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Tennessee's no-bid COVID-19 spending continues with little oversight

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Posted at 5:49 PM, Dec 15, 2020
and last updated 2020-12-15 20:08:05-05

NASHVILLE, Tenn. (WTVF) — Yet another no-bid state contract for COVID-19 services is raising serious questions about who's minding the store when it comes to your money.

For months now, NewsChannel 5 Investigates has raised questions about the tens of millions of dollars that Tennessee Gov. Bill Lee's administration is spending on its pandemic response without competitive bidding.

The most recent deal: a $20 million contract for contact tracing that was awarded to a Hendersonville company with no experience in contact tracing and without giving any other company a chance to compete.

That deal, with Xtend Healthcare, was first reported by Nashville Public Radio's Blake Farmer.

"The state was looking for some kind of way to have the manpower to do this contact tracing," Farmer said.

"There don’t seem to have been any bids for this $20 million contract and, of course, the company didn’t have much experience."

Xtend Healthcare is a medical billing company whose website boasts that it has "collected billions of dollars for our clients — enabling them to continue delivering on their community commitments."

That website recounts work that the company has done for the West Tennessee Healthcare system during a time, NewsChannel 5 Investigates discovered, when state Health Commissioner Lisa Piercey served as the system's executive vice president.

Farmer found that the no-bid contract for Xtend to hire contact tracers was quite lucrative for the company.

"The going rate seems to be about $16-an-hour that contact tracers for Xtend or anyone else is making," Farmer said.

"But Xtend Healthcare is charging the state nearly $40 an hour for their work – and that’s even though these folks are working from home. They are even using their own personal computers."

NewsChannel 5 Investigates noted, "$40 an hour -- that’s quite the mark-up."

"Yeah," Farmer answered, "and they are also charging higher rates for their managers and any of the clinical staff."

Our NewsChannel 5 investigation has uncovered numerous examples of questionable no-bid contracts being awarded by the Lee administration in response to the COVID-19 crisis.

Among those contracts: a $26.5 million, no-bid contract with Nomi Health for COVID testing.

Our investigation discovered that Piercey steered the contract to Nomi -- a politically connected company with no experience -- over the objections of career state employees.

State Sen. Jeff Yarbro has suggested that the Lee administration is "throw[ing] all the rules and standards out the window just because it's an emergency."

"Entering into a $25 million, no-bid contract with a company with a lack of expertise over the objections of the professional staff of the agency is one of the most shocking things I’ve seen in my time in state government," he added.

The Lee administration also ordered up face masks from a North Carolina sock manufacturer Renfro Corp. without giving any other company a chance to bid.

Cost to taxpayers: $8.3 million.

Because these deals are being handed out during a declared state of emergency, auditors in the Comptroller's Office are not consulted - as they might be with other state contracts to make sure they are on the up and up, the Comptroller's Office confirms.

And the legislature’s Fiscal Review Committee, which is supposed to monitor no-bid contracts, has largely been sidelined.

NewsChannel 5 Investigates asked the committee's executive director, "Is the Fiscal Review Committee being notified about all of these no-bid contracts?"

"I have not on a staff level been notified about them," Krista Carsner answered.

The Fiscal Review Committee was created following a contracting scandal involving former Gov. Don Sundquist's administration that was exposed by NewsChannel 5 Investigates 20 years ago.

State law only requires committee notification of no-bid contracts where the contracts are for $200,000 or more and for more than one year.

"From a Fiscal Review Committee standpoint, there is always concern that the money that is being spent is being spent wisely and in the best interest of the state," Carsner said.

"When you are in an emergency situation, the authority of the Fiscal Review Committee is limited."

NewsChannel 5 Investigates asked, "If a contract was awarded that should not have been awarded, the committee cannot do anything about that?"

All the committee can do in that situation, she said, is draw public attention to the deal and suggest it be reviewed by state auditors.

"They do not have the power to actually stop or prevent a contract," she said.

In Utah, the governor who was first to enter into a controversial no-bid contract with Nomi Health announced in May that his state would return to normal bidding processes.

But Bill Lee told us that he plans to continue with the no-bid spending.

"That is in the midst of a state of emergency which continues to this day and that will continue to happen during the state of emergency."

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