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How a Utah company won – then lost – a $26.5 million pandemic contract in Tennessee

The State of Utah has also paid nearly $10 million to the company
Posted at 10:28 PM, Dec 17, 2020

SALT LAKE CITY — Tennessee lawmakers are asking questions about millions paid to a Utah company who received a no-bid contract to provide COVID-19 testing and personal protective equipment at the start of the pandemic.

The Volunteer State paid $5.9 million to Nomi Health, which is based in Orem, Utah. It was supposed to be $26.5 million, but Tennessee terminated the contract early over concerns of whether Nomi could deliver what it had promised, according to an investigation by FOX 13’s sister station, WTVF in Nashville.

Over the objections of career state employees, WTVF reported, Tennessee Health Commission Lisa Piercey steered the contract to Nomi, whose prior experience in health care was only in connecting employers to health providers – not delivering health care – after a Republican political consultant pitched a contract to the governor's office.

"I've been trying to learn as fast as everyone else,” Nomi CEO Mark Newman, a University of Utah business graduate, said in a video chat on March 25, “and break this into kind of system. So, if, if a clinician is listening to this and says that guy doesn't know what he's talking about. Just call me up and help educate me, we're trying to move as fast as we can."

Six weeks after that chat, Tennessee gave Nomi the contract.

"Entering into a $25 million, no-bid contract,” Tennessee state Sen. Jeff Yarbro told KTVF, "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."

Utah Gov. Gary Herbert had already given a similar contract to Nomi. The state’s transparency website says it has thus far paid Nomi $9.6 million.

Republican governors in Iowa and Nebraska followed Utah's lead.

Emails obtained by WTVF show that Republican political consultant Tony Simon from Atlanta pitched a Nomi contract to Gov. Lee’s chief of staff Blake Harris, who put him directly in touch with Health Commissioner Lisa Piercey.

Nomi delivered a presentation to Tennessee officials April 17, according to records obtained by WTVF. The next day, Piercey's chief medical officer, Dr. Tim Jones, delivered some "good news" in an email to the head of the Tennessee Public Health Laboratory and other officials.

"The Commissioner is arranging for a contract (probably already signed) with a company called Nomi to help facilitate mass testing for COVID," Jones wrote.

The contract was signed by May 1, according to WTVF.

The day before Piercey signed the contract, there were already warning signs from a story in the Salt Lake Tribune. The article said health workers were warning of a “potential public health disaster” in Utah.

A column in an Iowa newspaper raised concerns about the contract and testing there, too. Inside Piercey’s department, Dr. Richard Steece, the head of the state’s lab, reacted strongly to the unexpected news of the no-bid contract, according to emails obtained by WTVF.

“Please tell me we can get out of this contract? Or better yet it has not been signed?” Steece wrote.

Jones, the chief medical officer, responded: "Signed, sealed and delivered. The Commissioner would like to start implementation within a couple of weeks.”

May 6, Piercey’s laboratory team went on the record with their “significant concerns” about the Nomi Health contract, WTVF found.

Deputy lab director Kara Levinson noted in an email that Nomi's testing platform appeared to be fourfold less sensitive than CDC-approved tests.

"Using a less sensitive test has the potential to give false-negative results, which has significantly [sic] implications for individual patients that may be sick and for public health staff that perform contact tracing," Levinson wrote in an email obtained by WTVF.

In more emails obtained by the station, lab director Richard Steece suggested that Nomi Health's process could only produce half as many tests as promised.

Another laboratory official, Paula Gibbs, was more blunt.

"Speaking honestly and openly here ... this project is actually SLOWING us down instead of helping increase throughput," Gibbs wrote.

Also, Mark Newman and other Nomi officials, instead of delivering medical gloves, delivered breeder gloves used by veterinarians on livestock, WTVF found; they also got hydrogen peroxide wipes that were for veterinary use and not appropriate for disinfecting from
Coronavirus.

Their KN95 masks were also not FDA approved, though, WTVF determined, later tests would prove that the masks performed well under the expected standards.

June 10, a formal validation report issued by the state’s health laboratory concluded that staff there had “no confidence” in the reliability of the Nomi test, according to records obtained by WTVF.

Five days later, Tennessee issued a "notice of termination of contract," claiming Nomi Health had caused "life, health or safety to be jeopardized."

Piercey approved a payment of $5.9 million to settle with the company, according to records obtained by WTVF.

UPDATE: Late Thursday, Nomi sent FOX 13 a statement that read in part:

“There was no breach of the contract by Nomi Health. The State of Tennessee paid Nomi Health $5.9m at the end of the agreement - not to get out of the contract as has been erroneously reported, but for the full two months of goods and services implemented and delivered to Tennessee -- including more than 100,000 FDA EUA test kits, lab materials and machines, construction of temporary lab work rooms, software, technology, staffing and training, testing site set up and medical-grade PPE supplies to support front-line sample collection teams involved in the program. Our teams were on the ground routinely and worked day in and day out, supporting the State's COVID-19 response.

“The tests Nomi delivered perform at or better than their FDA approved EUA for limit of detection and above other efficacy and accuracy measurements. This is true of every single test used in testing operations Nomi supports.. At that point in time, the limit of detection was approximately 3,420 copies/mL. Dr. Steece and his team wanted testing protocols to have an even lower limit of detection as outlined in the documents. The supplied tests are used, validated and revalidated across the world every single day, and continually improve as the pandemic continues. While chain of custody concerns in medical equipment prevented the return of the test kits to Nomi, the test kits can be used by any lab in Tennessee here and now.

“The question of us delivering veterinary supplies is misconstrued. We delivered medical grade and approved PPE such as gowns, masks, face shields and gloves so team members have the safest workplace possible. From our work in the Midwest, we learned that insemination sleeves as an additive layer on top of the existing PPE further increased safety for nurses and so Nomi provided them to the State of Tennessee at no additional cost.

“We are proud of our work nationally every day. We deliver every component of effective public and private testing programs that an organization needs to be successful, from antigen and PCR testing to teams and technology to efficient results reporting. Nomi has invested in continuously improving the quality of our programs and we are honored to serve communities nationwide in this critical pandemic response.

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