An independent review of Maryland’s purchase of COVID-19 test kits from South Korea found they “were not procured in accordance with State procurement regulations.”
Nor could auditors determine who made the ultimate decision to spend $11.5 million on tests that had to be returned because of performance issues.
Those findings, contained in a “special review” conducted by the Office of Legislative Audits, came as no surprise to the man who served as head of procurement at the Department of Health until his abrupt dismissal in December.
In an exclusive interview with Maryland Matters, Dana L. Dembrow recalled the late-night call he received from a colleague who insisted that “millions” of dollars be sent immediately to South Korea — and his refusal to comply.
“I didn’t even bother getting the details,” he recalled. “I just said, ‘That’s not going to happen.’”
Eventually, someone else approved the purchase. Later that year, Dembrow was sent packing, despite numerous “outstanding” performance reviews.
The former procurement chief said he has great sympathy for the challenge state leaders — from Gov. Lawrence J. Hogan Jr. (R) on down — faced during the early months of the pandemic.
There was a global frenzy for test kits, personal protective equipment, ventilators and other supplies — and states were competing with the federal government and other nations. Items that were promised would vanish before delivery. And there were rumors that the federal government was intercepting items that states had purchased.
All this while the infection rate, hospitalizations and loss of life mounted.
What Dembrow said he still can’t understand is why the Hogan administration refuses to concede — even in the face of Friday’s report — that the test kit purchase didn’t pan out as officials had hoped.
A former Montgomery County legislator known as stickler when it comes to procurement, Dembrow believes the public would be understanding of such an explanation.
“I still don’t understand why they don’t just come clean and admit that they were using best efforts to face a difficult situation, and it was a blown procurement,” he said. “Instead the governor spent 10 months denying there was anything wrong at all.”
The Office of Legislative Audits review found there were numerous problems. Chief among them: “a pervasive lack of documentation to support the key aspects of the procurement, use, and validity of the tests…”
According to the report, the first batch of tests obtained from the South Korean vendor, LabGenomics, “had not been authorized by the federal Food and Drug Administration and one study conducted by a laboratory in Maryland concluded that the tests were likely to have an increased number of false negatives and inconclusive results.”
The first batch of tests was returned to South Korea with no refund, since there was no contract to require one. Taxpayers also funded the replacement batch, which provided more reliable results.
Auditors also said they found no justification in agency records for the $464,000 spent on the charted jet used to bring the first set of kits to Baltimore from Seoul.
Top state officials on Friday defended their efforts to secure desperately needed equipment — and the governor called the Office of Legislative Audits report “partisan.”
Hogan said that if he had it all to do over again, “I wouldn’t change a single thing.”
Dembrow stands by his refusal to wire funds to South Korea without proper documentation.
“They were acting in good faith,” he said of the agency and adminstration officials pushing for the purchase. “That’s my belief anyway — and all should be forgiven.”
“The only thing that is troubling is that it’s a little disingenuous to run around saying that this was a perfect procurement and we had this wonderful success… when in fact it was a failed effort.”
In a statement provided to Maryland Matters by the Department of Health (MDH) on Tuesday, the agency cast doubt on Dembrow’s “personal knowledge” of last year’s procurement frenzy.
“Unfortunately, Mr. Dembrow is incorrect,” the statement read. “MDH has attempted to obtain competitive-bid contracts to the extent possible for all procurements, including emergency procurements. As Mr. Dembrow was not involved in the purchase of personal protective equipment and other commodities in 2020, we question his personal knowledge of this subject.”
The OLA review was requested last year by state legislators who wanted more information about Hogan’s much-ballyhooed purchase of test kits from South Korea, along with the dismissal of two employees who raised red flags.
Dembrow was one of them.
A state official told auditors that they wanted a “strong full-time leader.” Dembrow, while working long hours, was technically a part-time employee.
Auditors said they found nothing in Dembrow’s personnel file to support the claim the agency ousted him for that reason, and he told Maryland Matters that the department has yet to replace him. An agency spokesperson refused to say whether a replacement has been hired.
Cost concerns discarded, Dembrow claims
Dembrow said he fought unsuccessfully to reduce the use of emergency contracts.
“This was an emergency in March. This was an emergency in April or May,” he said. “But in December you can no longer claim that this is something that was ‘sudden’ and ‘unexpected.’
“Operation Warp Speed had been underway for months and months. Everybody knew this was coming,” he said of the vaccination campaign that launched late last year.
“At some point you’ve got to rein it in a little bit, and I was trying to to do that. And it was difficult, because [emergency procurements] are a whole lot easier to do…”
After the federal government began to provide billions of dollars to the states for coronavirus-related expenses last year, Dembrow said officials adopted a “buy as much stuff as you can” attitude.
“There was a mentality about it that we aren’t going to pay for this — the feds are going to come in and rescue us,” he said. “There was very little concern about the amount that anything cost.”
The agency rejected this claim, saying in a statement: “We are cognizant of the balance that must be maintained towards obtaining value for the taxpayer’s dollar and ensuring that necessary supplies and services are obtained during a once in a century pandemic.”
A former administrative law judge on the State Board of Contract Appeals, Dembrow said high-ranking officials in MDH and in the administration had the mistaken notion that procurement rules go out the window during an “emergency.”
In reality, “you still have to have competition. It simply reduces the level of competition required to that which is ‘reasonably practicable,’” he said.
Hogan has flatly rejected suggestions that he end the COVID-19 emergency. And Dembrow said he’s clear the governor likes the ability to operate outside the normal parameters.
“I think that is what is at the essence of my not being there,” he concluded. “He [Hogan] would just as soon not have somebody who knows what the requirements are and wants to insist that they be followed. It’s a whole lot easier just to do whatever the hell you want to do.”
Although the health department refused to disclose to auditors or Maryland Matters who gave final approval for the South Korean test kits, the agency said it “ensures that all procurements, including emergency procurements, comply with all applicable statutes and regulations.”