Missouri lawmakers to scrutinize emergency COVID spending

JEFFERSON CITY

It was mid-March 2020 and the pandemic was unfolding rapidly.

Less than a week after the first suspected COVID-19 case in Missouri was identified in St. Louis County, Gov. Mike Parson declared a state of emergency.

Days later, the state’s Office of Administration (OA) took an unprecedented step: It granted emergency authorization to the state agencies it oversees for purchases over $50,000 to respond to COVID-19 without following the typical procurement process or getting prior approval.

Documents obtained by The Independent through an open records request show how over the course of the year that authorization was in place, state agencies spent tens of millions of state and federal dollars through the emergency procurement process — paying for everything from face masks to private consultants to cremation services to picnic tables.

The spending — which was supposed to be restricted to items necessary to respond to COVID that meet the definition of an emergency — was largely documented in spreadsheets submitted this spring to OA, the agency that oversees contracting and purchasing for the state.

The spreadsheets aren’t exhaustive, and agencies varied in what they submitted. Some provided detailed reports. Others simply submitted purchases that were eligible for federal reimbursement but didn’t fall under the emergency authority. Several agencies said they didn’t use the emergency authorization at all.

Despite these inconsistencies, the spreadsheets offer a glimpse into how state government continued to function amid the pandemic.

OA has no immediate plans for an audit of emergency spending, noting it required agencies to maintain logs and that state Auditor Nicole Galloway has been reviewing how federal stimulus funds are spent.

Rep. Cody Smith, a Carthage Republican and chair of the House Budget Committee, said lawmakers plan to play part of that oversight role.

The House Budget Committee is meeting Wednesday to hear from OA on federal pandemic funding. Smith said the nature of the pandemic and the need to spend money quickly required the General Assembly to put a greater degree of trust in the executive branch.

“We didn’t have time to sit around and contemplate all of the possible scenarios that might arise, nor could we have really predicted them, because no one’s ever really dealt with this before,” Smith said. “So we had to give the executive branch quite a bit of latitude to administer these funds.”

Now, the legislature intends to assess how those funds were spent.

“In this case, we are looking retroactively on spending that we have authorized,” Smith said, “and we want to go back and just make sure that all of those dollars were put to good use.”

Rep. Peter Merideth, a St. Louis Democrat and ranking minority member of the committee, said he had been unaware OA had granted such authority.

“I don’t think we have done anywhere near a sufficient job of oversight of the COVID spending,” Merideth said, noting agencies have been slow to get federal funds out through relief programs.

‘Once they can get the foot in the door’

In a March 16, 2020, email to state procurement officers informing them of the emergency authorization, Karen Boeger, the director of OA’s Division of Purchasing, instructed agencies that finding items would be difficult and they would have to improvise.

They should use existing statewide contracts, the state’s supply of surplus property or buy items manufactured by incarcerated people in the Missouri Vocational Enterprises program. If those routes were unsuccessful, departments were granted approval to make emergency purchases over $50,000, though they should still try to ensure as much competition as practical under the circumstances.

After three extensions, the authorization expired March 31, 2021.

OA said the division did not have an overall estimate of the total cost of purchases over $50,000 made under emergency authorization.

Some of the largest expenses documented on spreadsheets submitted to OA were payments to private companies that played a prominent role advising Missouri’s pandemic response.

The state awarded a lucrative no-bid contract to the McChrystal Group last year after a nonprofit had covered up to $600,000 in expenses for its work. The Virginia-based consulting firm was founded by retired four-star Army general Stanley McChrystal.

One of the firm’s principals previously helped run the state’s weekly calls with COVID-19 vaccine providers in addition to advising top state officials on matters like planning a weekly vaccine ordering schedule.

In a copy of OA’s approval of the state’s emergency contract, Todd Richardson, the director of Missouri’s Medicaid program who also oversaw the state’s “COVID-19 Fusion Cell” cross-departmental team, noted that there had been a significant effort to find more private money after the nonprofit’s funding ended in May.

“That effort has been unsuccessful,” Richardson wrote in a late July 2020 email to OA officials.

The McChrystal Group’s emergency contract was extended until March 31, 2021. The firm was paid $2.16 million in fiscal year 2021, according to the state’s accountability portal.

It’s a similar pattern that has followed for other prominent consultants that the state has relied on.

Deloitte, a global consulting firm with offices in Missouri, has conducted data analyses for the state on everything from vaccination gaps and vaccine deserts to COVID-19 hotspots. OA established an emergency contract with Deloitte for the Department of Health and Senior Services on Dec. 4, 2020, to assist with COVID-19 recovery and response management, said DHSS Spokeswoman Lisa Cox.

Like The McChrystal Group’s contract, Deloitte’s has been extended multiple times — most recently through Dec. 31, 2021.

In late July, DHSS provided a short justification for the extension, noting it was needed in part due to the recent increase in COVID cases and because the firm’s trademarked data tools have been beneficial.

Under that contract, Deloitte has been paid a little over $2 million since fiscal year 2021, according to the state’s accountability portal. Overall, Deloitte has been paid over $2.6 million by the state over that same time period.

Jeremy Mohler, communications director for In the Public Interest, a California nonprofit that focuses on the privatization of public goods and responsible contracting, said it’s not surprising to see contracts continuously extended.

It’s a primary business model for consulting firms, he said.

“They want to get a contract and then continually renew the contract,” Mohler said, “because once they can get the foot in the door, it’s a steady stream of revenue for them.”

The Division of Purchasing is working on establishing longer-term contracts through competitive proposals for things like COVID testing and contract tracing that were originally acquired under emergency procurements, Christopher Moreland, a spokesman for OA, said.

Mohler said vendors that have already established a personal relationship with the state through emergency procurement have a leg up later during competitive bidding.

“They know how to write a customized proposal on how they’re going to handle it, because they’ve already been doing the work in the agency,” Mohler said, “when every other competitor is at a major disadvantage, because they’re basically just guessing from the outside.”

One example is Protiviti Government Services Inc., a Virginia-based business consulting firm that was hired in October 2020 through an emergency procurement by the Department of Labor and Industrial Relations to assist with processing unemployment claims, holding appeals hearings and providing call center agents.

Over $13 million has been paid to Protiviti since fiscal year 2021, according to the state’s accountability portal.

While a bid process is now underway to procure the services on a long-term basis, the company’s contract has been extended through the end of the year.

Part of the justification was the “hundreds of hours” spent on training the firm’s staffers, and their current production levels that were a result of working with the state for nearly 10 months.

The McChrystal Group, Deloitte and Protiviti are just three of the most notable consulting firms hired by the state. Because agencies’ spreadsheets were not an exhaustive or a complete list of purchases amid the pandemic, it’s difficult to pinpoint the full scope of consultants that aided the state’s pandemic response.

A handful of additional firms used by agencies amid the pandemic include:

• Over $1.2 million to BKD LLP, a Springfield-based accounting and advisory firm for Coronavirus Relief Funds grant compliance, oversight and reporting assistance.
• Ernst & Young LLP, a London-based professional services network, awarded an emergency contract to assist with unemployment insurance call center support, claims processing and systems assessment for the Department of Labor and Industrial Relations. DHSS has also previously said it has paid the firm $576,000 to administer its vaccine registry tool. Per the state’s accountability portal, the firm has been paid over $8 million in fiscal year 2021.
• $8.6 million to Accenture LLP under an emergency contract with DHSS for an EpiTrax electronic case reporting system, contract tracing software, contract tracer licenses, training and help desk support, according to the state’s accountability portal. Overall, Accenture has been paid a little over $10 million by the state in fiscal year 2021.
• Over $910,000 to Tetra Tech, a Pasadena, California-based consulting firm, through a contract utilized by SEMA and DHSS, according to the state’s accountability portal. The contract was originally established through the competitive bid process by OA on behalf of SEMA, and DHSS requested a contract amendment in November 2020 to utilize the services. Overall, Tetra Tech has been paid a little over $1 million by the state since fiscal year 2021.

Adapting to COVID

Many purchases made by the state were unsurprising, with millions spent on face masks, hand sanitizer, thermometers and plexiglass barriers.

Temporary staff was another significant expense across state government.

In December, DHSS entered into a 12-month emergency contract with Vizient, a Texas-based healthcare company that Parson announced would bring on temporary healthcare staff as hospitalizations of COVID patients hovered at the state’s highest levels.

Vizient was paid nearly $6.67 million for temporary staff who worked a total of 48,110 hours from Dec. 20 to Feb. 28 across five hospital systems, according to an expenditure spreadsheet provided by DHSS.

At the Department of Labor and Industrial Relations, a massive increase in unemployment claims required additional assistance, said Maura Browning, a spokeswoman for the department.

C&S Business Services and Higher Education Loan Authority of the State of Missouri were two companies brought on primarily to help shore up the Division of Employment Security’s call center, Browning said. Purchases are still ongoing, and through July the department paid roughly $476,200 to C&S Business Services and $1.8 million to the Higher Education Loan Authority of the State of Missouri.

DHSS and other agencies also relied on C&S Business Services to provide temporary staff. The company, which had a statewide contract in place prior to the pandemic, was paid $2 million by the state in fiscal year 2021, according to the state’s accountability portal.

Agencies also spent hundreds of thousands of dollars on temporary staff through other vendors, including data entry for DHSS and staffing for Missouri Veterans Commission’s homes and Department of Mental Health treatment facilities.

Some of the DHSS’ largest expenditures came from contracts paid for with federal funds to respond to COVID, boost immunization rates and ensure nutritious meals. For example, over $52 million was issued to school districts, houses of worship and nonprofits as part of a federal program to serve free, healthy meals to children in low-income areas.

DHSS’ log also featured purchases that ranged from securing testing supplies, courier services to pick up and transport samples to labs and nearly $17,000 to OA State Printing for materials like “Did you wash your hands?” posters and COVID vaccine screening and consent forms.

Over $2.3 million was listed as being paid to The Curators of the University of Missouri and a little over $360,000 to the Department of Natural Resources for sewershed COVID testing that has helped identify the presence of variants in wastewater throughout the state.

The department’s log also listed more than $1.4 million to Elasticity, an advertising agency with a St. Louis office that’s contracted with the state, for COVID-19, vaccine and flu campaigns.

Overall, Elasticity has been paid more than $6.2 million by various state agencies since fiscal year 2021, according to the state’s accountability portal, with the firm executing marketing campaigns like the “COVID-19 Show Me Strong Recovery” campaign funded through $2.5 million in CARES Act funds allocated by the governor’s office.

Missouri’s State Emergency Management Agency (SEMA) used federal funds on supplies like a $4,700 reach-in refrigerator from a restaurant supply company to house Johnson & Johnson vaccine, over $218,000 to rent porta-potties for mass vaccination sites and $188 at Amazon for “Pens for Cheryl.”

After OA’s emergency procurement authorization expired in March, SEMA requested and was granted a subsequent authorization through Aug. 31 for emergency COVID purchases, including PPE, vaccination supplies and more.

The Department of Corrections purchased raw materials to make PPE of its own, buying nearly $51,600 of vinyl for incarcerated people in the state’s job training program to make hospital gowns. Another purchase included $555,000 paid to Crescent Parts and Equipment, a qualified vendor of HVAC equipment and supplies, for ionizers.

Karen Pojmann, a spokeswoman for the Department of Corrections, said the ionizers were installed in the air handling systems of prisons, community supervision centers and residential facilities. She credited them for contributing to a more than 80 percent drop in COVID case numbers in four weeks.

A Kaiser Health News investigation previously found schools nationwide were spending thousands of dollars on ionizers that utilized “often unproven” technology.

Other purchases exemplified the ways agencies had to get creative.

The Missouri State Public Defender’s Office spent $2,300 on Amazon tablets to confidentially communicate with clients in jail and nearly $700 on three picnic tables for its Nevada and West Plains offices. Mary Fox, the director of the Missouri State Public Defender System, said the picnic tables were “a lifesaver” and allowed clients to fill out paperwork and meet with their attorneys outside.

The Department of Elementary and Secondary Education’s spreadsheet, which included items that could be paid for with CARES Act funds at the time of their submission to OA, featured purchases for technology, like $281,680 on 800 iPads and cases for Missouri Schools for the Severely Disabled students.

The department said the iPads were needed to continue virtual education and support services to comply with the federal Individuals with Disabilities Education Act when the state-operated schools were closed or students were out due to quarantines.

Another $57,850 of CARES Act funds were approved to install a UV light air cleaning system that “kills viruses in the air systems and duct work,” according to DESE’s log.

The department said the lights were requested as a safety precaution to protect students from COVID in common areas within state-run schools for blind, deaf and disabled students.

CARES Act funds were also approved to pay for a $12,800 hotel cancellation fee for the Transition Institute and a $16,200 hotel cancellation fee for the School Administrators’ Conference — both of which were called off due to the pandemic.

Smith said there’s always a risk that with expedited procurement processes come fewer checks and balances. He said he hopes emergency procurements will end, noting they’re in place for a reason. But he also said he didn’t feel that time had come yet with the Delta variant pushing case numbers and hospitalizations near the state’s peaks.

A big picture summary of the state’s pandemic spending is still needed, Smith said, and Wednesday’s hearing will likely be the first of more to come.

“Now that it’s starting to wrap up,” Smith said of federal stimulus spending, “it’s important to go back and look at it again, having had the benefit of hindsight.