When Chinese company BYD failed to meet a May 31 deadline to gain NIOSH certification of their N95 masks, the State of California had the right to cancel the contract and receive a full refund of a $500 million down payment it issued in March.
Given that the $3.30 price per mask is much higher than the state could find on the market right now from a domestic producer (LA Mayor Eric Garcetti paid Honeywell $0.79/mask in March), that the company had already missed an April 30 deadline, and that NIOSH had denied two of BYD’s certification applications and rated its production facilities as “not acceptable,” one would think Gavin Newsom would be relieved to get out from the contract.
Nope. Though California is facing a budget shortfall this year instead of a $21 billion surplus and Newsom has tried to raid the State Highway Fund to cover General Fund obligations, Newsom opted to extend the deadline once again, to June 12, and failed to negotiate any price concessions as a part of that extension.
In the real world, businesses with incompetent negotiators at the helm go bankrupt. Newsom faces no such risk and has personal/political reasons for keeping the contract going. As we reported in March, he received a $40,000 contribution from BYD’s top executive in California. BYD is a “green energy” company, one of Newsom’s favored industry sectors. And, Newsom’s administration has close ties to BYD’s chief lobbyist, Mark Weideman, who also represents Tom Steyer’s NextGen America.
Slimy all around.
Fortunately for Newsom and BYD, the company finally received NIOSH approval June 8. In April and May Newsom blamed the federal government for delaying delivery of the masks, which he said had arrived in the country and were just sitting there, waiting to be inspected. A NIOSH spokesman said it “notified BYD on May 4 that on-site visits to the company’s manufacturing and production facilities in China had resulted in a rating of ‘not acceptable.’ The agency also said its ‘review of documentation provided to NIOSH for the design, manufacturing and quality inspection of the device was concerning.'”
Newsom didn’t address any of that in his announcement of the NIOSH certification, preferring to cast it as a victory that will provide an ongoing supply of N95 masks to the state:
“Providing California’s front-line health care workers and responders the protective equipment they need is a critical part of our response to COVID-19. This new supply of N95 masks, as well as the surgical masks this contract has already provided, are game-changing and play a crucial role in our state’s public safety and reopening strategy.”
According to BYD’s website, the repeated NIOSH denials were due to “findings related to documentation control paperwork” that are easily fixable and “BYD is manufacturing a high-quality product.”