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Audit criticizes some of Gov. Herbert's emergency spending, planning for COVID-19

Virus Outbreak Utah
Posted at 9:44 AM, Sep 30, 2020

SALT LAKE CITY — A highly-anticipated state audit released Wednesday morning offered some criticism of how Governor Gary Herbert’s office has handled some of the COVID-19 pandemic response and the spending of millions of taxpayer dollars.

The audit, conducted by Utah State Auditor John Dougall, was in response to scrutiny over spending by the governor’s utilization of emergency spending during the COVD-19 pandemic, including multi-million dollar tech contracts and the controversial purchase of a stockpile of hydroxychloroquine. It found no criminal activity, but suggested procedural changes to how emergency spending is done and more of a paper trail.

“We acknowledge the unprecedented nature of this pandemic. We recognize that decisions were made quickly in an evolving situation with many unknowns at the time,” the audit said. “As this pandemic is ongoing, our intention was to evaluate various events and processes to identify areas wherein improvements can be made to safeguard both public health and public funds and to ensure that limited resources are used effectively.”

Gov. Herbert's office accepted some findings and disputed others.

"The State of Utah never shies away from the opportunity to improve operations, even in the midst of a global pandemic. From the beginning of the COVID-19 crisis, we have been clear that we are constantly trying to improve our coordination and processes in order to best serve the people of Utah," the office said in a statement on Wednesday.
"State employees have truly risen to the occasion and have continued to render great service as we fight this pandemic. We look forward to working with the legislature to implement appropriate recommendations contained in the audit."

The audit claimed Utah's Division of Emergency Management could have done more to prepare for the pandemic since it knew the deadly virus was coming. In an interview with FOX 13 on Wednesday, Dougall said the state has done a lot to prepare for earthquakes and other disasters, but his audit found the state did not do more for a pandemic.

"The state was flat-footed, unreasonably so, from our perspective, when it came to a pandemic" he said.

The audit also criticized a lack of coordination and said it took too long to get a "unified command" together. Some agencies were reluctant to participate, like the Utah Department of Health. In its response, the governor's office agreed that they should have activated it sooner.

"We agree that better communication could have improved the State's early response to the pandemic. With the benefit of hindsight, we also agree that the Unified Command should have been activated earlier," the governor's chief of staff, Justin Harding, wrote in a response to the auditor.

But the audit spent most of its time scrutinizing the governor's utilization of no-bid contracts. FOX 13 first reported on Gov. Herbert’s use of “emergency procurement powers” back in May. Under a state of emergency, the powers allow the government to bypass a traditional public bid process and sign contracts or purchase needed items.

The state has spent more than $108 million utilizing emergency procurement — mostly on personal protective equipment including disinfectant wipes, hand sanitizer and face masks. (FOX 13 even found the purchase of pool noodles used in a creative way to slow transmission of COVID-19.)

But the governor’s office also signed multi-million dollar agreements with tech companies that have been heavily criticized by Republicans and Democrats on Utah’s Capitol Hill. The state entered into deals with Silicon Slopes tech firms for a contact tracing app that no longer tracks people’s movements and TestUtah, which has faced questions about its effectiveness.

The audit raised similar concerns and even leveled some criticism against Gov. Herbert and Lt. Governor Spencer Cox for relationships they have with Silicon Slopes companies.

“We also note that the Governor and Lt. Governor had a relatively close relationship with SS and various of its member companies. This causes particular concerns when contracts are steered to those companies, especially at the approval of the Governor. We also note that it is possible the Governor’s Office may have engaged in the sunk cost fallacy, pivoting into a contractual arrangement with certain SS-associated vendors without reconsidering other alternatives when the initial arrangements changed,” the audit said.

In a response, the Governor’s office defended its actions.

“We want to be clear that any such relationships did not influence the award of contracts. The review of which contract should be awarded to which entities was performed by staff members who exercised independent judgment in making recommendations about contract awards,” Harding wrote.

The audit went through contracts the included millions spent to purchase a stockpile of hydroxychloroquine that the state ended up getting a refund on after it was found the drug was not effective in treating COVID-19. An internal review by the governor’s office found no wrongdoing with any of the purchases, but Gov. Herbert himself said it was “unbeknownst to me” how the purchase came to be.

Dougall told FOX 13 he found very little evidence of documentation.

"It doesn't look like anyone actually authorized that purchase," he said. "It looked like some thought others thought it needed to happen, so it was purchased but others didn't know state dollars were being used to purchase it so there was confusion. In essence, it never should have happened in that manner."

A recent legislative audit on COVID-19 emergency procurement found nothing illegal, but said the governor’s office didn’t even consult with its own Department of Health about the contracts.

Dougall, a Republican and an independently elected member of the executive branch, has been carrying out his own audit in the background of the highly competitive governor’s race. Criticism of emergency spending emerged in the Republican primary (where Lt. Gov. Cox ultimately emerged as the nominee).

Dougall faced his own criticism for not moving quickly enough for political campaigns’ taste. The state auditor told FOX 13 he and his staff did their best to ignore it.

"We just focus on what we see, we report on what we see and we don't engage in those activities," he said.

Democratic candidate Chris Peterson leveled more criticism over state emergency spending during Tuesday night’s televised debate with Lt. Governor Spencer Cox.

“We’ve spent over $100 million and still have not got ourselves into the situation where this virus is under control,” he said, adding: “We’ve wasted money on that cell phone app and medicines that sciences show doesn’t work. That’s not appropriate. We need better leadership on this virus.”

Cox defended the state’s decision making in the pandemic during the debate.

“This response is about all Utahns coming together. I am very proud of the people that have stepped up in this response,” he said. “There have been some mistakes, and I have been very clear about that in the past in admitting those, but by and large we are doing this the right way.”

Dougall also offered some praise for news media who covered emergency spending by the state during COVID-19.

"I think the news media did a great job in their investigations. That's one of those key things from our perspective," he said.

READ THE AUDIT AND THE RESPONSE BY THE GOVERNOR'S OFFICE HERE