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Hochul defends COVID test purchases against pay-to-play allegations

The Biden administration has announced a new investment in at-home COVID tests. Here, an Abbott BinaxNow test.
Ted S. Warren
The Biden administration has announced a new investment in at-home COVID tests. Here, an Abbott BinaxNow test.

New York Governor Kathy Hochul is defending a decision to buy over half a billion dollars in COVID-19 rapid tests from a campaign donor. Her Republican opponents have seized on the issue, and one government reform group said it merits an investigation.

The controversy centers around a $637 million purchase of over 50 million at-home COVID tests by Hochul’s administration last December and January.

The tests were manufactured by AccessBio, a New Jersey-based company. But the state health department did not buy the tests directly from the company. They instead used an intermediary procurer, the company Digital Gadgets.

The owner of Digital Gadgets, Charles Tebele, and his family members are donors to Hochul’s election campaign. They contributed over $300,000. The bulk of those contributions came after the purchase orders for the tests had been signed.

The transactions were first reported by the Albany Times Union. The paper also found that the state of California also bought COVID tests from AccessBio, but they did not use a middleman to obtain them. The state paid only about half as much money for the same amount of tests — or $300 million less.

Hochul said she didn’t know that the owners of Digital Gadgets had contributed to her campaign. She said she tries to keep campaigning and governing separate. But she defended the price paid for the tests, saying it was at a time when the Omicron variant was spreading, and she was concerned about having enough tests to keep the schools open.

“My directive to my team was, ‘the only way we’re going to get kids back in schools is to amass as many test kits from wherever you need to get them. Just go do it,'" Hochul said on September 23. “That was my only involvement.”

The governor said “no contribution has ever had an effect on any public policy decision” in her administration. She adds she “follows all the rules.”

John Kaehny is with the government reform group Reinvent Albany. He said there a number of troublesome questions surrounding the deal.

“The number of red flags going up here is phenomenal,” Kaehny said.

He said the state had access to lower-priced tests through other companies but chose to buy the bulk of them from Digital Gadgets. The company is not an established medical supplier and had no history selling the tests.

Kaehny adds the company also has a history of questionable transactions. Former New York City Mayor Bill de Blasio contracted with Digital Gadgets to supply ventilators earlier in the pandemic. Company owners also gave large donations to de Blasio’s 2020 campaign for the presidency. Some of those contracts were scrapped after the company failed to deliver on the ventilators.

Another warning sign, Kaehny said, is that since Hochul was operating under emergency powers granted to her during the pandemic. So she did not need to request bids for the contract, as is normally required under New York state law. The emergency order also stripped away the state comptroller’s powers to review the purchase orders.

“The sad, sad reality about this is that this looks like one of the biggest pay-to-play scandals in New York state history,” said Kaehny who adds the “truth” of what occurred needs to be uncovered.

Kaehny’s group is calling for a federal civil and criminal investigation of the deal. Federal pandemic-related subsidies were used for the purchases.

Hochul’s opponent in the November elections, Long Island Congressman and Republican, Lee Zeldin, is highlighting the issue in a campaign ad.

“Hochul rigged a lucrative COVID testing contract for a large donor at twice the price,” the narrator intones, as threatening music plays in the background.

At a recent campaign appearance in Rochester, Zeldin called it “blatant, pay-to-play corruption.”

“(There’s) no evidence at all of Kathy Hochul trying to negotiate a better price for New York taxpayers,” Zeldin said on September 29. “(There’s) no evidence of Kathy Hochul going to the company that actually manufactured the COVID tests to try to get a better deal directly from them. That’s what California did. And they paid 45% less."

Despite the criticism, Hochul is not backing down, and continues to deny that she did anything wrong.

“I would do that all over again, I needed to get people protected,” Hochul said on September 28. “We achieved the result.”

But Hochul concedes there could be “more safeguards” in place, and she said she’s aware of the importance of public perception.

In a statement, Hochul's press secretary, Hazel Crampton-Hays, offered more context to the issue.

"At a time when the demand for COVID tests so outstripped the supply that New Yorkers spent hours lined up around blocks to try to buy tests before stores went out of stock, Governor Hochul sought to meet this enormous need for testing by directing her team to procure as many tests as possible to distribute to nursing homes, senior centers, local governments that could not secure the tests they needed on their own, and to help schools re-open safely after winter break," she said.

Crampton-Hays said the administration worked with "federal and local partners on pop-up testing sites, and stocking mass vaccination sites with tests. These around the clock efforts to secure millions of in-demand tests were successful: in early January of this year, over 95% of New York's school districts operated completely in-person when major school districts across the country conducted remote learning."

Crampton-Hays added that Hochul "repeatedly updated New Yorkers in her public briefings during the winter surge on the state's efforts to procure hotly-demanded tests." And she said state officials "did extensive outreach to vendors to determine who had tests to buy, and the administration also received outreach from vendors with tests to offer given the widely reported test shortages and governor's public briefings on the effort to distribute tests." Crampton-Hays said Hochul did not oversee the procurement process and "was not involved in the day-to-day procurement decisions."

Karen has covered state government and politics for New York State Public Radio, a network of 10 New York and Connecticut stations, since 1990. She is also a regular contributor to the statewide public television program about New York State government, New York Now. She appears on the reporter’s roundtable segment, and interviews newsmakers.