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Utah lawmaker unveils new bill to rein in emergency no-bid state contracts

(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 on Friday, 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.

After months of questions about controversial state contracts made outside of the normal bidding process in the early days of the coronavirus pandemic, a legislative panel gave its early stamp of approval Tuesday to a new bill designed to promote more transparency and accountability in emergency state purchases.

Under the proposal, procurement officials would be required to make certain information publicly available within two weeks of an emergency purchase, including copies of each written contract and the name of the highest ranking government official who approved it — something that has proved elusive at times in Utah’s flurry of no-bid contracts.

The bill also seeks to set an end date for contracts entered into outside of normal purchasing processes. No-bid agreements related to a natural disaster — including an explosion, fire, flood, storm, tornado or windstorm — could last no longer than 60 days under the proposed legislation, while all other emergency procurements contracts, including those related to a pandemic, could last no longer than 30 days.

“Through this pandemic, we obviously are learning lots of things about gaps in the code and maybe areas of code that don’t quite fit the exact circumstance that we’re currently finding ourselves in,” state Rep. Candice Pierucci, R-Riverton and the sponsor of the bill, told the state’s Economic Development and Workforce Services Interim Committee on Tuesday.

Her proposal, she said, “would allow the executive branch to be nimble and responsive while also putting guardrails and checkpoints in place to encourage transparency, accountability and ultimately the competitive bid process that works so well."

State law currently allows the head of purchasing to forgo standard processes when doing so would avoid a lapse in critical government services, mitigate a circumstance that would have a negative impact on public health or safety or to protect the legal interests of a public entity.

The procurement unit is required to ensure purchases are made with “as much competition as reasonably practicable.” After the emergency is over, it’s required to prepare a written document explaining the conditions that made the purchases necessary.

But Pierucci’s bill seeks to plug some of the problems lawmakers have identified with the approach currently outlined in state code after Utah leaders have come under criticism for the way they spent roughly $97.3 million outside of normal purchasing rules in the early days of the coronavirus pandemic.

Procurement officials have argued that those shortcuts were necessary during the pandemic to cope with the urgent need for protective gear amid intense international competition.

But in the absence of competitive bidding processes, public records have shown that personal recommendations and CEO suggestions guided state officials as they formulated a coronavirus response plan and hunted down critical supplies. And a recent state audit found leaders had little documentation of due diligence in entering some of those contracts.
Pierucci indicated that the contract period limitations outlined in her bill could have stopped the state from entering into its current long-term no-bid contract for the Healthy Together app, which was originally envisioned as a contact tracing tool but now acts as more of a symptom checker.

“The app that we have a year long contract for that we’re $4 million into, it was entered into as an emergency contract and it has a yearlong duration,” she said. “In this case, if we had this code in place, it would have been a 30 day contract.”

(Trent Nelson | Tribune file photo) This Oct. 30, 2019, file photo shows Rep. Candice Pierucci, R-Herriman, at the House Lounge in Salt Lake City. She is sponsoring legislation designed to put accountability safeguards into emergency, no-bid contracts by the state.

As part of its contract with Twenty, the company that created the app, the state will continue to pay $300,000 per month for the tool through March. And while health officials say it is still valuable as a source of public health information, critics have argued the state shouldn’t continue to spend money on an app that hasn’t worked as promised.
Pierucci’s bill would also address the accountability issues that arose with one of the state’s most controversial emergency purchases: an $800,000 order for hydroxychloroquine from a Utah pharmacist who had amassed the anti-malaria drug and was working behind the scenes with officials to distribute the unproven medication statewide for coronavirus patients.
Utah Gov. Gary Herbert ultimately canceled the order from Meds in Motion. But state auditors later said that to this day they couldn’t determine who’d given the OK for the spending on the malaria drug.

“Without written documentation of authorization (or explicit verbal authorization), it is impossible to determine exactly how this occurred,” the auditors wrote. “We are concerned that this purchase occurred without anyone’s explicit authorization.”

Christopher Hughes, director of the state’s Division of Purchasing, said Tuesday that he thought the changes in Pierucci’s bill would help provide more transparency with emergency contracts and at the same time were “not overly burdensome to anybody within the procurement profession.”

He said a 30-day timeframe would allow procurement officials to move quickly in the first days of an emergency while also ensuring adequate time to secure contracts under the normal processes designed to promote fairness and competition by the end of the period.

Pierucci’s bill received early approval from the state’s Economic Development and Workforce Services committee with a near unanimous vote on Tuesday.

The only lawmaker who voted against approving the proposal as a committee bill was Sen. Jake Anderegg, who said he planned to support the legislation later on but didn’t want it to receive the expedited treatment that comes with unanimous consent.

As state lawmakers have spent months debating how to rein in the executive branch’s powers outlined in the state’s Emergency Management Act, Anderegg, R-Lehi, said he worried that Pierucci’s proposal could expand the governor’s powers.

“I understand where this is going and why it would be needed and how it could be helpful,” he said. “It just is one of those things where I think we’ve got to rein in the Emergency Management Act of 1953 and put some better guardrails in place before this bill should be a prime-time bill.”

Pierucci said she her bill did the opposite and would instead rein in powers under the emergency procurement code.

“The idea and goal of it is to get us to a place where we were using the competitive bid process, which also is encouraging more transparency and accountability,” she noted.

The bill will be further deliberated in the upcoming general legislative session early next year.

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