After controversial contracts, Utah’s governor says coronavirus purchases will return to normal

(Trent Nelson | The Salt Lake Tribune) Gov. Gary Herbert speaks at a news conference in Salt Lake City on Thursday, May 7, 2020.

Utah officials have spent millions in fast-moving deals, often using no-bid contracts, as state leaders scrambled to respond to the spreading coronavirus.

Some purchasing decisions, Utah Gov. Gary Herbert noted Thursday, were made in less than 24 hours. In one case, the state lost out on personal protective equipment because they didn’t bid high enough. Others have brought controversy, including a high profile contract involving anti-malaria drugs.

But Herbert said during a news conference that now that state officials have a better handle on the situation, it’s time to slow things down.

He said COVID-19-related expenses will now be moving back to a “normal purchasing process,” even as Utah is still in a declared state of emergency. This means that the state will be moving away from that crisis-time no-bid contracts.

The governor also acknowledged the possibility that not every spending decision made in the past eight weeks was the right one.

“I believe there are legitimate questions that have been raised,” Herbert said, “about various contracts that have been entered into by the state.”

When pressed about what contracts he was referring to, Herbert skirted the question and instead said that the communication between the Utah Department of Health and the Governor’s Office of Management and Budget and the purchasing department could have “been more precise.”

“I think you’ve heard the phrase ‘the fog of war,’ ” he said. “I think our communications really have not been as good as possible.”

So far, Herbert said Utah has made more than 300 purchases with 73 different vendors — a total spending that could top $90 million.

State leaders next week will invite reporters to do a more detailed walk-through of those contracts that have already been approved, Herbert said, so officials can explain “background and context” of those purchases.

"The numbers are somewhat staggering," he said Thursday, "but that's kind of the essence of this emergency, unprecedented as it may be, and wanting to get on top of this before we had a spread that we can not control and have a worse pandemic that we have already."

One expenditure that has drawn scrutiny is an $800,000 contract with Draper-based Meds in Motion to buy 20,000 units of hydroxychloroquine and chloroquine, which are anti-malarial drugs that briefly were touted as a possible treatment for COVID-19. Questions about how the deal came to pass, and a Food and Drug Administration recommendation against prescribing the drug for COVID-19 patients, led Herbert to cancel the contract. Meds in Motion returned the money.

An internal review in Herbert’s office found some communication failures but no deliberate wrongdoing in the state’s handling of the contract — but the purchase will be reviewed by Utah’s auditor and the Legislature.

Some lawmakers have publicly questioned other no-bid contracts, including a $2.75 million deal that went to mobile developer Twenty to create the app “Healthy Together,” which tracks people potentially exposed to the coronavirus.

“I’m concerned we overpaid for this product,” tweeted Rep. Suzanne Harrison, D-Draper. “... The lack of a competitive bidding process impacts the price and potentially the quality.”

Rep. Andrew Stoddard, D-Sandy, has expressed similar concerns about the price of the app, saying it was “extremely high.”

He told The Tribune that Utah’s technology companies “maybe had the good intentions to help out initially” when the state was ramping up its fight against COVID-19. But, he said, “there’s so much lack of transparency that we haven’t had any idea of what they’re doing, how they’re doing it or how much they’re being paid until just recently.”

There’s also been questions raised about Utah’s no-bid contract with Orem company Nomi Health to run a statewide website, TestUtah.com, to screen patients and offer thousands of diagnostic tests.

The team that launched TestUtah.com has also won multimillion-dollar, no-bid contracts in Iowa and Nebraska, and the screening form for testing in all three states asks about users’ symptoms and social distancing practices. But the questionnaire also has asked whether patients are allergic to hydroxychloroquine.

Mark Newman, the founder and CEO of Nomi, also serves on the board of directors of Meds in Motion, which had won the controversial contract for hydroxychloroquine.

Herbert said Thursday that his office will cooperate with “any legitimate inquiries” about coronavirus-related purchases. But he defended the purchasing decisions that have been made thus far, saying they were done in an effort to save lives. He noted that if the standard bidding procedure had been in place for testing supplies, it likely would have been a two-month process and Utah health officials would just now be getting those critical supplies.

“Certainly with the benefit of hindsight, it’s easy to say, ‘Well, we should have done this or that or the other thing,’ but given the constraints and uncertainties of the moment and the urgencies that we faced at the time, I stand by the collective decisions that have been made by our state leaders."

He also promised to hold accountable anyone found to have committed fraud, price gouging, or self-dealing with state resources.