A firm criticized for its owners’ involvement in Gov. Kathy Hochul‘s (D-NY) campaign that gained a $657 million contract to deliver coronavirus test kits is suing her administration, alleging it failed to follow rules for competitive bidding.
The firm, Digital Gadgets, filed a lawsuit in Albany County Supreme Court alleging violations of state law by the state Department of Health when the agency posted advertisements for bids to procure COVID-19 test kits, only to later invoke an executive order when Digital Gadgets opposed the denial of its bid.
“Digital Gadgets brought this lawsuit to ensure the state complies with the rules they established along with the bid process,” Digital Gadgets spokesman John Gallagher told NPR affiliate WSKG, which reported the complaint. “The DOH is blocking Digital Gadgets’ ability to demonstrate that the winning bidders do not meet the specifications issued by the department.”
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Digital Gadgets was contracted by the state to procure nearly 52 million test kits as part of efforts to combat a resurgent wave of the virus between December 2021 and March 2022. New York Division of Homeland Security and Emergency Services Commissioner Jackie Bray made the purchase under an executive order to circumvent normal procurement procedures due to the emergency at hand, contracts that cost the Empire State nearly $637 million.
In July, the Albany Times Union published that around the time the state was negotiating those contracts, Hochul received $300,000 in donations to her election campaign from the firm’s owner, Charlie Tebele, and his family. Hochul has said she did not know the Tebele family and wasn’t aware of a specific purchase order with Digital Gadgets.
The lawsuit alleges that between the months of April and June, state officials, including Bray, were in the process of negotiating another order with the firm. Between those talks, Tebele and his spouse gave another $40,000 to Hochul’s campaign.
But on July 12, the Department of Health posted an invitation for bids, or IFB, “virtually identical” to the constraints being negotiated among Digital Gadgets and the state just one month before, the firm’s complaint says.
“Indeed, the [IFB] specifications were virtually identical to the June Order: it sought a vendor who could supply a minimum of 2 million tests per month and precisely the same specifications as the proprietary Surge Program proposed by Digital,” Digital Gadgets’s counsel wrote.
The attorneys say the “key distinction” from the Department of Health’s July 12 invitation was that it “did not specify the more expensive, US-made AccessBio tests, thereby allowing bidders to propose supplying cheaper, lower quality tests made overseas, including tests made in China.”
Digital Gadgets and more than 100 other firms ultimately submitted bids during the summer, all the while details of the Tebele family’s donations to Hochul continued to be reported.
In August, Digital Gadgets was informed it was denied the bid and requested a debrief from Department of Health officials on why it was not given the bid. An attorney for the firm included a letter in court filings that showed a department official involved indicated that any dispute over the bid award should be filed with the state comptroller.
But after Digital Gadgets protested the bid to the director of contracts at the comptroller’s office, the firm was told the contract was awarded pursuant to the executive order, making the procedures described in the IFB moot.
An official with the Department of Health later indicated that the initial IFB was not being used for consideration of the bids.
“The Department published that procurement out of an abundance of caution, to obtain pricing and related information from responsible and responsive bidders in order to be good stewards of taxpayer dollars,” the agency’s procurement manager, Eryn Keefe, wrote in a letter to Digital Gadgets’s counsel.
A spokesperson at the Department of Health declined to comment to WSKG due to pending litigation.
Bill Hammond, senior fellow for health policy at the Empire Center, told the outlet there were possible political motivations surrounding the state’s decision around the IFB
“It seems like the state was acting a little squirrely here,” Hammond said. “First, they were negotiating under the emergency order. Then, they issued what appeared to be a competitive bidding document. Then, they’re back to saying, ‘No, we’re buying under the emergency order.'”
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Hammond previously told the Albany Times Union that the Hochul administration should answer why it was eager to get into business with such a premium vendor.
“The Hochul administration is saying it was not because they were a donor but should answer the question of why they so eagerly got into business with this very high-priced vendor, and bought more than half their total amount from this one supplier, when they knew it was charging a much higher rate than they had been paying,” Hammond said.
