Hogan, Franchot Clash Over Emergency $25 Million COVID Contract

Comptroller Peter V.R. Franchot (right) isn't seeing eye to eye with the administration of Gov. Lawrence J. Hogan Jr. (left) over some emergency health department contracts. File photo by Danielle E. Gaines.

Comptroller Peter V.R. Franchot (D) urged the state to stop using emergency contracts for some COVID response efforts – blasting a Health Department agreement that ballooned by more than $10 million after the Board of Public Works refused to approve it last month.

At issue is a consulting contract with Ernst and Young, which is advising the state on implementation of its COVID-19 program.

Franchot and Treasurer Nancy K. Kopp (D), at a Board of Public Works meeting on March 24, refused to give retroactive approval to an $11.9 million contract with the New York-based firm, without knowing more about the scope of the work or why the Health Department was seeking approval well beyond the 45-day window for emergency procurement.

The contract returned to the board on Wednesday, with modifications bringing the revised contract amount to more than $25 million.

Franchot again took issue with the agreement.

“I just want to make sure that the department and other departments of the state are not skirting procurement rules and increasing contract amounts like this … and then saying, ‘Oh, it’s because it’s an emergency,’” Franchot said. “Well, this is a year after the start of the pandemic. And back then we had a real crisis. I understand that. And I understand the necessity for emergency procurement contracts. I think that era has perhaps served its purpose.”

But Gov. Lawrence J. Hogan Jr. (R) cut him off, fiercely defending the contract – and saying the state remains in a heightened state of emergency.

“I would just totally disagree with that. The era has not passed. We’re in the worst and most important part of the emergency,” Hogan said. “…It’s the largest peacetime undertaking in American history. We had to get 11,400 people that were not working on this, have never done this before. It’s never happened since 1918. And we’re doing millions of doses. That costs a lot of money and it is an emergency. We are in a state of emergency and we can’t follow normal procurement process. It’s absolutely patently absurd.”

Franchot responded that he and the governor then had an “honest disagreement” because he thinks the state should be moving to more contracts through the regular competitively bid procurement process.

“Then would you suggest we hold up the effort, we stop the effort with the 4 million vaccines?” Hogan shot back, as the men talked over one another. “…Half a million Marylanders have been infected and 40,000 have been hospitalized and nearly 9,000 have died. It is an emergency. And we don’t have normal processes that are set up for this.”

Franchot said he understood the argument, but remained concerned that the board was being asked to add more than $21 million to an emergency contract that it hadn’t yet approved, and that the Health Department and other agencies might be misusing the emergency contracting process.

“I agree with you that it continues to be a crisis. But we’ve been in it for more than a year now. And you simply can’t have that be the default response on every questionable procurement activity that comes up,” Franchot said.

He quoted the Health Department’s former procurement chief, Dana Dembrow — a central figure in the controversial $11.9 million purchase of COVID testing kits from a South Korean firm — who has said in exclusive interviews with Maryland Matters that emergency procurements should be reined in one year into the pandemic. (Franchot and Dembrow served together in the House of Delegates for several years, representing the same Montgomery County district.)

Hogan said the contract with Ernst and Young wasn’t a questionable procurement. He has also defended the purchase of the test kits from South Korea.

“I just beg to differ, we are in a state of emergency. And as long as we continue to be, we’re going to continue to take actions that save lives. And we’re not going to wait and go through a long drawn out procurement process,” Hogan said.

“When I lift the state of emergency, we can go back to a long drawn-out procurement process,” he added later.

The state’s first contract with Ernst and Young – $3.8 million beginning Jan. 20 – yielded a report with recommendations to scale up the state’s vaccination program.

The original contract included possible renewals bringing the total to $11.9 million. The revised contract for $25,046,140 was approved by the agency March 31 and would run through Oct. 18.

At the end of March, more than 94 Ernst and Young staffers were brought in to help in the state’s vaccination effort; the state plans to use those workers and specialized services initially and plans to retrain and deploy state employees to take over the services later, according to a staff report.

Emergency procurements come to the Board of Public Works for retroactive approval.

Ultimately, the contract – as well as two other emergency contracts for $330,000 and $1.8 million that had been postponed – were approved by the board.

Franchot said he voted in favor of the contract because he believed Hogan made the case for why it was critical and that Ernst and Young had done a good job.

But he also had little choice.

“Let me be crystal clear: I just view this as a form of misuse and abuse of emergency procurement regulations. I think it’s completely unacceptable to see this arise again and again and again,” Franchot said. “And it raises the question, are we doing intentional bypassing of the board’s critical authority to provide oversight of the state’s procurement system?”

Hogan responded that “nobody wants this to stop more than we do, Mr. Comptroller. That’s why we’re doing all of this so we can bring [the pandemic] to an end.”

“This would be a good one to start with,” Franchot responded.

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Danielle E. Gaines
Danielle Gaines covered government and politics for Maryland Matters for two years before moving into an editing position. Previously, she spent six years at The Frederick News-Post ― as the paper’s principal government and politics reporter for half that time, covering courts and legal affairs before that. She also reported for the now-defunct The Gazette of Politics and Business in Maryland and previously worked as a county government and education reporter at The Merced Sun-Star in California’s Central Valley.