs in a national emergency.”

Auditors found DFC has not tracked how much money it spent on the Covid supply-chain program but agency officials said at least $1 million was spent sifting through the proposals.

Agency materials online continue to promote the funding opportunity, but estimates from the agency as to how long it takes for the funding to be approved have gone from 3 to 4 months to 9 to 15 months, according to the report.

In July 2020 the agency announced a $765 million commitment to work with Kodak to make generic drug ingredients needed in the pandemic. Kodak’s stocks soared by 570 percent and the company said it was planning to expand existing facilities in Rochester, New York, and St. Paul, Minnesota.

The deal came under immediate scrutiny and never went through.

The agency’s inspector general reviewed the Kodak deal and concluded there was “no “evidence of misconduct on the part of DFC officials.”

The loan that is the furthest along in the process is an application from a Connecticut-based company called ApiJect, but the GAO says the project to build a new facility creating 650 jobs to make prefilled injectors for Covid vaccines has been delayed because the company has “encountered delays securing the necessary property rights for the project site.”

ApiJect declined to comment on the report. A person familiar with the project told NBC News there is a legal dispute with the property landowners.

In April, the agency told NBC News that ApiJect was one of the “critical projects” it had in its “pipeline of applications” that was being subjected to a “stringent diligence process.”

Boehler left the DFC on Jan. 20, the day of President Joe Biden’s inauguration, and was succeeded by Jagadesan. Boehler declined to comment.