California pays $3.30 per mask under $1B deal

SACRAMENTO — Advisers to California Gov. Gavin Newsom agreed to pay Chinese electric car manufacturer BYD $3.30 for each mask the company made under a coronavirus response contract totaling almost $1 billion, according to an invoice obtained by the Los Angeles Times.

But the documents from the California State Treasurer’s Office, which was responsible for the release of the funds, raise new questions about the exact terms of the contract — because the price paid seems to include only N95 masks, those considered to provide the most protection, but not the cost of traditional surgical masks BYD has also sold to the state. Some 10 million of the surgical masks have already been shipped by BYD, the first ones arriving late last month, with many of them quickly distributed to counties.

The Governor’s Office of Emergency Services refused Monday to provide the contract, insisting in a letter to the Times that the document is exempt from disclosure under the California Public Records Act. Members of the Legislature have also been stymied in their attempts to see the contract, though Newsom administration officials promised they would provide access once the deliveries of masks are complete.

Documents obtained from the office of State Treasurer Fiona Ma through a records request include an April 7 invoice from Global Healthcare Product Solutions, a subsidiary of BYD, for “N95 face masks” with a perunit price of $3.30. It stipulates that the state will pay half of the total cost of the deal — $495 million — in advance of the first 150 million masks being delivered. In all, the invoice notes 300 million N95 masks will be delivered by the time the contract ends.

“All sales are FINAL. We do not accept any returns or exchanges,” the invoice says.

The cost of personal protective equipment during the early weeks of the global pandemic has fluctuated wildly, with health care professionals and government officials scrambling to find the gear while ensuring those supplies aren’t pilfered by outside actors. States have also complained of supplies being commandeered by the federal government. Newsom administration officials have told lawmakers those kinds of fears are why they have kept the terms of the contract confidential.

Nathan Click, the governor’s communications director, said the cost per mask was agreed to at a time when some states were paying as much as $7 each. He said the cost is a fair one for the taxpayers.

Frank Girardot, a spokesman for BYD, said the per-mask price includes all taxes and duty fees plus the freight costs for air delivery. He said once those costs are factored in, the pre-shipping cost per mask to the state was $2.88.

“Our cost is fair,” Girardot said Wednesday. “There is nobody that can make this quantity, this fast.”

Sergio Fernandez de Cordova, the chairman of a New York media nonprofit who is working with the government consulting firm Raymond Associates to secure better mask deals for government agencies, estimated the $3.30 per mask price could be some 30 cents per mask higher than it’s costing the company to manufacture and ship overseas.

He said with the amount of money California can muster, the state could have propped up its own factories in the state, employed Californians out of work and made large quantities of similar masks for “easily under a dollar.”