New York taxpayers have paid over double the normal rate for COVID tests thanks to Gov. Kathy Hochul’s decision to buy said tests from one of her major campaign donors versus from companies offering them at better prices.
During one sale, the campaign donor, Digital Gadgets, offered the tests to Hochul at $13 per test. Meanwhile, other companies were offering the tests for as little as $5 a pop.
Despite the drastic difference in price, the governor “quickly agreed to pay $338 million to Digital Gadgets at the higher per-test price,” according to the Times Union.
“The state Division of Budget and Hochul’s office signed off on the deal on Dec. 20, the same day [Digital Gadgets] made the proposition,” the paper reported Thursday.
And so the governor paid for roughly 26 million tests. Had she chosen the $5 provider, she’d have received over 67 million tests for that much money.
According to the Times Union, Hochul at some point made another purchase of $299 million, bringing the total to $637 spent to purchase tests at an average price of $12.25.
This discrepancy is relevant because Digital Gadgets founder and CEO Charlie Tebele is a staunch Hochul supporter.
“Tebele and his family members have donated nearly $300,000 to Hochul’s campaign, including $70,000 before last winter. That’s when Hochul’s administration signed two purchase orders to buy $637 million in tests. Tebele subsequently hosted a campaign fundraiser for Hochul in April, records show,” the Times Union notes.
Does this explain her decision to buy tests from Digital Gadgets? It seems so, because no other reason makes sense, as noted by Bill Hammond of the Empire Center for Public Policy.
Speaking with the Times Union, he noted specifically that, despite Hochul buying the tests in bulk, she wound up paying as much as (if not more than) consumers were paying to buy tests at a retail store.
“Hammond reviewed the records obtained by the Times Union and was struck by the significantly higher price the administration paid Digital Gadgets, resulting in hundreds of millions in additional spending,” according to the outlet.
“The Hochul administration is saying it was not because they were a donor, but should answer the question of why they so eagerly got into business with this very high-priced vendor — and bought more than half their total amount from this one supplier — when they knew it was charging a much higher rate than they had been paying,” he said.
Hochul has for her part claimed that she had no idea Digital Gadgets was a campaign donor.
“I was not aware that this was a company that had been supportive of me. I don’t keep track of that. My team, they have no idea,” she reportedly said during a press briefing in July.
But this seems dubious.
“On April 10 — about two weeks after the last of the $637 million in payments was made — Tebele hosted a campaign fundraiser for Hochul, spending $4,700 to pay for the event,” according to the Times Union.
“That same day, a Tebele business partner in a related Digital Gadgets company, Jack Cayre, gave the maximum of $69,700 to Hochul’s campaign. A day later, Cayre’s brother gave $69,700 and Tebele’s wife gave $20,000 to the campaign.”
She’s also made the case that, unlike the other companies offering the tests at a lower rate, Digital Gadgets was able to supply a large enough quantity of tests before schools reopened in January.
“The fact that there was someone who could meet that need at that time allowed us to deliver critically important test kits when nobody else — including the federal government — could get their hands on it. As a result, we got kids back in school in January, as opposed to sitting home another semester,” she said.
The problem is that Hochul reportedly continued funneling money to Digital Gadgets even after schools had reopened, the Omicron wave had subsided, and the other companies had replenished their supplies.
“[T]he payments continued – and increased – for another three months. Sixty-two percent of the money ultimately collected by Digital Gadgets was paid in late February and March, after COVID hospitalization levels had returned to their pre-omicron lows,” Hammond wrote in a blog post for the Empire Center.
“By that point, the department presumably would have had the time to seek bids from multiple other vendors and submit contracts for vetting by the comptroller. Instead, Hochul continued bypassing those requirements by renewing her emergency order every 30 days, most recently on July 14.”
Following up on great reporting by @ChrisBragg1:
Most of the $637M in emergency payments to Digital Gadgets, a test kit supplier owned by campaign donors, happened after the omicron wave was over. https://t.co/Fhe3c7lQIz pic.twitter.com/l3wWPpzCps
— Bill Hammond (@NYHammond) July 21, 2022
Notice what Hammond wrote about Hochul’s emergency order. This is important.
“On Nov. 26, Hochul signed an emergency order suspending the normal competitive bidding process that included oversight from the comptroller’s office. Instead of purchasing tests through normal state contracts, the Department of Health began buying them through a series of ‘purchase orders,'” according to the Times Union.
In other words, her order made it so that COVID tests would be purchased without any oversight. How convenient.
Now, in fairness, Hammond admits that it’s possible that the other companies genuinely couldn’t keep up with Hochul’s demands, thus making it necessary for her to buy tests from Digital Gadgets. But the question then becomes, why she didn’t apply her power and do something about the company’s clear-cut price gouging.
“At some point, it seems like the state should have the leverage to say, ‘We’re paying well over double what the tests are worth — we don’t appreciate that, and we need you to come down.’ I don’t know if that conversation was held or not,” he said to the Times Union.
Writers and editors can be contacted at [email protected] with feedback, tips, or corrections.
V. Saxena is a staff writer with a decade of experience as a professional writer, and a lifetime of experience as an avid news junkie. He holds a degree in computer technology from Purdue University. Saxena also contributes to BizPac Review.
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