• Fri. Dec 2nd, 2022

Billions awarded by the state in no-bid, auto-renewable COVID contracts

With the onset of the COVID-19 pandemic in 2020, California authorities approved more than 8,000 contracts without a tender, and many have since been “automatically renewed” with little or no oversight under the state’s applicable emergency declaration. for almost three years.

The unbidden contracts, mostly awarded by the California Department of Health (CDPH) and the California Department of Technology, include more than 80 work orders worth at least $25 million and totaling at least $12 billion, according to analysis by Kaiser Health News . the non-partisan, non-profit CalMatters news services; and household watchdogs such as the Howard Jarvis Taxpayers Association.

A 2022 bill, passed unanimously by both houses of the California legislature in August and signed into law by Gov. Gavin Newsom on Sept. 25, will require state agencies “to provide information regarding the terms of a proposed extension or renewal.” of all contracts of $75 million or more awarded beginning January 1, 2023.

Senate Bill 1271 will not apply retrospectively to the no-bid contracts issued under the emergency declaration, but is a long-overdue step in the right direction, said State Senate Minority Leader Scott Wilk (R-Santa Clarita).

“This is a victory for transparency and good governance,” Wilk said in an Aug. 22 statement following the passage of SB 1271.

“This measure removes the “automatic” nature of the state’s no-tender contract renewal process and adds essential oversight. I’m very pleased that lawmakers are sending a message to the governor that we want more checks and balances in the renewal process.”

SB 1271 was one of several bills Wilk proposed in February 2022 as part of a “government accountability package,” the SCA-7, a resolution requiring voter approval, and SB 947, an expansion of California’s whistleblower protections , contained law on the involvement of employees of private companies who were awarded contracts without tender.

SCA-7 would require that all non-agency contracts valued at $25 million or more that are to be renewed or renewed must be approved by the Joint Legislative Budget Committee at least 60 days before the contract ends.

“Right now, there are no laws on the books that require public oversight hearings to extend state contracts without bidding for $25 million or more to any state agency,” Wilk said in comments to SCA-7. “My bills would add that much-needed component to the law.”

Wilk was underway this week and unavailable for comment, but press secretary Jacqui Nguyen told The Epoch Times that SCA-7 and SB 947 were “moving forward” for further discussion over the next year.

For California lawmakers, “next year” begins on December 5, when they become the first state legislatures to call their 2023 session.

Nguyen said whether the 2022 bills will turn into “another law in the future” or be reinstated as originally drafted in 2023 is “not concrete,” noting that Wilk wants to “work with other lawmakers” to get more Include fiscal transparency measures in state law.

Though no-bid contracts, particularly for technology services, have been a source of contention in California for years, the authority granted to the governor under the state’s public health emergency allowed Newsom to unilaterally issue mask/vaccination orders and temporary stay-at-home orders grant, and awarding emergency aid contracts without an offer sparked widespread criticism, including from other Democrats in the Deep Blue state.

The fear was compounded late last year when a $1.7 billion, no-bid, annual contract awarded to PerkinElmer, Inc., a Massachusetts-based diagnostics company, was “automatically renewed” with little opportunity to challenge it to deliver.

PerkinElmer was awarded an annual contract in spring 2020 to operate a laboratory in Valencia, California with a commitment to return COVID test results within 48 hours and process up to 100,000 tests daily.

In early 2021, whistleblowers at the Valencia lab reported that tens of thousands of COVID-19 tests were contaminated by mishandling with either inconclusive or false results, and claimed that unlicensed lab technicians were watching videos and sleeping while processing test samples.

Despite objections from the California Senate Republican caucus, which found at the time that the lab had never met its promised testing capacity and turnaround time, the $1.7 billion annual contract was “automatically renewed” in October.

Attorney Laura Powell of Californians for Good Governance told The Epoch Times that while the PerkinElmer contract has attracted a lot of attention, there are thousands of other no-bid contracts that state taxpayers are hooked on but few about can find information.

“I’ve been trying to document in a spreadsheet how many contracts (not an offer) there are,” and couldn’t do so without filing public record requests, she said, claiming that California routinely ignores such requests or “they hesitated along.” of answering”.

Powell noted in a Nov. 10 Twitter post that the CDPH has issued a $192 million contract for graphic design services related to COVID-19 public health messages, going to Sacramento-based PR -Company Runyon Saltzman was awarded.

Runyon Saltzman has received $328.7 million in orders from California since 2020, including more than $254 million in no-bid orders, she said.

The state has shared few details about exactly what the $192 million deal entails. “Some have suggested the money will actually be used for ad purchases. Obviously they don’t really spend that much on graphic design!” Powell wrote. “Nevertheless, 1) $192 million for propaganda is unscrupulous, 2) they have to be honest about how our money is spent, 3) contracts without bids encourage corruption.”

Newsom announced in October that California’s COVID-19 state of emergency will end on February 28, 2023. But without further safeguards for no-bid contracts, critics like Howard Jarvis Taxpayers Association president Jon Coupal claim the governor and his successors are likely to maintain, if not increase, the practice.

“For the last two years, Gov. Gavin Newsom’s administration has paid billions of dollars in secret, no-offer contracts with little to no transparency,” Coupal said in a widely shared op-ed in April co-authored with Wilk. “Now Newsom is applying the same arcane approach to a growing number of other government contracts. All Californians, regardless of party affiliation, should be deeply concerned.”

“Transparency is bipartisan, or at least it should be,” Wilk added. “Government contracts without tender should never become the norm and when deemed necessary there must be strong accountability to prevent waste, fraud and abuse. Public confidence in the procurement process needs to be restored.”

Taxpayer concerns and the public’s lack of confidence in the governor’s and state agencies’ procurement practices prompt another scrutiny as the state faces potential budget deficits over the next five years.

California’s Legislative Analyst Office (LAO) estimates that the state could face a budget deficit of $25 billion in the next fiscal year and deficits of between $8 billion and $17 billion in the following four years.

The estimate is part of the LAO’s 2023-24 Fiscal Outlook, released Nov. 16, which helps state legislators prepare budget proposals for the upcoming fiscal year.

LAO said the state’s revenue estimates represented “the weakest performance California has seen since the Great Recession.”

John Haughey


John Haughey has been a journalist since 1978 and has extensive experience in local government, state legislation and growth and development. A graduate of the University of Wyoming, he is a Navy veteran who has fought fires at sea during three deployments aboard the USS Constellation. He was a reporter for newspapers in California, Washington, Wyoming, New York and Florida; a staff writer for Manhattan-based business journals.