The federal government will pay General Motors $489.4 million to build ventilators to treat coronavirus victims in a new contract under the Defense Production Act announced Wednesday by the U.S. Department of Health and Human Services.
It’s the latest development in what has become a bizarre back-and-forth drama between GM and President Trump, who late last month publicly lashed out at the automaker over the price and predicted production numbers of the devices, and later authorized the DPA to force GM’s hand before praising the company’s effort. The HHS contract calls for 6,132 ventilators to be delivered to the Strategic National Stockpile by June 1, and a total of 30,000 by the end of August
GM has been working for weeks with Washington-based Ventec Life Systems to make a version of the company’s multi-function VOCSN ventilator at GM’s components plant in Kokomo, Indiana. Both GM and Ventec have said they will make the units at cost, with no profit. The contract prices the ventilators, which normally sell at $18,000, at about $16,313 apiece. The bulk of the contract covers the cost of the ventilators, including materials, engineering and tooling, other ancillary supplies and capital for GM to get its production line ready to build the units, GM spokesman Jim Cain said. Production is set to begin next week.
“GM and Ventec Life Systems are working with speed and urgency to arm front-line medical professionals with the critical care ventilators they need to treat seriously ill patients,” the automaker said in a statement. “GM is proud to deploy its purchasing and manufacturing capability alongside the respiratory care expertise of Ventec. We remain dedicated to working with the Administration to ensure American innovation and manufacturing meet the needs of the country during this global pandemic.”
The COVID-19 pandemic has galvanized automakers across the globe into action shoring up supplies of equipment needed by health care workers, first responders and others. GM is also repurposing a shuttered transmission plant near Detroit to produce surgical face masks. Ford is also building a variety of medical equipment including plastic face shields, respirators and ventilators, which will be built at its Rawsonville Assembly plant in Michigan starting the week of April 20.
Cain, of GM, said the goal is to deliver a ventilator unit that can be deployed immediately without the need to source more parts or materials.
“By rating contracts under the DPA, HHS is helping manufacturers like GM get the supplies they need to produce ventilators as quickly as possible, while also ensuring that these ventilators are routed through the Strategic National Stockpile to where they’re needed most,” HHS Secretary Alex Azar said in a statement.