District attorney asked to investigate controversial no-bid business contracts approved by Gov. Bill Lee’s office

Sock masks, price gouging and failed products: Sen. Heidi Campbell wants an external audit of state pandemic contracts to ensure laws were followed

NASHVILLE — Sen. Heidi Campbell wants Nashville’s district attorney to investigate a slew of controversial no-bid contracts approved by Gov. Bill Lee’s administration during the pandemic state of emergency.

In a letter sent Dec. 7 to Nashville District Attorney General Glenn Funk, Sen. Campbell said the Lee administration’s preference for no-bid contracts were part of an “alarming, multi-department pattern.”

Under a state of emergency, the governor can suspend financial safeguards meant to ensure fair pricing in contracts, like competitive bidding and vendor certification. With rules relaxed by the administration, some of the state contracts in question sent millions of taxpayer dollars to private businesses that failed to deliver the basic services they promised.

Sen. Campbell says taxpayers deserve to know why the Lee administration chose those businesses and why they continue extending contracts outside of the normal procurement process.

“Without documented reasoning, the public is left to speculate about the propriety of these contracts and whether political favoritism played a role,” Sen. Campbell wrote. “At this unique moment in time, with unprecedented levels of federal funding available to help Tennesseans, we must make sure that we are employing strong fiduciary and legal oversight.”

While the Nashville senator is calling for a full investigation of no-bid contracts, she identified in her letter several controversial contracts that have been the subject of numerous news reports.

“There are likely many honest and reputable business owners and nonprofit organizations in Tennessee wondering why the administration passed them over for emergency work,” Sen. Campbell said. “Every taxpayer deserves to know why vendors were awarded no-bid contracts.”

Controversial contracts in the news:

• Xtend Healthcare
  $75 million for contract tracing
  Xtend Healthcare, a medical billing company with no experience in epidemiology, was hired to do contact tracing as COVID-19 cases skyrocketed across Tennessee. Despite spending tens of millions of dollars on the effort, the state has published very little evidence to show how the company is doing. The medical billing group is also a wholly-owned subsidiary of Navient, the nation’s largest student loan servicer and a company facing major litigation for predatory lending practices.
• Nomi Healthcare
  $26.5 million for testing and PPE (though the contract was eventually terminated with a $6 million buyout to Nomi)
  Nomi Healthcare is a Utah-based company that was supposed to provide COVID tests and medical-grade personal protective equipment, or PPE. The company had little to no experience in testing. News reports from other states indicated that problems had arisen because of the company’s performance in other states. However, Gov. Lee’s administration signed a contract after hearing a business pitch from GOP political operative. According to Commissioner Piercey, the deciding factor in awarding the contract to Nomi was that, in addition to tests, they would also provide PPE.
• Sexton Furniture Manufacturing
  $165,000 for hospital gowns (though the contract was canceled when a reporter asked questions about whether it was ethical)
  Sexton Furniture Manufacturing is furniture manufacturing business based in Bean Station, Tenn. and owned by state Rep. Jerry Sexton. The business does not have a functioning website.
• Pale Horse Global Risk Solutions
  $13.5 million (as of Sept 2020, the state said it had paid Pale Horse $6.8 million).
  Pale Horse, a small security company with a Hickman County business address, was contracted to provide PPE. While state emails show some vendors were being paid $.54 per N95 mask, the Lee administration paid Pale Horse $2.55 per mask. Metro Nashville Council Member Robert Swope lists himself as a managing partner for the company. The company was sued in 2020 by an investor for profits from its contract with the state of Tennessee.
• Renfro Corp
  $8.3 million for face masks
  Renfro Corp. is a North Carolina-based sock manufacturer with distribution in Cleveland, Tennessee. The Lee administration contracted with Renfro to produce masks made from porous, loose-knit material used in their socks.

Read Sen. Campbell’s full letter to District Attorney Funk: