California agencies approved more than 8,000 no-bid contracts with the outbreak of the COVID-19 pandemic in 2020, and many have since been “automatically renewed” with little or no oversight based on the state’s public health emergency declaration that was in effect. almost three years.
The no-bid contracts, awarded mostly by the California Department of Public Health (CDPH) and the California Department of Technology, include more than 80 work orders worth at least $25 million totaling at least $12 billion, according to analyzes by Kaiser Health News, the nonpartisan nonprofit news service CalMatters and budget watchdogs like the Howard Jarvis Taxpayers Association.
The 2022 bill, passed unanimously by both houses of the California State Legislature in August and signed by Gov. Gavin Newsom on Sept. 25, will require state agencies to “submit information regarding the terms of the proposed extension or renewal” of all $75 million contracts or more closed as of January 1, 2023.
Senate Bill 1271 would not retroactively apply to no-bid contracts issued under the emergency declaration, but it is a long-awaited step in the right direction, said state Senate Minority Leader Scott Wilk (R-Santa Clarita).
“It’s a victory for transparency and good governance,” Wilk said in an Aug. 22 statement after SB 1271 passed.
“This measure removes the ‘automatic’ no-bid state contract renewal process and adds necessary oversight. I’m very glad the Legislature sent a message to the governor that we want more checks and balances in the recovery process.
SB 1271 was one of several bills proposed by Wilk in February 2022 as part of a “government accountability package” that included SCA-7, a resolution that would have to be approved by voters, and SB 947, an expansion of California whistleblower protections. Law to include employees of private entities that were awarded contracts without a bid.
SCA-7 would require all state agency no-bid contracts of $25 million or more to be renewed or extended to be approved by the Joint Legislative Appropriations Committee at least 60 days before the contract termination date.
“Right now, there are no laws on the books that require public oversight hearings on the renewal of no-bid state contracts of $25 million or more for any state agency,” Wilk said in comments accompanying SCA-7. “My bills would add a much-needed piece of legislation.
Wilk was traveling this week and unavailable for comment, but spokeswoman Jacqui Nguyen told The Epoch Times that SCA-7 and SB 947 have been “continued” for further discussion next year.
For California lawmakers, “next year” begins Dec. 5, when they become the first state legislatures to convene in 2023.
Nguyen said whether the 2022 bills would turn into “another bill” or be reintroduced in 2023 as originally proposed is “not concrete,” noting that Wilk “wants to work with” colleagues lawmakers to codify more measures for fiscal transparency into state statute. .
Although 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 mandates, temporary stay-at-home orders. and the no-bid awarding of emergency response contracts has prompted widespread criticism, including from fellow Democrats in the deep-blue state.
Anxiety was compounded late last year when a $1.7 billion annual no-bid contract awarded to PerkinElmer, Inc., a Massachusetts-based diagnostics company, was “automatically renewed” without a chance to challenge it.
In the spring of 2020, PerkinElmer was awarded a one-year contract to operate a laboratory in Valencia, California, agreeing to return COVID test results within 48 hours and process up to 100,000 tests each day.
In early 2021, whistleblowers at a laboratory in Valencia reported that tens of thousands of COVID-19 tests were contaminated by mishandling with results either inconclusive or incorrect, and claimed that unlicensed lab technicians watched videos and slept while processing test samples.
The $1.7 billion annual contract was “automatically renewed” in October, despite the objections of the California Senate Republican Committee, which noted that at a time when the lab never met promised testing capacity and turnaround schedules.
Attorney Laura Powell of Californians for Good Governance told The Epoch Times that while the PerkinElmer contract has gotten a lot of attention, there are thousands of other no-bid contracts that taxpayers are seeking but can find little information about.
“I tried to document how many (no-bid) contracts there are in the spreadsheet” and couldn’t do so without filing public records requests, she said, arguing that California routinely ignores such requests or “draws its feet in response.”
In a Nov. 10 Twitter post, Powell noted that CDPH had awarded a $192 million contract for graphic design services related to public health messaging related to COVID-19 to Sacramento-based PR firm Runyon Saltzman.
Runyon Saltzman has won $328.7 million in California contracts since 2020, including more than $254 million in no-bid contracts, she said.
The state has provided few details about exactly what the $192 million contract entails. “Some have suggested that the money is actually going towards ad buys. Obviously they don’t really spend that much on graphic design!” Powell wrote. “Yet 1) $192 million in propaganda is unreasonable, 2) they must be honest about how our money is spent, 3) no-bid contracts encourage corruption.”
Newsom announced in October that California’s COVID-19 state of emergency would end on Feb. 28, 2023. But without further guarantees on no-bid contracts, critics such as Howard Jarvis Taxpayers Association President Jon Coupal say the governor and his successors are likely to keep , if not increase, practice.
“Over the past two years, Gov. Gavin Newsom’s administration has paid billions of dollars in secret no-bid contracts with little or no transparency,” Coupal said in a widely published April op-ed authored by Wilk. “Now Newsom is deploying his same secretive approach to a growing number of other government contracts. All Californians, regardless of party affiliation, should be deeply concerned.
“Transparency is impartial, or at least it should be,” added Wilk. “No-bid government contracts should never become the norm, and when they are deemed necessary, there must be strict accountability to prevent waste, fraud and abuse. Public confidence in the contracting process must be restored.”
Taxpayer concerns and a lack of public confidence in the governor’s and state agencies’ procurement practices are drawing further scrutiny, with the state facing potential budget deficits over the next five years.
The California Legislative Analysis Office (LAO) estimates that the state could face a budget deficit of $25 billion in the next fiscal year and between $8 billion and $17 billion over the next four years.
The estimate is part of the LAO’s 2023-24 Fiscal Outlook, released Nov. 16, to help state lawmakers craft budget proposals for the upcoming fiscal year.
The LAO said the state revenue estimates represent “the weakest performance California has seen since the Great Recession.”