Gavin Newsom might want to declare a moratorium on any humble brags about his ability to negotiate a deal. The Golden State’s governor was very excited about the $1 billion deal he struck with a Chinese company to provide hundreds of thousands of KN95 and surgical masks to the state during the coronavirus pandemic; so excited, in fact, that he went on Rachel Maddow’s MSNBC show to announce it and wired the company nearly half a billion dollars before he could even alert the state legislature to the expenditure.
As we reported, the company he contracted with, BYD, primarily manufactures electric vehicles and buses and has a long history of producing shoddy products. Their products are so defect-riddled that Congress recently passed a law prohibiting them from being awarded certain federal contracts.
Until this week, Newsom resisted sharing the contract’s details with the legislature and stonewalled a Public Records Act request by the LA Times by claiming attorney-client privilege. On Wednesday a few details were revealed by the Times:
Documents obtained from the office of State Treasurer Fiona Ma through a records request include an April 7 invoice from Global Healthcare Product Solutions, a subsidiary of BYD, for “N95 face masks” with a per-unit price of $3.30. It stipulates that the state will pay half of the total cost of the deal — $495 million — in advance of the first 150 million masks being delivered. In all, the invoice notes 300 million N95 masks will be delivered by the time the contract ends.
“All sales are FINAL. We do not accept any returns or exchanges,” the invoice says.
In contrast, Los Angeles Mayor Eric Garcetti’s office announced this week that they’ve contracted with Honeywell to provide N95 masks at 79 cents apiece, but they won’t take delivery of those masks until late summer/early fall. Newsom’s spox says that at the time Newsom struck the deal, some states were paying $7 or even $10 a mask.
Newsom claimed in a news conference Monday that 10 million masks have been received under the contract; those were surgical masks and have already been distributed to counties. He also said that respirator masks had arrived in the country but were still going through the National Institute for Occupational Safety and Health (NIOSH) certification process. On Wednesday the governor’s office announced that it had clawed back $247 million of its initial payment to BYD because the company missed the April 30 deadline for NIOSH certification. No reason was given for the delay, and the state amended the contract to give BYD more leeway and to add more surgical masks, according to KTLA:
While the state initially sought 100 million surgical masks through the deal, it now plans to buy even more, according to the amendment, though it didn’t include a specific number. The state and BYD must set an updated delivery schedule for the surgical masks by Friday.
A new payment and delivery schedule for the N95 masks must be set by May 22. Under the federal certification process, the final validation step would take place in Utah, Newsom said previously. It wasn’t clear where the delay in the federal certification process occurred or whether the masks had yet arrived in the United States.
Newsom said last month that the state and federal governments had “teams on the ground” in China auditing and visiting BYD’s factories.
Who could have foreseen that there would be such a delay when using a questionable Chinese supplier who’d never made masks before? Yep, everyone.