Philips terminated the contract with the American Ministry of Health and will not deliver it 30.7 thousand ventilators

2020

Contract cancelation on delivery of 30.7 thousand ventilators to the Ministry of Health of the USA from Philips

At the end of August, 2020 Royal Philips announced that it terminated the contract for production of ventilators with the U.S. Department of Health and Human Services. Initially in April the company signed delivery contract 43,000 of the devices EV300 till December, 2020 in the conditions of COVID-19 pandemic.

News about contract cancelation followed the July report of the Congress in which the Trump's administration was accused of inefficiency of the plan for acquisition of ventilators in the first months of a pandemic. Affirmed that federal officials spent more than $500 million, having signed the inexpedient contract with Philips.

Philips terminated the contract with the American Ministry of Health and will not deliver it 30.7 thousand ventilators

The company completed the last contract supplies in August. On a strategic national warehouse 12,300 ventilators arrived. Other 30,700 devices which were included in the contract will not be delivered.

The CEO of Philips Frans van Houten said in the press release that the status of the company remains stable, despite the production reduction of ventilators connected with contract cancelation. He added that production reduction will affect financial performance of Philips, but the company expects resuming of moderate sales growth and increase in profit until the end of the year.

Today we fulfilled the obligations to the Ministry of Health of the USA, - told van Houten. - I am proud of the fact that in emergency situation we managed to increase production of ventilators four times: we employed hundreds of new workers on the plants in the USA and urged our partners to activate all efforts in response to COVID-19 pandemic. We are disappointed with contract cancelation, but are ready to correct the plans and we will continue cooperation with the Ministry of Health within the last deliveries.[1]

Conclusion Ministry of Health of the USA of two contracts for production of IVL

On April 8, 2020 the U.S. Department of Health and Human Services (HHS) announced the conclusion of two contracts with a total cost more than $1 billion for production of medical ventilators which necessary for seriously ill patients to patients with COVID-19 coronavirus.

The cost of the contract with General Motors was $489 million, the company undertook to make and deliver about 30 thousand devices in medical institutions. The American Ministry of Health signed one more agreement with Philips company which will have to produce 43 thousand items of equipment until the end of 2020, including 2500 pieces by the end of May. Philips will receive $646.7 million for it.

The U.S. Department of Health and Human Services (HHS) announced the conclusion of two contracts with a total cost more than $1 billion for production of medical ventilators which necessary for seriously ill patients to patients with COVID-19 coronavirus

GM will cooperate with Ventec Life Systems to deliver to the U.S. Government ventilators to the end of August, 2020, and the first 6132 machines should be sent by June 1. GM is going to begin production in Indiana to the middle of April, 2020.

According to the agreement, the cost of each ventilator will be $16 thousand that is much lower than market value in $50 thousand about which told the authorities of New York earlier.

As the representative of GM Jim Kaine explained Reuters, the company in full will execute the government contract, and its capacities allow to release even more equipment if it is required. In addition to ventilators, GM delivered supplies and them accessories.

These are the first contracts for production of such equipment according to the law on defense production of 1950 providing an opportunity to force business to execute orders for military needs. The U.S. President Donald Trump began to use widely the law at the beginning of April. In a present case operation of the law extends to production of respirators, masks, ventilators and other means for fight against COVID-19.^[2]

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