The Oklahoma State Department of Health violated the state constitution when it paid millions of dollars in advance for pandemic supplies, according to an investigative audit.
Oklahoma State Auditor Cindy Byrd’s office released the 26-page audit Wednesday after The Frontier reported last week that Attorney General John O’Connor’s office said the document wasn’t a public record and he would keep it confidential.
Byrd said she decided to release the audit after receiving an open records request and consulting with outside legal counsel.
“I have concluded there is no Oklahoma statute that gives any state official the authority to withhold this information,” Byrd said in a statement.
A health department spokesperson said the agency “believes its response to this extraordinary public health crisis was prompt and effective within the resources and infrastructure available at the time.”
“The purchase of life saving personal protective equipment was paramount to the State’s ability to respond swiftly to the pandemic,” the emailed statement said. “Purchases were made in the midst of a global supply chain crises where acquisitions had to be made expeditiously.”
In a statement on Wednesday, Stitt said the pandemic was an unprecedented crisis.
“From the beginning my top priority has been to protect the health and safety of Oklahomans,” Stitt said. “In early March 2020 we were one of the first states to shut down nursing homes to protect the most vulnerable, saving countless lives. To keep hospitals open and our frontline workers safe, I issued executive orders to get PPE to our state as quickly as possible.
“Looking back today, we can acknowledge that there were technical errors while still knowing we did everything we could to protect citizens of this state during an unimaginable time.”
In 2020, executive orders from Stitt suspended many of the legal requirements of the normal purchasing process, such as obtaining competitive bids or buying through preferred state’s vendors, so agencies could quickly respond to urgent needs for personal protective gear and other equipment.
The audit found problems with the agency’s payment and inventory records. Auditors received hundreds of supporting records for purchases in “disarray,” the audit said.
The Health Department made 42 one-time purchases over the $250,000 limit permitted by the governor’s executive order, the audit found.
Paying in advance for products or services was not allowed under the executive orders, a violation of the Oklahoma Constitution, according to the audit.
“In addition, several AG Opinions consider advanced payments to be unconstitutional and violate the referenced Constitution,” the audit said.
When the coronavirus arrived in Oklahoma in March 2020, Stitt named Gino DeMarco his “PPE czar” and put him in charge of PPE purchasing decisions for the state Health Department. DeMarco was also a state deputy tourism director at the time.
Because DeMarco wasn’t a Health Department employee, agency employees were not always aware of purchasing details, the audit found.
Then-State Secretary of Health Jerome Loughridge issued a memo that increased DeMarco’s spending limit from $250,000 to $3 million for single orders, even though he didn’t have the authority, the audit found.
The state paid out more than $5.4 million in goods that had not been received, the audit found.
The agency has since either received missing products it ordered or was working to get refunds, an agency spokeswoman told The Frontier last week.
The Health Department also paid $80,000 in unauthorized finder’s fees, the audit found.
The audit also called a $750,000 state contract with Shyft Partners LLC for project management “questionable” and said the services the company provided did not appear to be unique.
“The uniqueness of the contractor appears to be that they had established rapport with the leadership team,” the audit found.
In April 2020, then-Attorney General Mike Hunter asked the state auditor to investigate spending at the state Health Department, including the use of federal relief funds. The request came following reports of drastic measures the agency had taken to secure protective equipment during the pandemic, including an attempt to spend $9.5 million for N95 masks from a company under investigation by the FBI.
Byrd’s office shared the completed investigative report on Health Department spending with the Oklahoma Attorney General’s office last year, she told The Frontier last week. The state auditor shared the document five days before then-Attorney General Mike Hunter resigned in May 2021. Gov. Kevin Stitt appointed O’Connor about two months later.
Byrd said she felt compelled “legally and ethically” to make the audit public.
“Oklahoma taxpayers paid for it – they should get to see it,” she said in a statement.