Review of U.S. database reveals a range of services
There is no question that making the material for billions of protective masks is related to fighting the pandemic, and that is what Lydall Inc. plans to do at its Rochester plant with the CARES Act funding it received.
But what about the contract to develop a laser to shoot down incoming missiles, or the software designed to prevent Air Force personnel from killing themselves, or restoring power to an airport damaged by Hurricane Maria in Puerto Rico?
Such is the wide range of services businesses are being hired to perform under Covid-related contracts. Half of the contracts examined by NH Business Review came through military agencies and the U.S. Department of Veterans Affairs. Even Lydall’s $13.5 million masks contract — the largest single CARES Act contract awarded to a New Hampshire company that NH Business Review found — came though the Air Force, though it had nothing to do with the agency.
That’s because the military, with its vast acquisition bureaucracy, is processing a lot of the Covid-19 paperwork. On the other hand, The New York Times reported in September, some $668 million of CARES Act funding has been diverted for maintaining military infrastructure.
NH Business Review used the Federal Procurement Data System to search for New Hampshire companies that got acquisition and sustainment contracts. More than 70 contracts were awarded to nearly 30 firms for a total of about $41 million. Most went to firms that were obviously on the front lines of fighting the pandemic.
But they also included construction contracts awarded to a firm owned by a highly decorated veteran who was convicted two years ago for pulling off a woman’s hijab, technology contracts that went to a company that gave $100,000 to a lobbying firm that also represents Donald Trump, and a thermometer contract to a publicly traded firm that recently paid the federal government nearly $40 million for export control violations and the Foreign Corrupt Practices Act.
Here is a closer look at these and others.
Air Force contracts
Xemed LLC, a medical technology firm in Durham, uses xenon isotope gas to get better images of lung respiration, which can help better treat coronavirus complications, and it did apply for funding, but that’s not the $1.5 million Covid contract it received.
The contract it did get was for a compact external cavity diode-pumped alkali laser pump system with atomic wavelength stability. In other words, a laser with a more narrow wavelength that is more efficient at lighting up gasses and shooting down missiles, explained F. William Hersman, a University of New Hampshire professor who founded Xemed.
Hersman first applied for the contract in October 2019, which is why he was surprised to learn it was Covid-related, but the procurement system classifies it as Covid-19 DIB (Defense Industrial Base), an instance when funds allocated to fight the pandemic are used to shore up military infrastructure.
It helped shore up Xemed, which Hersman has been subsidizing with his university salary and was on the brink of laying off nine employees. He needed and got a $120,000 Paycheck Protection Program loan, enabling his company to hang on until the Air Force grant was approved in June.
The grant “kept us afloat,” said Hersman.
“We would have gone under if we didn’t get it.”
VOI Inc. applied for its $500,000 Air Force contract in November, also before the pandemic hit. The Hanover-based company, founded by a Dartmouth professor, developed software that picks up signs of imminent suicide. Although the Air Force was interested, the contract got held up over a continuing resolution dispute and was put on hold, said VOI’s chief operating officer, Rick Johnson. In the end, it too obtained a PPP loan of about $70,000 to keep the company’s three employees working Then Air Force representatives asked whether the software had “any relationship with the Covid crisis,” Johnson said. There is a lot of anecdotal evidence that the quarantine is exacerbating suicidal tendencies, he said, so “we submitted this and they must have agreed.”
The grant will enable the company to hire about nine or 10 employees by next summer, Johnson said.
A third Air Force contract, also for Covid-19 DIB, went to Athenium LLC, a software company in Dover that helps insurance carriers improve performance. The company merged with Weather Analytics Inc., which prepares climate data. Its $1.5 million contract is for “imagery solutions.”
Calls to the company and the Air Force were not returned by deadline. The Air Force also did not respond to inquiries about any of the contracts received by New Hampshire companies.
Front lines
Lydall’s Performance Material Division’s Air Force contract to produce face mask material is clearly Covid-related.
The $13.5 million sole-source contract it signed with the Air Force in June was the PM division’s first and only in recent times, but it was the largest single private Covid-related contract awarded to a New Hampshire company. At deadline, the company was putting the finishing touches on a 75,000-square-foot building that will eventually house three new machines and the Filtration Center of Excellence. It will be capable of producing material for 1.7 billion N-95 masks — half the amount needed nationwide — or more than 6 billion surgical masks, according to Ashish Diwanji, president of the PM division. The first machine was expected to arrive around Election Day.
The contract couldn’t come at a better time for the publicly traded company, which is headquartered in Connecticut.
Lydall — whose fabrics and other materials are used for insulation as well as filtration in many industrial applications — lost $74 million as of Sept. 30. In the second quarter, sales were off by a third, though they flattened out in the third quarter, partly due to the PM contract, increasing sales by 11.4%, he said.
Even before the new machinery’s arrival, the division was already “working 24/7,” churning out material at an annual rate of 350 million N-95 masks and about 400 million surgical masks, said Diwanji. Word spread to the White House. The contract to expand operations first came up in May, and U.S. Sen. Jeanne Shaheen, D-NH, jumped in to help. He was “constantly being approached” by her staff with offers to help, “and we were very grateful, since we haven’t done this before,” said Diwanji.
Although the Air Force is paying Lydall to expand, the material goes to Lydall’s customers, with the federal government agreeing to buy a certain number of the finished product, which it will distribute as needed.
The Rochester facility — which had about 120 people working there before the pandemic — hired and trained another 18.
Diwanji plans to add another dozen before the next two machines are online in June 2021. Among the hires will be scientists for the Filtration Center of Excellence, to enable it to continue to develop air quality filters to neutralize viruses.
“Clearly as the demand for the current surge falls off, we want to be ready for the shifting needs in indoor quality,” he said.
Vapotherm, a publicly traded firm based in Exeter, landed four contracts worth about $1.3 million. But it also received more purchase orders for its respiratory systems that help patients breathe but are not as intrusive as ventilators. One, ordered by the Army in May, went to Afghanistan.
Even without major federal contracts, “our company has been completely transformed by Covid. It has raised awareness of our technology and the value it can bring,” said Anthony Ten Haggen, vice president of legal affairs and compliance at Vapotherm.
The company has rapidly expanded to meet that challenge by increasing its workforce by about a third to 440, 165 of them working in Exeter.
Medicus Health Care Solutions LLC of Windham, a staffing agency for doctors and other advanced practitioners, actually was awarded the largest total of Covid contracts — 15.2 million — the largest singular contact being a $12 million deal with the Veteran Affairs for the VA medical center in the Bronx, N.Y. It was awarded in April at the height of the pandemic’s first surge.
“It was a big, awesome opportunity to help with the front lines,” said Courtney Gould, vice president of government placement for Medicus, which employs 200.
Evolve Technologies, a 17-person firm in Salem, works with agencies around the country to supply them with emergency equipment.
Its five Covid contracts, worth a total of $391,000, were for such items as rapid deployment shelters and isolation pods for transferring patients so they won’t affect others.
“Everything we are seeing right now has been responding to Covid or preparing for it,” said Olan Johnston, director of business development.
Old hands at contracting
Unlike Lydall, Claremont-based Red River Technology is an old pro at government contracts, particularly military ones. It is part of a $120 billion federal contract portfolio, making the $4 million for some six Covid contracts seem small in comparison. Red River has a healthcare division and offers technological solutions for “clinical workflow, facilities, EMR, medical devices, security, regulatory issues, compliance,” according to its website. The four Covid contracts are to help meet technical needs at the Department of Health and Human Services, Social Security Administration, Veteran Affairs and the Agency for International Development.
Red River regularly pays American Defense International to lobby in Washington, but this year added Steve Scoffs and paid him $100,000. Scoffs lists Donald Trump and Koch Industries as his clients (though it should be noted that Red River’s chairman, Rick Bolduc, contributed to one of Trump’s opponents, Florida Sen. Marco Rubio, in the 2016 presidential primary). The company did not return phone calls by NH Business Review’s deadline.
Carrigg Commercial Builders of Manchester is another experienced federal contractor, winning at least $127 million in contracts — $21 million in the last six months — almost all though Veterans Affairs.
The $725,000 in Covid-related contracts — all through the VA — include a $224,000 contract to install an emergency generator, a $245,000 contract to replace a front door as well as contracts for ambulance parking, a negative air exhaust duct and an emergency ramp, all at Massachusetts facilities.
Founder and owner Robert Carrigg was awarded the Bronze Star in 2007 for his actions during the Iraq War. He later went on to work for Blackwater, a private military company that has been a lightning rod for controversy, including legal troubles surrounding the alleged massacre of civilians in Fallujah.
In 2018, Carrigg was arrested and charged for pulling on a woman’s hijab, according to a New Hampshire Union Leader article. In June 2019, he pleaded no contest to simple assault and was sentenced to a 12-month suspended sentence, which he completed in July 2020, according to court records When asked whether Carrigg’s arrest affects his standing to get federal contracts, the VA replied that Carrigg was not on any excluded party list, and that he was a vendor in good standing.
Carrigg did not respond to a detailed voice message by deadline.
FLIR Commercial Systems Inc. also has legal issues but of another kind, though it is unlikely that they have anything to do with the Nashua facility that won an $807,000 thermometer contract from the Army. The publicly traded company, based in Oregon, produces and distributes thermal imaging products. Last quarter, revenues were $482 million and profits were $61 million, up by a third.
In 2018, FLIR signed a consent decree with the State Department for $30 million to resolve allegations of unauthorized export of technical data and defense services. It is also being investigated for other penalties involving sale of thermal projects to customers in China without proper licensing, according to its financial filings. In 2015, it agreed to pay a $9.5 million fine to the Securities and Exchange Commission for attempting to fly Mideast officials on a “world tour” to coax them into buying its products.
FLIR is well connected in Washington.
Its political action committee contributed $118,000 to candidates from both parties, and it has spent over $1 million on its own lobbyists as well as $230,000 on six other lobbying firms.
FLIR did not respond to inquiries.
Bob Sanders can be reached at bsanders@nhbr.com.
Click here to view a chart of the government contracts awarded to New Hampshire companies from CARES Act funds
