Health officials request $124 million in pandemic-related emergency contracts as GOP calls for oversight

Wolf administration officials doubled down this week on pursuing more than $100 million in new pandemic-related emergency contracts as they faced questions from state lawmakers about the health department’s spending.

The House and Senate held two hearings this week after Spotlight PA reporting found that the Department of Health was using the emergency procurement process, which allows state agencies to sidestep public bidding for contracts they say are urgent, to hire a new contact tracing company after the last one failed to prevent a data breach.

The health department requested a $34 million contract with Public Consulting Group, LLC, to take over the contact tracing program, though officials told lawmakers they expect to spend closer to $9 million.

Separately, the agency is pursuing an $87 million emergency contract to hire a company to perform COVID-19 testing in K-12 schools across the state. Officials also want to pay a Boston-based firm $2.7 million to perform consulting services. The company, Boston Consulting Group, was previously awarded an $11.6 million contract to assist the state with the vaccine rollout.

“It is incredibly important right now that, even though case counts are low, we are on top of any potential outbreak,” Acting Health Secretary Alison Beam said during a joint hearing of the Senate Health and Human Services and Communications and Technology Committees on Wednesday.

The needs are urgent, Beam said, because they want to have these programs in place before the start of the new school year in August.

But Republican lawmakers pushed back, saying that at this stage of the pandemic, there needs to be more oversight and transparency around how emergency contracts are used.

“Now that the spread isn’t occurring as rapidly as it was, did we not as a state have the ability to transition a little bit slower, take time, and perhaps vet some Pennsylvania-based vendors?” Sen. Michele Brooks, (R., Mercer), chair of the Health and Human Services Committee, asked Wednesday.

The Department of Health wants to hire Ginkgo Bioworks, a Boston-based biotech company, to provide optional COVID-19 testing programs in K-12 schools in the coming weeks. Public Consulting Group is also headquartered in Boston and is the agency’s choice to pick up where the last contact tracing company left off.

The previous vendor, Insight Global, headquartered in Atlanta, was hired through an emergency procurement request in July 2020. The state fired the company in June after a security breach exposed the personal information of about 72,000 people who participated in contact tracing efforts — outreach to people who were possibly exposed to the coronavirus in an attempt to prevent future outbreaks.

While the original contract was worth $22.9 million, it grew to $57.8 million by March, purchase orders on file with the state treasurer show. Health department officials on Wednesday told Senate lawmakers the state has paid the company $28 million so far. A hold has been placed on future payments as litigation related to the data breach is handled.

It was not until late June that the health department used the emergency procurement process to initiate a contract with Public Consulting Group to take over.

The contract has not yet been finalized, but a department spokesperson said in a statement that movement is expected soon. Officials would not say how many contact tracers would be hired, only that the number would be included in the contract.

According to the Contact Tracing Workforce Estimator built by the George Washington University Institute for Health Workforce Equity, Pennsylvania still needs 2,225 contact tracers.

Community health nurses employed by the health department, along with Pennsylvania National Guard members, have been assisting with contact tracing efforts since early June as the department works to replace Insight Global.

About 50 service members were assigned at the start of the transition, but that number has since been reduced to about 12, due in part to National Guard scheduling, Keara Klinepeter, health department executive deputy secretary, said during the Wednesday hearing.

“Twelve, right now, is sufficient,” Klinepeter said.

Klinepeter emphasized that the pandemic is not yet over, “and in the instance of a threat to public health, time equals lives.”

Health department officials told lawmakers on Wednesday that they considered at least eight vendors when picking a new contact tracing company. Still, only the final emergency procurement request, to hire Public Consulting Group, has been made public.

These contracts are only a small sample of the hundreds of emergency procurement requests made during the pandemic.

A Spotlight PA analysis showed state agencies made 483 emergency procurement requests in 2020, up from an average of 135 requests made each year since 2015. The estimated costs attached to those requests totaled more than $340 million last year, up from an annual average of $81 million.

The Department of General Services typically approves emergency procurement requests within a day or two after they are submitted, a Spotlight PA review of state records showed. Non-emergency solicitations can take a minimum of 45 days to finalize.

Health department officials said they work closely with the Department of General Services to craft emergency procurement requests, as well as subject-area experts within the health department, legal counsel, and department leadership to determine whether the expense is necessary and to oversee a contractor’s work.

“We don’t treat vendors who come in through emergency procurement differently than we treat vendors who come in through a traditional, competitive process,” Klinepeter said.

Department of General Services Secretary Curt Topper told House lawmakers during a hearing Tuesday the process is rigorous and the format is necessary to make sure state agencies are able to respond to emergencies like the coronavirus pandemic.

“I think we have a really good handle on this,” Topper said. “I don’t have any complaints about the process with respect to emergency procurements.”

Rep. Jason Ortitay (R., Allegheny), who chairs the subcommittee that held Tuesday’s hearing, said he’s still considering ways to strengthen the legislature’s oversight of state contracts, including adding dedicated audit staff to legislative committees.

Ortitay also said he wants to improve transparency by requiring state agencies to publicly post emergency procurement requests. State law currently does not require agencies to make the requests public, but the Department of General Services does publish them to the state eMarketplace website, Topper said.

“That’s one thing we’re going to fix, is to make sure they are statutorily obligated, and it’s not just an option,” Ortitay said.

The health department will continue to communicate with legislators on the issue of procurement, a statement from a department spokesperson said.

Sen. Kristin Phillips-Hill, (R., York), chair of the Senate Communications and Technology Committee, said she would follow up with agency officials and colleagues in the House to collaborate on ways to improve the procurement process as a whole.

“I think that we need to have more legislative oversight,” Phillips-Hill said.

This story has been updated to clarify the amount of money paid to Insight Global.

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