Just Say "No" to No-Bid State Contracts

By Jon Coupal and Scott Wilk

During the past two years, Gov. Gavin Newsom’s administration has paid billions of dollars in secretive no-bid contracts with little to no transparency. Now Newsom is deploying his same secretive approach to a growing number of other public contracts. All Californians, irrespective of party affiliation, should be deeply concerned. Especially troubling is the Newsom administration’s perverse penchant for no-bid contracts, many of which renew automatically. Since 2020, his administration entered into more than 8,000 no-bid contracts, many of which were valued at more than $25 million. By the end of 2020, the total amount was nearly $12 billion. The latest example? Instead of simply suspending the state’s gas tax, Newsom wants to award a no-bid government contract to a yet-to-be-named third-party vendor to manage a process of providing rebates to Californians, a lot of busywork to distract drivers from the fact that he’s making them pay the state’s highest-in-the-nation gas taxes. After the horrible mess the EDD made by distributing payment cards in 2020, one has to wonder, what could go wrong?

During the same period that cash and no-bid contracts were being handed out, behested payments on behalf of the governor surged. These are “donations” for charitable or governmental purposes that are specifically requested by elected officials, often from companies with business before the state. In 2020 alone, $227 million was “donated” at the “behest” of the governor, a huge spike compared to just $12.1 million in 2019. This even got the attention of the Los Angeles Times, which wrote that “many of the donors have other business before the governor, received no-bid government contracts over the last year or were seeking favorable appointments on important state boards,” which “creates the appearance of a pay-to-play system.”

Sub-par no-bid contracts risk the squandering of taxpayer dollars and renewing no-bid contracts without reviewing their merits not only wastes taxpayer money but is also a way of skirting California’s contracting process.

For example, in 2020, the Newsom administration awarded a $1.7 billion no-bid contract to the Valencia Branch Laboratory to process COVID-19 tests for the state. Less than a year later, we learned of shocking waste and fraud occurring in the lab. The truth came out thanks to selfless whistleblowers, one of whom is now being sued by the company operating the lab.

For months, Senate Republicans called for a full release of the state investigations on the lab. For months, the state stalled, ultimately complying only after the contract had already auto-renewed.

Because of this fiasco and the larger problem of no-bid contracts, one of the co-authors of this column, Sen. Scott Wilk, introduced three bills – which the Howard Jarvis Taxpayers Association supports – to bring accountability to the process: SB 947, SB 1271, and SB 1367.

SB 947 would empower employees of state government contracts to blow the whistle on fraud, waste or abuse by granting them whistleblower protections already afforded to state workers. SB 1271 would require no-bid contracts of $25 million or more to be subject to oversight of the Joint Legislative Budget Committee prior to renewal or extension of the contract. SB 1367 would prohibit a state agency from awarding a contract to entities that have provided behested payments on the governor’s behalf in the preceding 12 months.

Thankfully, SB 947 unanimously passed out of Senate Judiciary and has received the full support of the National Whistleblower Center. SB 1271 and SB 1367 are set for a hearing on April 26th in the Senate Governmental Organization Committee.

Transparency is non-partisan, or at least it should be. No-bid state contracts should never become the norm, and when they are deemed necessary, there must be strict accountability to prevent waste, fraud and abuse. The public’s confidence in the contracting process must be restored.

Jon Coupal is president of the Howard Jarvis Taxpayers Association. Scott Wilk is the current Senate Republican Leader and represents California 21st Senate District which includes the Antelope, Santa Clarita and Victor valleys. You can learn more about Scott by visiting his website.