Federal Mask Manufacturers File Lawsuit Against Federal Government Seeking Billions in Alleged Unpaid Contracts
In the heat of the Corona crisis early in 2020, the Federal Government skipped regular procurement processes and bought protective masks at fixed prices to speed things up. However, the Health Ministry often didn't pay up, and had quality complaints to boot. The suppliers weren't happy.
Now, the Federal Government is in hot water, facing potential losses of around 2.3 billion Euro due to ongoing disputes over exceptional conditions for mask delivery during the pandemic. As of now, around 100 lawsuits have been filed, with a combined value of approximately 2.3 billion Euro, according to the Health Ministry's response to an FDP inquiry. The lawsuits' outcomes are still unknown, but it's clear, as FDP budget expert Karsten Klein told "Welt am Sonntag", that "the aftermath of the excessive purchasing under Health Minister Jens Spahn will become progressively disastrous."
In the initial phase of the Corona crisis, the Federal Government urgently required but scarce masks for the healthcare system. To cut corners and speed things up, the Ministry used a unique procurement process, closing purchase agreements without further negotiations at fixed prices. Later, the Ministry frequently refused payment and raised quality concerns, leading to lawsuits.
So far, around 80 disputes have been settled through compromise, the Ministry reports. The Federal Government has won eight lawsuits with a total value of roughly 50 million Euro, and lost two with a combined value of 230,000 Euro.
In total, the Federal Government shelled out around 1.4 billion Euro through this special procurement process. If payments are necessary due to court rulings, the Ministry states that these will be covered by budget reserves.
Ministerial head Karl Lauterbach recently pledged an investigation into mask procurements during the Corona period, spurred by criticism from the Federal Audit Office regarding the Ministry's actions under Lauterbach's predecessor Spahn. The agency was not impressed with the fact that 5.7 billion protective masks were procured in 2020, yet only 2 billion were distributed - of which only 1.7 billion were in Germany.
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- Despite facing numerous lawsuits from federal mask manufacturers, totaling around 2.3 billion Euro in alleged unpaid contracts due to quality concerns and payment issues during the Corona crisis, Jens Spahn's Health Ministry has reportedly settled 80 disputes through compromise.
- In response to criticism from the Federal Audit Office regarding his predecessor Jens Spahn's handling of mask procurements during the Corona period, current Federal Ministry of Health head Karl Lauterbach has pledged an investigation into the matter.
- Amidst the Corona measures and crisis, the Federal Government decided to bypass regular procurement processes, purchasing protective masks at fixed prices from Karl Lauterbach's Health Ministry to expedite deliveries. However, the suppliers later filed lawsuits, accusing the Government of refusing payment and expressing quality concerns.
