Terrible deal for New York taxpayers

Albany Times Union

Why did the state pay so much for coronavirus tests from a big donor to Gov. Kathy Hochul?

Fact #1: Digital Gadgets CEO Charlie Tebele and his family members have donated nearly $300,000 to Governor Kathy Hochul’s campaign.

Fact #2: The Hochul administration signed two purchase orders for at-home coronavirus tests worth $637 million from Digital Gadgets, even though the test distribution company’s price was significantly higher than that charged by competitors.

What are we to make of these two facts? Well, if the Hochul administration is to be believed, one has nothing to do with it. The purchase, it said, was not influenced by campaign contributions.

“I didn’t know this was a company that supported me,” the governor, a Democrat, said during a meeting with reporters in July. “I don’t follow that. My team has no idea.”

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That, of course, is almost always what politicians say. But there are reasons to be skeptical of the claim — or to find it downright ridiculous.

As Times Union investigative reporter Chris Bragg reports, the state paid as much or more than consumers would pay at a retail store for the tests from Digital Gadgets, despite purchasing 52 million of them. What happened to getting a deal when you buy in bulk?

The administration justified the purchase by saying that Digital Gadgets, a New Jersey-based wholesaler of hoverboards and other electronic devices, was able to supply the tests when they were otherwise in short supply.

However, as Bill Hammond of the Empire Center for Public Policy writes, the administration continued to pay for significant amounts of the tests from Digital Gadgets after the omicron wave subsided, and with it the demand for tests. Meanwhile, the state didn’t try to stop the orders before paying the full $637 million, even though it probably had the ability to do so, and ended up buying more tests than it needed to.

As we’ve said before while arguing for campaign finance reform, we believe that political contributions influence public policy decisions. If they didn’t, why would companies continue to be so generous? Are we to believe that Mr. Tebele and his family don’t have a better use for nearly $300,000?

But even if we accept Ms. Hochul’s claim, there is reason to be concerned about the state’s deal with Digital Gadgets. The higher cost of the company’s tests — $12.25 per test, more than double what some other companies were charging — cost New York taxpayers hundreds of millions of dollars. Cort Rudy, a spokesman for the Department of Health, declined to say whether the agency had negotiated with Digital Gadgets on the price.

The apparent waste is obscene and perhaps could have been avoided had Ms. Hochul not issued an emergency disaster order last November, halting the normal competitive bidding process, which includes oversight by the state comptroller’s office. The order gave her administration unfettered authority over the purchase of COVID-19 supplies.

In the very month of the order, Mr. Tebele and his wife together gave Hochul’s campaign $50,000. In the following months, through May, they gave another nearly $90,000, exceeding what they could legally donate, and a number of other Tebele family members also gave large sums to Ms. Hochul.

Coincidence? It would be naïve at best to think so.