The Maryland Board of Public Works on Wednesday delayed approving three emergency contracts the state health department awarded to bolster its response to the COVID-19 pandemic, with two of three board members citing a lack of transparency.
Comptroller Peter Franchot and Treasurer Nancy Kopp, both Democrats, voted to push back a decision on approving the approximately $3.8 million contract awarded to consulting firm Ernst & Young to help with the vaccine rollout. The state has already paid Ernst & Young, as well as the two other companies whose after-the-fact contract approvals were delayed Wednesday.
State health officials have said Ernst & Young, based in New York, is helping with supply chain management, forensic accounting and staffing for vaccine allocation, a description Franchot dismissed Wednesday as “broad, carefully crafted consultant verbiage.” He said the lack of information about this deal underscored the need for more transparency and accountability for the state’s emergency spending.
Lt. Gov. Boyd Rutherford, the third member of the panel, voted to approve the three contracts. He defended the state’s emergency procurement powers, likening the securing of outside services during a pandemic to a natural disaster that washes away a bridge — whether it’s urgent infrastructure repairs or a pressing public health emergency, there’s not time for the state to undertake the lengthy procurement process. He said there is already ample oversight.
“There is a balance that is struck between transparency that is in place and making sure that we get the projects done when they are done,” said Rutherford, a Republican.
“Given the speed, scale and the sheer breadth of the supply chain management and the planning and logistics needs for vaccine distribution, it has made it abundantly clear we needed outside help,” he said.
Emergency contracts have drawn scrutiny from state officials.
“What exactly are we paying Ernst & Young millions of dollars to do that we couldn’t do with our own staff?” Franchot asked.
Webster Ye, the state’s assistant secretary for health policy, said the health department needed “all the help we can get” to meet Republican Gov. Larry Hogan’s goal of administering 100,000 doses of the coronavirus vaccine every day, “with smooth data reporting to our federal and Maryland stakeholders.”
[ Maryland Comptroller Franchot calls for independent audit into state COVID spending ]
He added that the department had not been “on constant standby for a once-in-a-century pandemic” and lacked “dedicated supply chain logisticians” and forensic accountants.
Franchot and Kopp expressed irritation that Ye provided few details about a report that Ernst & Young was required to produce within seven days of its contract taking effect, after conducting “a comprehensive overall end-to-end assessment of the State’s COVID-19 Vaccination Program,” according to the contract proposal. It was one of at least three items the health department’s contract required Ernst & Young to produce.
Ye said Ernst & Young’s assessment led to the company helping with “first and second dose supply chain management,” preparing the state’s vaccination registration system, data reporting and assisting with the state’s Vaccine Equity Task Force. As for producing the report, Ye said, “we didn’t ask for a report to stick on a bookshelf and look pretty.”
Kopp said she respected Ernst & Young and supported the decision to hire them for the vaccination effort but said it wasn’t appropriate for the department to “keep secret” the report. Rutherford agreed the report should be produced, saying Hogan’s administration will “look into that.”
With Franchot’s and Kopp’s votes, the board also pushed back decisions on a contract awarded by the health department to Berkeley Research Group LLC for COVID-19 patient surge consulting and another for KPMG LLP with a similar description. Together, the two emergency contracts were worth more than $1 million.
[ Maryland’s emergency contracts for COVID vaccine rollout to get public review ]
The health department failed to notify the state spending board of those two contracts, and seven others, within 45 days of signing, as prescribed by state law. Franchot said the gap left him “basically appalled.”
The health department notified the Board of Public Works within the required time frame of the Ernst & Young contract and a $25 million award to Digital Management LLC to stand up a vaccine call center in the state, which the board approved Wednesday.
Ye said the department was “working as fast as we can.”
The board next meets April 7, and Franchot said he hoped the delay would “provide MDH the time to better justify the spending” and provide the assessment report Ernst & Young was tasked with producing.
The state legislature is considering a proposal by Franchot to establish an independent, bipartisan commission to audit all of the state’s spending on relief for the coronavirus pandemic.
Franchot described in an interview the billions of dollars in relief funds as “a river of money coming to the state of Maryland” and said he was concerned, based on the lack of transparency and oversight, about the private sector engaging in “pandemic profiteering.”
Several bills related to reforming the emergency procurement process have been introduced this year in the Maryland General Assembly.
One, sponsored by Democratic Del. Sandy Rosenberg of Baltimore establishes a statutory definition of “emergency” and adds conditions to the use of emergency procurements.
Another would require a procurement officer to make reasonable efforts to solicit at least three verbal offers for an emergency procurement contract. That legislation is sponsored by state Sen. Clarence Lam of Baltimore and Howard counties and Del. Kirill Reznik of Montgomery County, both Democrats.
Del. Brooke Lierman of Baltimore and Sen. Paul Pinksy of Prince George’s County, both Democrats, also introduced a bill to require the governor to tell the General Assembly about any emergency contracts within 72 hours of signing.
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Rutherford addressed the various bills at the Board of Public Works meeting Wednesday, saying many of the proposals coming out of the legislature were impractical.
“I don’t think they realize how impractical it is to notify the legislature on every emergency procurement or even to require the chief procurement officer to approve every emergency contract,” he said, citing operational challenges confronting state agencies and the circumstances by which these contracts are awarded, like a pipe bursting overnight at a correctional institution.
Rosenberg said he and the other sponsors incorporated recommendations from the General Assembly’s Office of Program Evaluation and Government Accountability, which examined emergency state procurement authority and procedures at the request of the legislature.
He said the evaluation followed the state’s cancellation of a $12.5 million contract with Blue Flame Medical after officials said the firm was too slow to provide sought-after N95 masks and ventilators during the first wave of the coronavirus pandemic last year. It led to a multimillion-dollar contract dispute.
The state’s Department of Legislative Services is conducting an audit of the Blue Flame Medical contract as well as the Hogan administration’s acquisition of COVID-19 tests from a South Korean company.
Rosenberg said more oversight of emergency procurement could serve as a boost to minority businesses. Emergency contracts generally do not go through the normal process of soliciting and analyzing bids from multiple vendors, which Rosenberg said could exclude otherwise valuable enterprises from consideration.
“It’s a balance,” Rosenberg said. “We recognize that an emergency is an emergency, and things need to be done in a hurry. But here you have our professional analysis, not a partisan response.”
A previous version of this story misrepresented the status of the procurement bills in the Maryland General Assembly.