ALBANY (TNS) — After enduring heavy criticism for her administration’s decision to spend $637 million on COVID-19 tests from one company — owned by a family who were campaign donors to Gov. Kathy Hochul — the state health department is being sued by the same company for allegedly not following through on a promise to purchase millions of dollars in additional coroanvirus tests.
The company, Digital Gadgets, filed a lawsuit in state Supreme Court in Albany recently alleging the state unlawfully awarded the contract for “surge supply” tests to other companies. The petition challenges the consistency of the state’s procurement practices under the COVID-19 state of emergency.
The potential contract in June was for 24 million American-made tests at $8.50 each, Didigtal Gadgets claimed. Instead, three companies received $59 million for the task, which no longer specified a need for an American-made test. None of the money has been spent to date, according to state records.
The lawsuit filed by Digital Gadgets centers in part on the use of the COVID-19 state of emergency as it related to procurement practices.
The executive order that enabled the emergency-like purchases of the tests led to substantial criticism of Hochul, generally from Republicans in an election year. The said her administration bypassed typical public procurement rules and awarded multi-million dollar contracts to Digital Gadgets, without competitive bidding or oversight from the state comptroller.
Digital Gadgets contends it reached an agreement to provide COVID-19 tests that would be awarded without competitive bidding, because of the state of emergency.
The company claims the state said they were to receive the additional contract, but a month later the Department of Health issued a formal request for companies to bid on a very similar contract.
The request for bids was released on July 12, one week prior to the Times Union’s initial story on the company’s owner, a Hochul campaign donor, receiving the $637 million contract.
The request did not state the contract would be awarded based upon the guidelines of the state’s coronavirus executive order, but instead offered the normal language for a formal bid, according to a copy of the request that Digital Gadgets included in its court filings.
In August, Digital Gadgets bid on the contract, but three other companies were awarded the deal.
Health department documents show that the companies were provided tests at a value of $1.60 to $2.35 a test. A total of 122 companies applied and Digital Gadgets ranked 50th at a price of $5.50 per test. Digital Gadgets contested its price was for a test kit, which would have been two tests, or $2.25 per test and that other companies were showing the price per test.
On Sept. 7, Digital Gadgets attempted to formally contest the bid, believing that it was uniquely positioned to be able to meet the demands of the contract, including the ability to ramp up supply and shelf life. Five days later, Hochul announced the end of the state of emergency. She said then that the state has been adhering to “normal procurement rules for some time now.”
The governor’s office, which is not a named party in the lawsuit, declined to comment due to the pending litigation.
On Sept. 14, the comptroller’s office informed Digital Gadgets they could not contest the bid.
“This office has no authority to hear this protest and, accordingly, will not be issuing a determination with respect to your protest,” Brian Fuller, director of contracts for the comptroller’s office, wrote in the letter.
Digital Gadgets, in its court fillings, said the health department’s characterization was “demonstrably false” and “appears to be, at best, a post-hoc justification.”
In a Sept. 28 letter, the Department of Health procurement manager Eryn Keefe told Digital Gadgets: “The department published that procurement out of an abundance of caution, to obtain pricing and related information from responsible and responsive bidders in order to be good stewards of taxpayer dollars.”
The Times Union reported on Sept. 16 that California spent 45 percent less on the same Digital Gadgets tests, although it came during a less heightened demand for tests. The state placed three orders with Digital Gadgets on Nov. 26, as New York City was experiencing the first major surge attributed to the omicron variant in the nation, and then an additional order on Dec. 20.
The contracts then flowed exclusively to Digital Gadgets, of which the owner, Charles Tebele and his family were frequent donors to Hochul’s campaign. Hochul denied any coordination or wrongdoing related to awarding the contracts to a company that was a contributor to her campaign. She has described of a firewall between her campaign and administration.
(c)2022 the Times Union (Albany, N.Y.)
