Audit: Health Department Spent $5.4M on Goods Never Received

OKLAHOMA CITY (AP) — During the early stages of the coronavirus pandemic, the Oklahoma State Department of Health spent more than $5.4 million on personal protective equipment and other supplies that the state has no record of receiving, according to an investigative audit released on Wednesday.

The audit, which examined spending at the agency from September 2019 through February 2021, was requested by former Oklahoma Attorney General Mike Hunter in April 2020. It was conducted by State Auditor & Inspector Cindy Byrd’s office.

“The state did not have a comprehensive emergency procurement policy or procedure in place prior to the COVID-19 emergency, greatly increasing the state’s risk for fraud, waste, and loss of funds,” the audit states. “As a result, prepayments were made in violation of the Oklahoma Constitution and goods have still not been received for over $5.4 million paid by the state.”

The $5.4 million for which products were not received included $2.1 million paid to PPE Supplies LLC for N95 masks, $890,417 paid to A&K Distributors for respirators and $2.2 million to seven different vendors for various types of services and supplies. The attorney general has filed lawsuits against both PPE Supplies LLC and A&K Distributors and is seeking refunds.

The health department said in a statement that agency officials believe their response to the pandemic was “prompt and effective within the resources and infrastructure available at the time.”

“As the state auditor’s report reflects, OSDH with the assistance of the Attorney General’s Office, are working diligently to resolve the matters of missing product or the return of state funds,” the agency’s statement said.

The audit also determined that advancing payments for personal protective equipment violates Article 10 of the Oklahoma Constitution, which prohibits the credit of the state from being “given, pledged or loaned to any individual, company, corporation or association.”

Although Gov. Kevin Stitt issued executive orders during a state of emergency that waived some purchasing requirements, the audit noted there is nothing in the Oklahoma Emergency Management Act or Catastrophic Health Emergency Powers Act that allowed the governor to waive the constitutional limitation.

Stitt said in a statement acknowledging mistakes were made at the agency.

“To keep hospitals open and our frontline workers safe, I issued executive orders to get PPE to our state as quickly as possible,” Stitt said. “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.”

Among the audit’s other findings were that 42 wire transactions exceeded the state’s $250,000 cap, the governor’s Secretary of Health Jerome Loughridge lacked the authority to delegate purchasing authority and that the agency had inadequate controls regarding its personal protective equipment inventory system.

The audit also noted that after Stitt gave his secretary of health the authority to set the salary of the OSDH’s commissioner of health, then-Commissioner Lance Frye’s salary jumped from $215,188 in July 2020 to $335,160 in January 2021. Frye resigned abruptly in October, just one day after state Republican leaders, including Stitt, expressed outrage upon learning the health department last year issued a birth certificate with a nonbinary gender designation.