An audit has found that Maryland's procurement of 500,000 COVID-19 tests did not adhere to the state's guidelines. The review by the Maryland Office of Legislative Audits (OLA) found that payments to the South Korean company for the tests were devoid of any written basis to support them. It also found that dealings with the firm "were not supported by formal written contracts or agreements."
The state purchased 500,000 COVID-19 test kits from the South Korean firm LabGenomics, with the initial batch costing $9 million. Maryland had no formal contract with the firm, instead it relied on an April 2020 letter of intent to purchase and import the tests prior to the Food and Drug Administration's (FDA) emergency approval.
The OLA report said this letter did not meet the state's procurement requirement.
The office of Maryland Gov. Larry Hogan initially announced the acquisition of the COVID-19 tests in April 2020. But when the tests proved faulty and did not get approval from the federal regulator, the state sent them back to LabGenomics. Health Secretary Dennis Schrader acknowledged the issues of the COVID-19 tests in December 2020. A replacement batch was then procured for an additional $2.5 million.
Furthermore, the OLA report noted "a pervasive lack of written documentation" of the procured COVID-19 test kits.
"Payments made for the [COVID-19] tests were not supported by formal written contracts or agreements containing any of the critical provisions required by state procurement regulations," it said. The procurement's lack of a paper trail meant the audit was mainly based on interviews with current and former state employees and other individuals linked to the deal.
It could not be determined exactly how many tests from the initial batch of 500,000 were used. Hogan said some tests in the replacement batch were used by December 2020, but OLA auditors were unable to confirm this. They wrote in the report: "No centralized records of tests distributed and/or used was maintained by [the Maryland Department of Health], and we are unaware of the existence of any such records."
Legislative auditor Gregory Hook commented: "While there was an expressed urgency to procure the tests, such conditions would not mitigate the need to properly document and comply with state regulations specifically tailored to emergency procurements." Meanwhile, LabGenomics officials were unreachable for any comment on the matter.
Compliance and transparency took a backseat
OLA auditors remarked that they could not determine the process on how LabGenomics was picked and the names of state officials that authorized the deal.
While there was documentation showing the state government talking with other vendors, it was unable to determine the degree to which these other parties were considered. However, the report noted that the governor's wife Yumi Hogan "worked with the Maryland Department of General Services (DGS) on acquiring the initial tests."
"We found no records documenting the formal evaluation of the vendors, the basis for the selection of LabGenomics, or whether LabGenomics was the best qualified vendor. [Furthermore], we have been unable to locate any documentation … as to the identity of the party or parties who authorized the purchase of the tests," the OLA report remarked.
Some state officials did not take kindly to the report. DGS Chief of Staff Eric Lomboy and MDH Chief of Staff Thomas Andrews slammed the OLA report as "rushed and politically driven." They reiterated that compliance with audits and underlying regulations are their agencies' utmost priorities. The governor's spokesman Mike Ricci remarked in an April 2 statement: "We have no regrets, except for the time and tax dollars that have been wasted trying to undermine this international accomplishment." (Related: Canada spent more than $700 million on unused ventilators – with a refund unlikely.)
The United Kingdom reported a similar issue in its procurement of vital items to address COVID-19 back in November 2020. The U.K. government's National Audit Office (NAO) said that around one percent of personal protective equipment (PPE) purchased by the U.K. Department for Health and Social Care was "potentially unusable." According to the NAO report, the office flagged around 195 million unsuitable items amounting to "hundreds of millions of pounds."
The office, in particular, cited two PPE contracts for masks worth 214 million pounds – as the face coverings had ear loops instead of the required head straps. "The problem of ear-loops on FFP2 respirator masks is likely to apply to tens of millions of similar masks from other suppliers. Most other types of PPE have also the same problems with compliance with technical standards," its report said.
Visit Pandemic.news to read more on issues surrounding the procurement of items needed to fight the spread of COVID-19.
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