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Audit criticizes Maryland’s emergency coronavirus spending

Findings fault state agencies for leaving out essential contract provisions for some purchases and failing to use written contracts for others.

Gov. Larry Hogan (R) announces the purchase of 500,000 coronavirus tests from a South Korean firm during a news conference in Annapolis in April 2020. (Michael Robinson Chavez/The Washington Post)

Maryland state officials did not follow emergency procurement rules to buy coronavirus tests, personal protective equipment, ventilators and other supplies and services worth tens of millions of dollars during the pandemic, auditors concluded in a report released this week.

The state Office of Legislative Audits found that agencies failed to use written contracts for some purchases, left essential legal language out of others and were not always vigilant in monitoring contracted goods and services.

Overall, auditors determined that 11 of the 15 emergency procurements they reviewed totaling $189.4 million were not in compliance with state regulations. State officials could not produce records showing services had been received for about $26 million in contracted spending.

“While we recognize the urgent and unique circumstances under which these procurements were made, such conditions would not mitigate the need to properly document and comply with State regulations specifically tailored to or required of emergency procurements,” auditors wrote.

The Maryland departments of health and general services, while pushing back on some of the findings, said they are working to remedy issues going forward.

Audit criticizes Maryland’s $9 million purchase of coronavirus tests that had to be replaced

The report released Thursday expands on findings in March that a shoddy procurement process surrounded the purchase of 500,000 coronavirus tests that later had to be replaced. The $9.46 million purchase from LabGenomics, a South Korean firm, was made without a written contract or documentation justifying the choice of company, both of which are legally required, auditors said.

This week’s report included a review of a $12.5 million contract for personal protective equipment and ventilators with the firm Blue Flame Medical, which was started in early 2020 by two well-connected Republican operatives. State officials have alleged that the company failed to deliver masks and ventilators as promised. The auditors found that the purchase order did not include critical provisions required by state regulations and meant to guide dispute resolution and other issues.

In October 2020, the state entered a settlement agreement with Blue Flame that allowed the company to keep an initial deposit of $6,271,000 for the purchase of 1,550,000 N95 masks and 37 ventilators, which were ultimately provided, the review found.

Auditors also probed consulting services from Ernst & Young related to the state’s coronavirus vaccine program and found that state officials used an emergency procurement method for the contract despite having ample time for a non-emergency process. The state then increased the contract from less than $4 million to more than $25 million without describing what added staff or services were to be provided, the review said.

Maryland cancels $12.5 million PPE contract with firm started by GOP operatives

“The State of Maryland’s covid-19 response has been organized around one core mission: to prevent as many deaths and hospitalizations as possible while ensuring that Marylanders can go about their normal business in a reopened economy safely,” the Maryland departments of health and general services said in a written response to the review.

The Department of Health said it has formed an Office of Contract Management and Procurement “to build on the procurement lessons that emerged in 2020.”

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