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Gov. Newsom Holds $1B Payment Back Until Masks Actually Arrive

California said it secured 200 million masks per month, but the Newsom administration won’t pay until there is assurance that the masks are coming. In total, the state plans to spend $7 billion on coronavirus response.

(TNS) — California Gov. Gavin Newsom’s administration doesn’t plan to show lawmakers and the public a nearly $1 billion mask contract until it has “assurance the supply is going to be arriving,” despite already having wired half of the money, an administration official testified Thursday.

“We have concerns about releasing too many details about it because our goal is to get the supply into California for the people who need it,” Christina Curry, chief deputy director of the governor’s Office of Emergency Services, told lawmakers during a budget hearing. “As you can imagine with something in such high demand and with such high interest, there are a lot of things that could come into play to definitively disrupt that... We do intend to provide that once we have assurances the supply is going to be arriving.”

States have struggled to buy enough masks to protect their essential workers during the coronavirus pandemic and have been competing against one another on the open market.

Newsom said last week that he had already “inked” the agreement to secure 200 million masks per month, mostly N95 masks thought to be most effective in preventing coronavirus transmission. He said that will be enough to fill California’s needs, and perhaps enough to help other states, as well.

Chinese company BYD is producing the masks, which medical workers treating COVID-19 patients need to supplement a dwindling supply.

State Treasurer Fiona Ma said her office vetted the request to send the money before wiring $495 million to Global Healthcare Product Solutions, LLC, a subsidiary of BYD, last week.

Normally, government contracts require the state to pay after it has received the materials it ordered, but the BYD contract required a nearly half-billion dollar payment upfront, said H.D. Palmer, spokesman for Newsom’s Finance Department.

Curry did not explain during the hearing how disclosing the contract would jeopardize the mask shipments.

“I must confess I have not much confidence in (the masks) being delivered,” Sen. Jim Nielsen, R-Gerber, told the governor’s office during the hearing. “At the least, we cannot be throwing out a false hope to people, but there’s a lot of money in this too. So please do understand, there is not an expectation but a demand that that contract become available.”

Sen. Richard Pan, D-Sacramento, also asked for additional details to the contract, including when California can expect to receive the equipment and how the administration plans to distribute the supplies.

“There are some reasons why it would be challenging for us to have all that decision making out in the open,” Curry said. “It could potentially raise questions about the decisions.”

Pan responded that lawmakers need to be able to see the contract, even if they do not not share it publicly.

“Since we are a co-equal branch, at least share that privately with the Legislature so we know,” Pan said. “We have to exercise our oversight function.”

Curry’s explanation for not providing the contract Thursday differed from what OES Director Mark Ghilarducci said Monday. He told reporters that his office had not yet provided the contract because the state was “still in the final negotiation phases.”

Sen. Holly Mitchell, D-Los Angeles, who led Thursday’s oversight hearing, told reporters afterward that it was not ideal that the governor’s office couldn’t share details of the contract, but said she still supports the action he took to secure more masks.

“I don’t want to continue to receive calls from health care providers and nursing home employees and other essential employees who are going to work every day without access to the gear they know they need to protect them and their health,” she said. “These are extenuating circumstances that clearly from the governor’s perspective required extenuating action.”

The $990 million the state has agreed to pay for the masks and other protective equipment represents a significant chunk of the $7 billion the Newsom administration told lawmakers it expects to spend on coronavirus response.

Newsom met with BYD CEO Wang Chuanfu on Jan. 29, according to the governor’s calendar records. Newsom’s office declined to answer questions about the nature of the meeting, which came the same day a flight arrived in California repatriating Americans from Wuhan, China. It was more than a month before Newsom issued his stay-at-home order.

Chinese-based BYD began manufacturing masks and disinfectant gel in late January, according to a press release from the company. It has since claimed to have become the world’s largest mask manufacturer.

Newsom and Ghilarducci dismissed concerns about BYD in response to reporter questions Monday, saying the state’s contract requires that the masks meet federal standards. California and private medical companies did “extensive vetting” of BYD, Ghilarducci said.

The Newsom administration is working with the federal government and several private health care companies to assess whether the masks meet quality standards, Ghilarducci said. The state has teams “on site” at the two overseas facilities where the masks are being manufactured to ensure quality control, he said.

Ghilarducci and Newsom did not answer questions Monday about whether they were aware of concerns raised by experts and congressional lawmakers about BYD before they negotiated the contract, which were reported by news outlet Vice over the weekend. BYD has denied claims of wrongdoing made in the article.

Ghilarducci said issues related to BYD’s electric vehicles are “separate” from the mask purchase.

California Congressman John Garamendi, D-Walnut Grove, pushed for legislation passed last year that bars BYD and other Chinese companies from bidding on some government contracts.

That provision of the National Defense Authorization Act prevents federal money from being used to purchase passenger trains and buses from government-controlled companies, including those from China. News outlet Roll Call reported that the provision was an attempt to curtail China’s growth in the American transportation market.

In its article, Vice quoted Garamendi saying he had concerns about the quality of the company’s products, including the masks it is now manufacturing.

“They may very well flood the market with substandard devices and people will be relying on them as though they are of satisfactory quality,” he told Vice last week.

This week, Garamendi’s office told The Bee the congressman is still concerned about the company’s vehicles, as well as its “motives and their connections to the Chinese government.” But Newsom has allayed his worries about the mask contract.

“Any concerns he has about their involvement with the PPE contract with California has been assuaged by the governor,” said a staff member in Garamendi’s office who declined to be identified by name. “He has the utmost faith in Newsom’s administration, and he knows they’ve vetted this thoroughly.”

Although it’s not the first company Garamendi would go to for masks, the congressman recognizes that the state needs more personal protective equipment, the staff member said.

©2020 The Sacramento Bee (Sacramento, Calif.). Distributed by Tribune Content Agency, LLC.

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