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Headline:

As Chicago Scrambled in Early Days of Coronavirus, Political Ties Helped Win No-Bid Contracts

Deck:

Dick Durbin’s top campaign staffer used his connections to help an Addison-based furniture company become City Hall’s top supplier of COVID-19 medical gear.

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In a city infamous for political intrigue and personal connections, the millions of dollars in emergency spending by Chicago’s City Hall to combat COVID-19 earlier this year presented a unique opportunity for hundreds of companies looking for city business.

So when the owner of a suburban furniture maker wanted to donate face masks for the effort, he called a local suburban councilwoman, who contacted a Senate campaign chief, who emailed a close confidante of Chicago Mayor Lori Lightfoot.

That’s how The Howard Elliott Collection Inc., an Addison-based manufacturer of decorative mirrors and other high-end home furnishings, began its journey to become the city’s largest supplier of pandemic medical supplies. The company’s “strong personal references” were later detailed in an atypically candid internal memo attached to the company’s City Hall file as it secured $1.5 million in city contracts.

Lightfoot’s use of her emergency procurement powers to fight the deadly outbreak opened the door to many companies that pivoted to provide needed supplies during the crisis, and allowed them to bypass many of the cumbersome levers the city has in place to help create a level playing field and to combat its well-documented history of insider deals.

While it’s not illegal to use personal relationships, the tale of how a furniture company became a top supplier of medical gear helps illustrate how valuable those connections were during the early days of the pandemic when speed was critical.

“This was an all-hands-on-deck moment,” said Joanna Klonsky, a consultant and political adviser to Lightfoot who made Howard Elliott’s introductions at City Hall. “And everyone was looking for ways to be helpful in an emergency.”

Lens on Lightfoot
The company’s introduction to the often-insular world of government contracts was not unique.

A BGA examination of nearly 50 contracts the city signed amid the health crisis, as well as dozens of interviews, offer a glimpse into how “friends of friends” navigated the city’s bureaucracy. Companies called aldermen, former politicians, business groups, and City Hall contacts to get noticed.

Not all connected companies landed emergency contracts. Some went to long-time city contractors. Some went to the lowest bidders the city could find on the fly. Hotel rooms were rented from a well-known Loop hotelier familiar to City Hall and willing to provide rooms, the mayor’s office said, when no others were available.

But as COVID-19 exploded nationwide and states and cities outbid each other for dwindling supplies of medical protective gear, City Hall staffers and political insiders were flooded with pitches from firms looking for government work.

It’s from two of those insiders — Klonsky and Greg Bales, U.S. Sen. Dick Durbin’s campaign chief — that the city learned in March about Howard Elliott and several other companies offering masks, face-shields, goggles and other personal protective equipment, known as PPE.

The pitches came as the city was spending tens of millions of dollars on emergency goods and services to handle the pandemic, and as Lightfoot and Durbin worked together to secure more than $1 billion in federal aid to help pay for it.

Billions in federal aid

Lightfoot’s administration denied BGA requests for thousands of internal communications regarding the coronavirus spending, citing the amount of work it would take to redact information legally exempt from public disclosure.

But Klonsky shared with the BGA five City Hall emails she said were relevant to the BGA inquiry for correspondence with Durbin’s campaign chief.

Those conversations — with officials at City Hall between March 21 and April 1 — show Bales forwarded the names of a handful of companies to the city through Klonsky or directly to another mayoral staffer who was leading the search for medical gear.

The emails detail how those companies were connected to Bales by an array of political insiders: A former state lawmaker, a Highland Park city council member, and the owner of a political communications company long connected to the national Democratic Party.

“When people were desperate to obtain masks and other PPE back in March, multiple people reached out to me — including individuals I'd never met before — with offers to help,” Bales said in an email response to BGA questions.

“In good faith, I referred those people to the City of Chicago with the intention of passing along much needed connections to personal protective equipment,” he said.

At the time Durbin, Bales’ boss, was involved in Senate negotiations to secure a coronavirus relief package worth nearly $5 billion in federal aid throughout Illinois. The federal funds have helped the city and the state shoulder the cost of COVID-19 expenses, including purchases made from companies that reached out to Bales.

Bales said his role was minimal and stressed the city alone decided whether to vet and engage with the companies. He also acknowledged being asked to make introductions to state officials.

“I sent them the PPE.donations@illinois.gov email,” he said, adding that he didn’t remember whether he spoke with state officials. “I never talked to anyone over there that I can remember,” he said.

Of the five companies included in the Bales’ emails provided by Klonsky, three got government contracts totaling $2.5 million, according to an examination of public records at City Hall and state government. In addition to its city contracts, Howard Elliott sold some masks to the state of Illinois, records show.

Bales said he saw no conflict of interest in making the introductions at a time when his boss held sway in the negotiations for federal aid. He said Durbin was not involved “at any level” in securing the public contracts

“He continues to encourage those of us on his team to connect local partners with the resources they need to weather this crisis and keep Illinoisans safe from COVID-19,” Bales said of Durbin.

Durbin declined multiple interview requests.

A BGA review of Durbin and Lightfoot campaign contributions found none from the companies Bales introduced.

“No political considerations” boosted vendors’ chances of landing a city contract, said Lightfoot’s deputy press secretary, Patrick Mullane, in a written statement.

“The mayor and staff have been in touch with the Senator and his Senate office staff at various points throughout the COVID crisis,” Mullane said. “Any discussion around funding continues to be about broad federal programs. We have never discussed specific contracts.”

“Howard Elliott Collection was one of hundreds of companies whose information was forwarded to the City” as it “mobilized all of its resources” to secure scarce supplies of lifesaving equipment, medical supplies and protective gear, Mullane said. He said more than 600 companies made inquiries at City Hall.

“The City abided by the strict procurement regulations to prevent any conflict of interest,” he said, “as it always does and is required to do.”

'A friend of a friend'

One conduit to the mayor’s office was Klonsky, Lightfoot’s pro bono consultant. Her city work — according to her two-page contract — is all designated "confidential.”

Klonsky was a paid consultant on Lightfoot’s mayoral campaign and remains a paid consultant on Durbin's re-election campaign as well as Light PAC, the mayor’s political action committee, records show. Klonsky said her jobs as a paid consultant are separate from her role as an unpaid Lightfoot adviser.

In a series of interviews with the BGA, Klonsky said she first got a call from Bales in March about Howard Elliott, and that Bales sent her an email shortly afterwards.

In a March 23 email to Klonsky titled, “N95 Masks + Donations,” Bales wrote:

“One, Brian has converted his manufacturing team to produce medical masks in Illinois — they’re not N95s, but doctors and others in the Chicagoland are still taking donations from him because they're in such desperate need.”

“Second, Brian also has a line on N95 masks with a 7-day delivery time out of China.”

Klonsky immediately forwarded the email to Joseph Schuster, a mayoral staffer leading the search for masks, face shields and gloves.

In a telephone interview, Bales initially said he became aware of The Howard Elliott Collection through a “friend of a friend.”

Asked for specifics, Bales said the firm’s owner, Brian Berk, was unable to get through to Lightfoot's office on his own. That’s when Berk called Highland Park Councilwoman Alyssa Knobel, who told the BGA the Berks are longtime family friends. Knobel said she then called Bales and introduced him to Berk. Bales, in turn, contacted Klonsky.

Berk did not return repeated phone and email messages nor did he respond to messages left at his work and home.

Bales and Knobel said their contacts with Berk centered on his desire to donate masks to the city, and both said they have no knowledge about how those donations turned into city contracts.

“I was asked if I could make an introduction and I did,” Bales said. “This was March. March was a mad scramble for everyone to get hands on PPE.”

Bales said Schuster later called him, asking if he would vouch for the company. “No,” Bales said he told Schuster but added: “Alyssa vouches for them. And I trust Alyssa.”

In total, Howard Elliott landed $1.5 million in no-bid contracts through April 20, making it the city’s largest supplier of protective gear at the time.

In three of those contracts, records show, the Addison furniture company provided the city surgical masks, gloves and face shields it obtained from other companies. The fourth and smallest contract was for masks manufactured by Howard Elliott.

One of its contracts was for one million surgical masks, which Howard Elliott acquired from China and sold to the city for 59 cents — up 20 cents from the company’s original quote and more than four times the cost of surgical masks before the pandemic, records show.

The increase, records show, was “due to market fluctuations and the demand for personal protective equipment.”

Howard Elliott wasn’t alone in charging a premium for masks. In the chaos of the pandemic, mask prices escalated without controls. Illinois officials even sent a staffer to deliver a $3.5 million check to a middleman in a parking lot to secure the sought after N95 masks at more than double their cost before the pandemic.

Meanwhile, the city was burning through its supplies for first responders, and its traditional distributors could not immediately offer more. Records show the city also bought 300,000 face shields, 119,000 disposable gloves and 25,000 reusable masks from Howard Elliott. Despite emails and interviews suggesting otherwise, Mullane said Howard Elliott was “at no point” seeking to donate 25,000 masks to the city.

In a memo attached to the gloves purchase, Chicago’s Public Health Commissioner, Allison Arwady, listed reasons why Howard Elliott was prioritized, including the company’s “strong personal references.”

“The Howard Elliott Collection is traditionally a furniture/hard goods manufacturer, based in Chicago and with an on-the-ground presence in factories in China,” Arwady said. “The city of Chicago learned about The Howard Elliott Collection through Senator Dick Durbin’s team — specifically, Greg Bales.”

Arwady declined interview requests.

Mullane, Lightfoot’s spokesman, said the mayor had a “limited involvement in PPE decisions” after the city’s procurement department reviewed the purchasing options and recommended vendors. But she was not a party to earlier conversations nor was she involved in day-to-day decisions about PPE offers.

Lightfoot’s emergency powers expired on June 30.

State orders goggles

Bales’ first introduction to Klonsky came March 21 when he emailed her about a New Jersey company that boasts on its website of making goggles for NASA astronauts.

“I’m connecting you with Anthony DiChiara, CEO of Liberty Sport,” Bales wrote. “Anthony’s company is a manufacturer of protective eyewear, including for medical (PPE) equipment.”

Klonsky forwarded the email to Schuster, records show.

The city’s contract database lists no direct contracts to Liberty Sport Inc. But the state ordered 20,000 goggles at $45 each on March 24, totaling more than $900,000.

DiChiara didn’t return messages requesting an interview.

Four days after his first email introduction, Bales sent the city’s Schuster another introduction, this time on behalf of a company well-connected in Democratic party circles.

“Connecting you with Jaimey Sexton, a friend of mine — he’s got a line on bulk purchases of N95 masks,” Bales wrote. “I’ll leave it to him to lay out what he knows.”

Sexton is the principal of The Sexton Group, which handles automated and live calling, telephone town halls and text messaging for Democratic political campaigns. He said in an interview that he reached out to Bales with information about another company that had access to the coveted N95 masks.

Sexton said he didn’t remember the name of the company, which was referred to him by a friend.

“I didn’t ask for anything. I was just trying to help,” said Sexton, who said he has known Bales for a decade through his firm’s political work. The Sexton Group’s website slogan reads: “Fighting Republicans Since 1997.”

A day later, Bales forwarded to Schuster yet another email, this time for Chanon DiCarlo from Upstaging Inc., a lighting and transportation company in the event production and concert industry.

In the email to Bales, DiCarlo explained how the company transitioned to making face shields and offered to brainstorm “on additional ways in which we can put our equipment & expertise to work.”

In an interview, DiCarlo said that email connection led to no city contracts. A company director told the BGA Upstaging was asked for a quote on custom barriers for City Hall through a third-party vendor. A contract has not materialized, the director said, but if the city places an order, it would be through that vendor.

Upstaging later landed contracts with the state, but DiCarlo said those conversations were handled by someone else. State records show the state ordered 7,200 face shields in late March at $15 each and later spent another $1,588 for face masks.

DiCarlo said she was put in touch with Bales through a mutual friend, Sarah Matheson, a photographer on political campaigns, who was included on the email exchange.

Matheson said she knew Bales from the political world, but said she wasn’t a political person. In fact, she said, she’s Australian and didn’t vote in American elections. Asked why she connected DiCarlo to Bales, Matheson said, “That’s really none of your business.”

'Good guys, bad guys'

On April 1, Bales sent a fifth email connecting a company to Schuster. He was forwarding a message from John Fritchey, a former Cook County commissioner and state representative, who said he knew a California doctor with access to masks and other medical equipment.

The city has not contracted Dr. James Chao or his company, Javis Development, records show. Contacted by telephone, Chao said he can’t remember exactly why he did not get a contract with the city. But he remembered it was hard for cities and states to compete for PPE because their procurement processes aren’t set up to quickly react to the chaos of escalating prices.

At the time, the Trump administration had directed governors to secure their own medical supplies, which meant Chicago was competing not only with hospitals, but also with other states and municipalities for the potentially life-saving gear.

Fritchey said a mutual friend of his and Chao put them in contact. He knew the local and state governments were scrambling for PPE, so he reached out to Bales, who he described as “a good person, personally, ethically and professionally.”

“In this business, there are good guys, bad guys and in-between guys,” said Fritchey of Bales, “and he falls squarely in the good guys.”

This story was produced by the Better Government Association, a nonprofit news organization based in Chicago.

Republishable images:

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Chicago Mayor Lori LightfootImage icon Download 20190911 - Lightfoot- _DSC0170.jpg (5.61 MB)Chicago Mayor Lori LightfootChicago Mayor Lori Lightfoot (Madison Hopkins/BGA)
Lens on LightfootImage icon Download LoL.png (11.13 KB)Lens on Lightfoot graphicThis project is a collaboration of seven Chicago newsrooms examining the first year of Mayor Lori Lightfoot's administration. Partners are the BGA, Block Club Chicago, Chalkbeat Chicago, The Chicago Reporter, The Daily Line, La Raza and The TRiiBE. It is
U.S. Senator Richard Durbin (D-IL)Image icon Download Richard_Durbin_official_photo.jpg (7.67 MB)U.S. Senator Richard Durbin (D-IL)Dick Durbin’s top campaign staffer used his connections to help an Addison-based furniture company become City Hall’s top supplier of COVID-19 medical gear. (U.S. Senate photo)

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Timeline: Friends of Friends

Timeline: Friends of Friends

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