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tldr: Feds awarded a contract at an unrealistic price point for most companies, but a small company thought they could get it done. Small company was bought an

tldr: Feds awarded a contract at an unrealistic price point for most companies, but a small company thought they could get it done. Small company was bought and the project was no longer realistic and no vents were produced. I see the Feds do this all the time. They are penny wise and pound foolish. Instead of increasing risk by going for lowest (or unrealistic) cost, its better to reduce risk and actually get something. Better yet, they could have just bought the vents on the market for little or no risk.

KKKKkkkk1 7y ago
The article does not support your take on this. Covidien — a publicly traded company with sales of $12 billion that year — already sold traditional ventilators, but that was only a small part of its multifaceted businesses. In 2012 alone, Covidien bought five other medical device companies, in addition to Newport. Newport executives and government officials working on the ventilator contract said they immediately noticed a change when Covidien took over. Developing inexpensive portable ventilators no longer seemed like a top priority. Industry consolidation stifled an innovation that could have prevented the current ventilator shortage. Despite the federal government's best efforts.
- avmich 7y ago
  Government should perhaps have an option of buying the company which holds a critical order, or stopping that company from being sold in the first place?
Wowfunhappy 7y ago
Before the company was bought: > Every three months, officials with the biomedical research agency would visit Newport’s headquarters. [...] The federal officials “would check everything [...] If we said we were buying equipment, they would want to know what it was used for. There were scheduled visits, scheduled requirements and deliverables each month.” > In 2011, Newport shipped three working prototypes from the company’s California plant to Washington for federal officials to review. So up until the sale, the government was actively supervising the project, and working prototypes had been made. It doesn't sound like some unrealistic, pie-in-the-sky bet. But the kicker for me was: > Government officials and executives at rival ventilator companies said they suspected that Covidien had acquired Newport to prevent it from building a cheaper product that would undermine Covidien’s profits from its existing ventilator business. Who knows for sure if that's true, but it seems extremely plausible.
- avmich 7y ago
  Why the company-buyer isn't held to the liabilities of the sold company? Whoever's bought the smaller company better be good on that company promises. Or else.

KKKKkkkk1 7y ago

The article does not support your take on this. Covidien — a publicly traded company with sales of $12 billion that year — already sold traditional ventilators, but that was only a small part of its multifaceted businesses. In 2012 alone, Covidien bought five other medical device companies, in addition to Newport. Newport executives and government officials working on the ventilator contract said they immediately noticed a change when Covidien took over. Developing inexpensive portable ventilators no longer seemed like a top priority. Industry consolidation stifled an innovation that could have prevented the current ventilator shortage. Despite the federal government's best efforts.

avmich 7y ago
Government should perhaps have an option of buying the company which holds a critical order, or stopping that company from being sold in the first place?

Wowfunhappy 7y ago

Before the company was bought: > Every three months, officials with the biomedical research agency would visit Newport’s headquarters. [...] The federal officials “would check everything [...] If we said we were buying equipment, they would want to know what it was used for. There were scheduled visits, scheduled requirements and deliverables each month.” > In 2011, Newport shipped three working prototypes from the company’s California plant to Washington for federal officials to review. So up until the sale, the government was actively supervising the project, and working prototypes had been made. It doesn't sound like some unrealistic, pie-in-the-sky bet. But the kicker for me was: > Government officials and executives at rival ventilator companies said they suspected that Covidien had acquired Newport to prevent it from building a cheaper product that would undermine Covidien’s profits from its existing ventilator business. Who knows for sure if that's true, but it seems extremely plausible.

avmich 7y ago
Why the company-buyer isn't held to the liabilities of the sold company? Whoever's bought the smaller company better be good on that company promises. Or else.