Committee questions Tennessee health commissioner on $26.5M no-bid contract

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Lawmakers on a financial oversight committee questioned Tennessee Health Commissioner Lisa Piercey and other officials Thursday about a $26.5 million no-bid contract for COVID-19 testing supplies that turned out to be unusable.

The contract, signed by state officials May 1, was with Utah-based health care startup Nomi Health. The state withdrew from the contract June 12 after the coronavirus test kits did not measure up to state standards. Tennessee remained responsible for $5.9 million to pay for some personal protective equipment, technology and a management fee.

The legislative Fiscal Review Committee, led by Rep. Ron Travis, R-Dayton, and Sen. Todd Gardenhire, R-Chattanooga, met Thursday to question Piercey, Tennessee Emergency Management Director Patrick Sheehan and state procurement officers about the contract.

Piercey said the contract was struck amid significant national and international competition for COVID-19 testing supplies and personal protective equipment. Nomi Health, Piercey said, was the only testing vendor she recalled that offered personal protective equipment along with testing supplies.

“You’ll remember, then, PPE was like gold – as were test kits,” Piercey said. “This was something that was being competed for not only with other states, but other countries.”

Paul Krivacka, the top attorney for the state’s central procurement office, described working until 10 p.m. on Good Friday on contracts to keep a supply of personal protective equipment available.

“This was a time in which vendors were walking away from us … if we didn’t agree to their terms and conditions within a couple of hours,” Krivacka told the committee. “This is a very unusual circumstance, a complete collapse of the global and national supply chain.”

Krivacka said, unlike most contracts, the state’s contract with Nomi Health was “on the vendor’s paper,” not a document the state drafted.

“It’s a dangerous form of contract,” Krivacka said.

Rep. Michael Curcio, R-Dickson, cited emails exchanged among department officials about the contract, asking why the contract moved forward after certain officials expressed concern.

“It sounds like even at the very outset of this, there was an opinion that this vendor was improper or this process was wrong: ‘please tell me that we can get out of this,’ ” Curcio said, quoting an email sent by the department’s chief medical officer, Dr. Tim Jones.

“It surprises me that you didn’t ask the people who were actually responsible for overseeing the test about this particular vendor,” Curcio said.

Piercey said she sought input from her leadership team and lab staff, and the department also conducted “a lot of vetting,” internally and sought input from other states.

The committee hearing adjourned without taking any action.

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