BPW Democrats: Retroactive pandemic contracts make mockery of procurement rules

Listen to this article

Two members of the state Board of Public Works — both Democrats — expressed growing frustration with state agencies seeking retroactive approval for millions in pandemic-related spending that only now is coming to the panel for approval.

The ire bubbled up early in Wednesday’s meeting even as the three-member panel ultimately approved — over Comptroller Peter Franchot’s objection — a nearly $100 million contract. The agreement with San Diego-based Qualivis included more than $38 million in retroactive revisions for staff at the mass vaccination sites and another $62 million in new spending for a deal that originally was approved in November for $6 million but is now worth a total of $146.5 million.

Franchot and Treasurer Nancy Kopp, two Democrats on the three-member panel that included Republican Lt. Gov. Boyd Rutherford, who chaired the meeting in place of the normal chair, Gov. Larry Hogan, questioned why the Maryland Department of Health had delayed bringing the revisions before them for so long.

“To be quite honest with you, I was more focused on saving lives at the time,” said Health Secretary Dennis Schrader.

The response appeared to aggravate Franchot and the typically reserved Kopp, who at times chastised Schrader.

“Stop using this device,” said Kopp, referring to the use of emergency procurement provisions in the law. “And it’s not a choice between reporting correctly (to the board) or saving lives. We expect you to do both. I know you can do both.”

The comptroller dismissed Schrader’s explanation as a thinly veiled “get out of jail free card” for not following state procurement law.

“We’re not in a state of emergency right now,” said Franchot, noting that Hogan lifted the statewide executive order effective July 1.

“The pandemic is still ongoing,” said Schrader, adding that the state is “in a different threshold of activity.”

The Qualivis contract was the first of 17 retroactive contracts to come before the three-member board Wednesday.

The company provided the state with testing sites, vaccination sites and monoclonal antibody therapy infusion sites. The new contract includes a $62 million revision that will extend the deal until June 30.

Franchot described the ongoing issue with late contracts as “utterly disrespectful” to the board.

“Each one of these 17 retroactive items represents a violation of the state’s procurement laws,” said Franchot. “I mean seriously, how long are agencies going to operate as if there are no procurement laws and regulations in place? Who cares, we just have to go  to the board and repeat the same old refrain over and over and over again: It’s an emergency. It’s for an emergency. The emergency used to exist, now it doesn’t exist. But this is all illegal behavior under our code.”

Franchot attempted to delay a vote on the contract saying it should be brought back at the July 28 meeting as two requests, one for the $38 million in payments for earlier work and another for the $62 million in future services.

Kopp initially seemed to support Franchot.

“I have no problem with deferring it, but it sounds to me as if the secretary signed a $100 million contract with this company partially to repay past actions and partially looking forward,” said  Kopp. “This is one of the problems with the use of  the emergency procurement device that we have been raising concerns about. I agree with the comptroller, it shouldn’t be coming to us this way.”

Rutherford, the lieutenant governor, initially moved to delay the contract but withdrew the motion after learning such a delay would have no effect at all.

“Because the department has already entered into the agreement, they do not need to wait to make payments to the vendor because there was already an agreement in place,” said Gabriel Gnall, procurement adviser to the board.

“If we don’t lay down some ground rules and stick to them then the agencies are going to, where possible, take advantage of this situation,” said Franchot.

Gnall’s comments caused Kopp to say that while she agreed with Franchot, the issue was moot.

“But we’ve signed the contract,” said Kopp. “I’m not sure I see the point.”

Franchot then asked Schrader to delay paying on the contract until after the July 28 meeting.

“I would urge you to hold off until the next meeting,” said Franchot. “Seriously.”

Schrader argued that a number of smaller Maryland-based subcontractors would be hurt by the delay. Additionally, he said, the state was required to pay because the agreement was older than 30 days.

“I agree with the comptroller,” said Kopp. “I think we all feel the same way. It’s not the (subcontractors) and it’s not even the vendor that we have the issue with. It’s us. It’s our own agencies and we signed a contract to pay them. They’re doing the work.”

Kopp, speaking sternly to Schrader, called the contract “an abuse of the emergency (procurement) system.”

“You can nod or whatever but the comptroller feels there is no other way to get your attention and get you to stop without deferring this,” said Kopp, speaking directly to Schrader. “I have some faith and hope that isn’t so.”