State Sen. Heidi Campbell is urging state auditors to complete an investigation into no-bid contracts awarded by Gov. Bill Lee's administration since the COVID-19 pandemic started, pinpointing a botched contract with Nomi Health last year that cost the state nearly $6 million.
A member of the Legislature's Fiscal Review Committee, Campbell raised questions Wednesday about a no-bid contract the governor's Unified Command signed last year with the Utah-based company to provide COVID-19 tests, even though the company had no experience with running tests.
"It's time for the Fiscal Review Committee and the public to have full transparency into that failed contract and the performance of every other business deal the Lee Administration made without oversight," Campbell, a Nashville Democrat, said in a Wednesday statement.
Campbell pointed out Gov. Bill Lee's Unified Command signed the contract through the Department of Health "against the better judgment of career professionals." She wants auditors in the Comptroller's Office, which reviews state contracts, to present findings or give updates at upcoming meetings in August and September.
"There's accountability in transparency, and we don't want this governor or the next governor to make the same mistake again," Campbell said.
According to a NewsChannel5 report, questions were raised about the accuracy of Nomi Health tests and the likelihood they would show incorrect negative tests before the state signed the contract on April 30, 2020.
Dr. Michelle Fiscus, who was fired from the department two weeks ago, told NewsChannel5 that Health Commissioner Lisa Piercey suggested the Nomi tests be used "in a healthier population, like college kids."
Fiscus also told NewsChannel5 she had warned Piercey that the Nomi tests could not be used in low-income housing and minority populations because of the potential for false-negative results and a potential testing disaster. That led Piercey to tell her the tests should be used in "healthier populations" rather than those areas.
Health Department spokeswoman Sarah Tanksley did not deny Piercey made the comment but said Wednesday the department has no further comment on the report.
"Dr. Piercey stands by her testimony given at the Fiscal Review Committee hearing last year. No Tennesseans were tested using the Nomi tests," Tanksley said via email.
Fiscus told the TV station she nearly quit when the department signed the $26.5 million contract with Nomi in spite of several warning signs that the company couldn't do the job.
Once it got the contract, instead of providing the correct type of medical gloves for personal protective equipment, the company shipped cattle breeding gloves to the state, in addition to the wrong kind of wipes and knock-off N-95 masks, some with holes in them, according to the NewsChannel5 report.
Ultimately, the Department of Health laboratory refused to endorse the Nomi test system, and Piercey canceled the contract but still paid the company $6 million.
The problems stemmed from the emergency authority to contract with vendors under laws guiding the Tennessee Emergency Management Agency, as well as the governor's creation of the Unified Command when the pandemic hit in March 2020. State officials also were slammed by a large number of vendors trying to sell the state personal protective equipment and COVID-19 testing equipment and solutions as the virus surged.
Sen. Todd Gardenhire, co-chairman of the Fiscal Review Committee, said he was not satisfied last December with the answers Piercey and other state officials gave when the panel reviewed the Nomi contract.
"I didn't have enough information and couldn't get enough information at the time to combat why we had to pay them $6 million," said Gardenhire, a Chattanooga Republican.
Piercey's staff suggested the state use another vendor, but she opted to sign the contract because Nomi Health was offering to run 90,000 COVID-19 tests a month, using a robot to handle the specimens, as well as bar coding and an app to expedite results while offering a large amount of personal protective equipment, which was hard to find at the outset of the pandemic.
One of her top staff members asked in an email whether the state could get out of the contract but was told it had been sealed and delivered, according to testimony in a Fiscal Review Committee meeting in December 2020.
On May 6, 2020, the department's deputy director expressed concerns about the Nomi contract, and the state lab raised similar questions about the vendor's testing ability on May 7.
In early June, tests showed Nomi testing was inadequate and that it could cause "life, health and safety to be jeopardized," according to a timeline of the events presented at the Fiscal Review Committee meeting.
The state tried to return the items, but Nomi would not accept them and requested payment. Piercey told lawmakers $5.95 million went toward services the state received from Nomi and the personal protective equipment.
She admitted, however, that the Department of Health was caught off guard when it realized it received cattle breeding gloves instead of typical medical gloves. Of the $5.95 million, though, the state paid only $63,000 for the PPE.
Piercey also acknowledged during questioning last December that the Department of Health was notified about Nomi by the governor's chief of staff Blake Harris. He put Republican political consultant Tony Simon in touch with Piercey, according to NewsChannel5.
"We were getting solicitations multiple times each day," Piercey said.
The commissioner also admitted there were some "initial concerns" about Nomi because they were "scaling up" so fast, but she said those were ironed out. Piercey said her department also talked to officials in Utah, Iowa and Nebraska in its vetting of the company.
When Nomi started running tests, they weren't as "sensitive" as the state's lab tests, and despite a couple of adjustments, Nomi couldn't reach the point where its test results would be reliable, Piercey said.
The state hoped to ramp up testing for senior citizens and eventually the entire state.
"But when we found out their sensitivity wasn't high enough and that they could possibly miss some positive cases and put an entire nursing home at risk, that was not a risk worth taking for Tennesseans," Piercey said.
That led to a "material breach" of the contract," according to Piercey.
By setting up the Unified Command, made up of the Department of Health, TEMA and Department of Military, the governor created a "more streamlined process" during the public health emergency, according to an official with the Central Procurement Office.
But that led to a situation in which Nomi was able to garner the contract without the usual checks and balances.
In fact, one problem with the Nomi deal was that it was put together under the vendor's contract instead of the state's normal contract guidelines. The state found itself in a situation where it was having to move quicker than normal because vendors would walk away if the state didn't agree to their terms in a matter of hours, according to testimony.
Even after the state called attention to the inadequacy of the personal protective equipment, Nomi disputed the state's claim that it was poor quality.
The PPE, though, was still in the state's warehouse in December and the test kits went unused, despite Piercey's claim that nothing was wrong with them.
Asked in December if legislators should anticipate similar problems, Health Department Deputy Commissioner John Webb acknowledged "hiccups" on the state's end and said, "We were in panic mode along with everybody else."
Piercey contended she consulted with numerous people, including senior staff, lab officials and state leaders, before entering the contract. Paying the $5.95 million "absolved" the state of paying the rest of the contracted amount, Piercey said.
Webb noted, however, the department has improved its communication since then to avoid similar contracting problems.
Asked by Rep. Bill Beck, D-Nashville, if she felt Nomi "sold you a bunch of goods," Piercey responded that she didn't.
"You wouldn't imagine the solicitations we got and the ridiculous nature of so many of them," she said. "Nomi did check the boxes. I think we made the best decision at the time with the information we had."
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