Newsom cutting huge, secret deals for COVID; lawmakers want to know more
SACRAMENTO — Virgin Orbit CEO Dan Hart first wondered if his satellite-launching company could help California build more ventilators on a Saturday morning in March while reading about shortages forcing doctors in other parts of the world to ration the lifesaving machines.
He reached out to a friend who knows Gov. Gavin Newsom personally. By about 8 p.m., after a flurry of emails, Hart was meeting with the state’s top emergency medical services official and a University of California, Irvine doctor working to develop a simplified version of the machine called a bridge ventilator.
Three days later, a team of Virgin Orbit engineers who normally design rockets had developed its first prototype. About two weeks into the project, Hart traveled to Sacramento to show the governor their design that relies on a windshield wiper motor.
Now, Hart says the state is paying the company to produce 600 bridge ventilators at an initial price of $2,000 apiece to help hospitals treat a surge in coronavirus patients.
The Virgin Orbit contract is just one of the deals the Newsom administration has struck with private businesses in the last few weeks on a rapid timeline and under intense pressure to secure lifesaving equipment in an increasingly competitive market. The state is already spending more than $2 billion on coronavirus response, with most of that money going to private companies producing medical equipment and protective gear, according to Newsom’s
finance department.
The pandemic has pushed Newsom to form new partnerships with businesses and tap existing private-sector relationships dating back to his days in San Francisco city government.
A former businessman himself, Newsom said his administration has been “very aggressive in reaching out to the private sector” for help and has praised companies like Virgin Orbit for “meeting this moment” by producing needed gear for the state. He says at least 350 manufacturers have told his administration they want to convert their facilities to produce hand sanitizer, protective equipment and other supplies.
In the meantime, there’s been little public scrutiny of the agreements the state has made to buy those products. The Newsom administration has denied lawmakers’ and journalists’ requests to see the state’s biggest contract — a $1 billion agreement with Chinese company BYD to make hundreds of millions of masks — saying that releasing details could jeopardize the shipments.
The administration has been slow to release other smaller contracts, too. It took two weeks for the administration to provide The Sacramento Bee a contract showing the state is paying the Sacramento Kings basketball franchise $1.5 million to convert its old arena into an emergency hospital. Administration officials say they are still working to provide other contracts through a records request for a wide range of government contracts related to testing, ventilators and protective gear filed by the Bee more than a month ago.
“It’s more critical now than ever before for the Legislature to exercise its oversight authority,” Republican state Sen. Jim Nielsen, of Gerber, said during a budget hearing earlier this month. “Large contracts are being let, we don’t know what they’re all about, monies are being obligated, and our budget is also being affected.”
The Legislature is responsible for overseeing the state’s expenditures, but lawmakers argue they have been sidelined during the pandemic. They passed a law giving Newsom authority to spend up to $1.1 billion on emergency response, but say they haven’t been given detailed information about how the administration is using the money.
Lawmakers have requested but not yet received a number of contracts from the administration, including those for two hospitals the state is spending $30 million to lease, Legislative Analyst Gabriel Petek said during an Assembly budget hearing last week.
They’ve raised the most concerns about the state’s nearly $1 billion contract with BYD.
Earlier this month, lawmakers gave Newsom permission to pay $495 million to a California-based BYD subsidiary up front as part of the deal, but asked that the administration provide them the full details of the contract.
After the money was wired, administration officials said they don’t plan to show lawmakers or the public the contract until they have “assurances” the masks will arrive. They’ve cited intense competition in the market and concerns that something could jeopardize the shipment if more details are released.
The administration will release the contract once all the supplies have arrived, Office of Emergency Services spokesman Brian Ferguson said Tuesday.
The $990 million agreement spans 2.5 months and will result in 200 million masks per month, administration officials have said. Lawmakers have requested the exact cost per mask, but the administration has declined to provide it publicly.