In summary

California renewed a huge contract for a COVID-19 testing lab so plagued with problems that state health officials warned it could lose its license.

On Sunday, while you were out trick-or-treating, California quietly auto-renewed a contract worth up to $1.7 billion for a COVID-19 testing lab so plagued with problems that state health officials warned in February it could lose its license.

The automatic renewal, which California Health and Human Services Agency spokesperson Sami Gallegos confirmed to me Sunday night, comes as the state faces scrutiny for its failure to release a report investigating “significant deficiencies” at the lab. Gov. Gavin Newsom’s administration said the full report would be made available in mid-March. More than seven months later, it is nowhere to be found.

“I urge you to halt auto-renewal of the contract,” Senate Republican Leader Scott Wilk wrote in a late October letter to the state’s top health officials, arguing that it “would be irresponsible to let any contract auto-renew when serious allegations remain unanswered and the report out of public reach.”

  • Gallegos told me in a statement: “The state plans to continue to have the Valencia Branch Laboratory operational to ensure that we have adequate testing capabilities going into the winter months. We will continue to evaluate our need for the laboratory as we do with all aspects of our response. The state can elect to terminate the agreement ‘without case’ (sic) with 45 days’ notice. To date, the state has paid PerkinElmer $716 million to operate the laboratory, with majority of funds recovered through the federal funds and health insurance claims.”

The state opened the Valencia Branch Lab in October 2020, two months after giving diagnostics company PerkinElmer a no-bid contract to operate it. Problems began popping up almost immediately. Whistleblowers told CBS Sacramento that lab techs were sleeping while processing COVID samples, test swabs were found in bathrooms and staff were inadequately trained. Although the state initially disputed the extent of the problems, it later admitted that it had become aware of “significant deficiencies” in December.

Indeed, state health inspectors gave the lab an “immediate jeopardy” designation — which represents “the most severe and egregious threat to the health and safety of recipients.”

Meanwhile, the lab has consistently struggled to meet its mandate of processing 150,000 tests a day and turning results around quickly. According to the most recent state data, the Valencia Branch Lab processed less than 195,000 tests for the week ending Oct. 23 and returned only 40% of test results within 24 hours — one of the lowest rates in the state. The lab also has a history of high rates of invalid, lost or cancelled test results. According to CBS Sacramento, 1 out of every 42 tests processed at Valencia as of August did not return a clear positive or negative result.

PerkinElmer did not respond last week to questions from ABC 7 News about the contract renewal.

Gallegos said that more than 1,600 schools are using the lab for COVID-19 testing — but that doesn’t include the state’s largest district, Los Angeles Unified. Former Superintendent Austin Beutner told CalMatters Sunday that LAUSD signed a testing contract with private company Summerbio in June 2020 — a few months before the state made public its contract with PerkinElmer. Beutner said that each test costs the district about $12 (compared to the $53 charged by PerkinElmer during the first two weeks of October) and that the deal stipulated the district wouldn’t pay anything if accuracy thresholds and 24-hour results weren’t met. State data shows Summerbio returns 99% of test results within 24 hours.

  • Beutner: “LA Unified reviewed the PerkinElmer price and terms and elected to stay with Summerbio because the price and terms were materially better for the school district.”

Interestingly, the state’s contract with PerkinElmer also allows it to cancel the deal if COVID-19 testing “has become commercially available at lower cost” and PerkinElmer is unable to achieve “comparable cost reduction.”

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The coronavirus bottom line: As of Saturday, California had 4,647,587 confirmed cases (+0.2% from previous day) and 71,519 deaths (+0.2% from previous day), according to state data. CalMatters is also tracking coronavirus hospitalizations by county.

California has administered 53,043,311 vaccine doses, and 73% of eligible Californians are fully vaccinated.

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1. Kounalakis replaces Newsom in Scotland

Congresswoman Nancy Pelosi, Lt. Gov. Eleni Kounalakis and Newsom at the Tsakopoulos Library Galleria on Jan. 7, 2019 in Sacramento. Photo by Randy Pench for CalMatters

Lt. Gov. Eleni Kounalakis will lead the California delegation at the United Nations Climate Change Conference that begins today in Glasgow, Scotland — the result of Newsom abruptly cancelling his trip Friday and announcing that he and First Partner Jennifer Siebel Newsom would attend virtually “due to family obligations.” The about-face came a few hours after I reported that details of Newsom’s itinerary were practically nonexistent and that virtually no one from the California press corps would be covering Newsom at the conference due to his office not telling journalists about the trip until nine days after the deadline to apply for a press credential. Indeed, Newsom had privately questioned his purpose in attending the conference and didn’t have plans to make any major announcements, CalMatters’ Laurel Rosenhall reports.

The last-minute pivot is eerily similar to an episode from August 2020, in which Newsom backed out of a prime-time speaking spot at the Democratic National Convention hours before his scheduled speech. Then, to cap off the whirlwind series of events, Newsom announced he would be giving virtual remarks after all — just moments before he appeared via a cell phone livestream.

2. California confronts crime uptick

Image via iStock

Three indications that crime will likely be a top issue for many California voters in the 2022 elections:

  • Los Angeles’ 2021 homicide rate is already 17% higher than it was in 2020 — when the city saw a decade high of 355 killings — and a whopping 49% higher than it was in 2019. As of Oct. 18, the city had logged 320 homicides — putting it on track to potentially top 400 killings for the first time since 2006. The surge in murders has increased homicide detectives’ workload, resulting in less cases being solved. Meanwhile, Los Angeles County Sheriff Alex Villanueva is warning that the county’s vaccine mandate will result in a “mass exodus” of law enforcement officers, increasing “dangers to public safety.”
  • A Safeway grocery store in San Francisco is limiting its hours due to what one supervisor described as “out of control” shoplifting. The move comes a few weeks after Walgreens announced plans to close five San Francisco stores because of “organized retail crime.” Although police data casts doubt on that claim, the closures have fueled the perception that San Francisco is overrun by crime — and the city itself is hoping that its requirement for municipal employees to return to the office starting today will help make downtown seem busier and safer.
  • California’s beleaguered bullet train project has cut through disadvantaged San Joaquin Valley communities, displacing homes, businesses and residents and fueling drug deals and crimes in certain areas, the Los Angeles Times reports. For example, after the high-speed rail authority paid the city of Wasco to relocate a farmworkers’ housing site, the vacant units turned into a crime scene. “Many of the units have been set on fire. There are homeless folks there, others hiding out, doing drug deals and storing stolen goods,” said city manager Scott Hurlbert.

3. CSU works to bring students back

San Francisco State University student Marissa Ledesma works at her home in Bakersfield on Oct. 27, 2021. Photo by Larry Valenzuela for CalMatters

As California public schools turn to TikTok and sleek marketing campaigns in an effort to boost declining enrollment, the California State University system is embarking on its own initiative to lure back students who dropped out during the pandemic — and help CSU reach its ambitious goal of a 70% six-year graduation rate by 2025. Some of CSU’s methods — like personally encouraging students with good grades to re-enroll in classes and launching a digital planner to help visualize degree paths — have been met with praise, while others — such as redesigning core classes where a higher percentage of low-income students and students of color receive Ds and Fs — are more controversial, CalMatters’ Mikhail Zinshteyn reports.

In other higher-education news, USC is in the midst of yet another scandal. On Friday, USC President Carol Folt acknowledged the university waited too long to notify students about numerous allegations of drugging and sexual assault at Sigma Nu fraternity parties. USC authorities on Sept. 30 were informed of five to seven of these incidents, but didn’t notify the community until Oct. 20 — four days after yet another student reported a sexual assault at Sigma Nu. The university has since suspended Sigma Nu and is enforcing a moratorium on all fraternity parties.

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CalMatters commentary

CalMatters columnist Dan Walters: Farmers have lost two key skirmishes in California’s water war.

Pooled testing can keep schools safe: The best way to gauge transmission levels in schools is to routinely test for COVID even among those who are asymptomatic, argues Karen Smith of Healthy Community Ventures.

California must act urgently on climate: State lawmakers’ participation at the United Nations climate change conference is important — but it’s more urgent for them to act once they return, writes Mike Young of California Environmental Voters.

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Emily Hoeven wrote the daily WhatMatters newsletter for three years at CalMatters . Her reporting, essays, and opinion columns have been published in San Francisco Weekly, the Deseret News, the San Francisco...