Preliminary report on no-bid government contracts finds poor communication between state officials

(Trent Nelson | Tribune file photo) Workers organize supplies at the Receiving, Staging and Shipping Center at the Salt Palace Convention Center in Salt Lake City, May 8, 2020. The center serves as a central location for personal protective equipment received by the State of Utah and sent to hospitals, local health departments and emergency managers.

Poor communication and lack of input from public health experts have shadowed multimillion-dollar contracts for two of Utah’s primary coronavirus initiatives, state auditors concluded after a quick review of nearly $100 million in emergency spending during COVID-19.

In the limited review released Tuesday, state legislative auditors determined that many of the state’s pandemic contracts have been “executed without major concerns,” but explained that a more in-depth investigation would be necessary to settle lingering questions.

The concerns they did raise centered on two specific tech contracts that have given rise to the TestUtah initiative and the launch of a mobile contact tracing application.

According to the report, Utah Department of Health experts were largely excluded from the contract negotiations with tech companies involved with TestUtah, which has been dogged by questions about the accuracy of its coronavirus tests. Auditors conjectured that input from the agency could have yielded a better agreement with Nomi Health, the Orem software company that has reaped nearly $10 million for helping launch TestUtah’s symptom survey and running various testing sites.

Utah’s leading health agency was also largely left out of discussions with a tech firm called Twenty about developing a mobile application to bolster contact tracing. Though the state has spent more than $4 million to date on the Healthy Together app, the tool has never worked as initially presented and has been used for contact tracing in only a handful of cases. The state continues to pay Twenty $300,000 each month for the app, which also provides a symptom checker and information about public health guidance and testing.

The “poor collaboration” between Utah officials continued after the state entered into these contracts, the auditors reported — and in one case, the Governor’s Office of Management and Budget (GOMB) gave directions to a vendor and reprioritized parts of the agreement without the knowledge of other agencies.

After officials signed the Healthy Together contract, questions persisted about which state agency was overseeing the contact tracing app, since one group was monitoring Twenty’s work while another division was handling payment.

“This contributes to confusion and decentralizes the efficacy of monitoring a contract for compliance,” the review stated.

GOMB led negotiations for both of these contracts, which have more recently shifted into the hands of Utah Department of Health officials.

During a briefing on no-bid contracts during the Government Operations Interim Committee on Tuesday, Rep. Suzanne Harrison, D-Draper and a physician, questioned the decision to award these multimillion-dollar contracts to companies with “absolutely no background in health care.”

“Could you comment on what kinds of consultations were made with health experts to argue that those were wise contracts to enter into in a no-bid contract process?” she asked.

Phil Dean, interim executive director of the GOMB, said he was not personally involved in those agreements and couldn’t “immediately respond to that question.”

Dean formerly served as the budget director and chief economist for the GOMB but took over as interim director with the departure earlier this month of Kristen Cox, who had served in the post since 2012.

Harrison told Dean she thought it would have been "a wiser use of taxpayer dollars to invest in existing public health infrastructure or at a bare minimum consult with experts in the Department of Health before entering into no-bid contracts with companies that had no experience in these areas.”

In response to questions specific to the Healthy Together contract, Dean said there are “ongoing discussions” about how to ensure the app meets its original purposes and that the state is accepting applications from companies to supply a Bluetooth contact tracing technology to track the spread of COVID-19.

Overall, the state spent roughly $97.3 million outside of normal purchasing rules designed to safeguard against favoritism and corruption, with officials arguing that these emergency shortcuts would help the state quickly ramp up its coronavirus response.

About $64 million of that was for personal protective equipment, while another $11 million was for technology and consulting contracts. An initiative to provide a mask to every Utahn came in at about $9 million, and testing materials and freight each cost about $6 million.

“To the credit of those working on emergency procurements, they were able to procure much needed supplies in the face of an uncertain pandemic,” the report stated.

Dean credited the quick action of state purchasers to procure personal protective equipment during the early days of the pandemic as “a major contributor to where we are today."

“I wouldn’t trade where we’re at for any other state as I look at the big picture,” he said.

At the same time, state officials probably could’ve allowed for some competitive bidding in seeking a contact tracing app, the review continued.

The communication problems were most pronounced during the early part of the pandemic, and there are signs of improvement, the report said, noting that multiple agencies have been collaborating on improvements to the Healthy Together app.

House Speaker Brad Wilson said one of his main takeaways from the report is that “not all procurement decisions are created equal. Some of the COVID-19 contracts could’ve developed more slowly while other spending needed to happen right away, he said.

“I think a good example that we’ve dealt with this year is the acquisition of PPE, and some of those needed to be made within hours to secure those supplies," Wilson, R-Kaysville, said Tuesday during a legislative audit subcommittee meeting. “Others, while still under the state of emergency, maybe could have been made a bit slower and had a little bit more collaboration.”

The auditors recommended that GOMB work with agencies to strengthen communication within the crisis response and that the Legislature look at clarifying the state’s emergency procurement rules.

They also offered lessons for future emergencies:

  • Officials should improve communication inside the unified command that heads the crisis response;

  • Representatives of agencies that will oversee a contract should be involved in negotiations;

  • Other relevant agencies should be notified when there’s an intent to enter a particular contract;

  • State purchasing experts should also give input on contracts when possible;

  • Utah’s emergency purchasing rules aren’t written for different crisis scenarios;

  • Certain emergency contracts might not be as urgent, so competitive bidding could still be an option;

  • State leaders should listen to concerns raised by legal experts;

  • The Legislature can help make decisions;

  • State law could be updated to account for technological advances that streamline the bidding process;

  • The state should collaborate with local leaders to import supplies in an emergency;

  • Public-private partnerships should clearly outline expectations for each entity involved; and

  • Officials could pre-draft solicitations and include those in negotiations.

In a written response, leaders of the state’s purchasing division wrote that they were committed to transparency in spending taxpayer dollars, even in the middle of a pandemic. Utah’s purchasing division was among the first in the nation to post emergency purchases on a public web portal, they wrote. The agency is working to implement aspects of the review, the purchasing officials wrote.

During the briefing with the Government Operations Committee, Dean stood behind the decisions the state made and the necessity to move quickly, noting that the regular procurement process is intentionally designed to take time.

“When you’re dealing with an emergency you don’t have the luxury of that time,” he said. “When people are losing their jobs, when we’re losing lives, we have both these lives and livelihoods that we need to protect, and time is an essential component of that.”

The legislative review came out as State Auditor John Dougall leads a deeper examination of the emergency spending. That audit has been ongoing for several months, and current and former candidates in the race for Utah governor have been waiting impatiently for the results, saying voters deserve to know whether wrongdoing was involved before the Nov. 3 election.

Lt. Gov. Spencer Cox, who played a significant role in the state response, is the Republican candidate to replace outgoing Gov. Gary Herbert. University of Utah law professor Chris Peterson is the Democratic candidate.

Dougall has said he doesn’t know how much longer his investigation will take.