Essex County COVID Program Plagued With Financial Waste, Report Says

ESSEX COUNTY, NJ — Essex County once saw high praise for the way it dealt with the coronavirus pandemic, including its COVID-19 vaccination program – which put hundreds of thousands of shots into people’s arms in one of the most densely populated areas of New Jersey. But now, the county is facing some stiff criticism from state officials, who are alleging that there was “widespread” financial waste and abuse happening behind the scenes.

On Tuesday, the New Jersey Office of the State Comptroller released a scathing report that accuses the county of having “lax oversight of spending” and racking up multiple violations of federal, state and local procurement rules in connection with its $40 million vaccination program. Read it online here.

The county responded to the report, taking issue with several of its allegations (see below).

Essex County Executive Joseph DiVincenzo Jr. said the analysis is "unbalanced, unfair and does not accurately depict Essex County’s response to the pandemic." Read More: Essex County Official Defends COVID Vaccine Program In Wake Of Comptroller Report

Essex County’s COVID-19 vaccination program launched in December 2020 and administered a total of 622,016 doses through August 2023. Along the way, it saw praise from high-profile lawmakers such as U.S. Sen. Cory Booker and got boosts from celebrities such as Queen Latifah and Rosario Dawson.

At the peak of the pandemic, the county had vaccine centers running in Newark, Livingston, West Orange and West Caldwell, as well as a mobile unit that traveled between municipalities. To make people feel more at home, the county created a child-friendly area and invited musicians to perform while people waited for their shots.

The county also ran a concurrent COVID-19 testing program, which was open to all local residents and people who attended school/work in the area.

“Essex County should be the model for New Jersey, if not the nation,” a resident commented in January 2021. “You have done an amazing job.” See Related: DiVincenzo Highlights COVID Programs, Infrastructure In State Of County Speech

But apparently, the program also had its critics.

According to the comptroller’s office, it launched an investigation after getting an anonymous tip. The office eventually reviewed nearly $10 million in payments made to 21 business vendors, and about $4.6 million in payments made to 63 independent contractors. It also interviewed multiple county officials and staff members.

Here’s what investigators concluded when their probe was done:

“The investigation found that the county improperly awarded millions of dollars as emergency contracts, bypassing the competitive bidding process, and while using emergency procurement methods, it failed to follow state and local requirements by not documenting the need for the emergency contract and not having the [Essex County Board of Commissioners] review and publicly approve each contract.”

Additionally, the county spent $17 million on staffing costs – but allegedly failed to implement an effective time-tracking system to verify that the workers were working the hours they logged. The comptroller’s office found at least eight workers were also full-time employees of other government agencies.

One worker was paid $130,000 over 11 months, yet the county didn’t know who that person was or what the person did, the report alleges.

The lack of financial oversight continued even as the pandemic began to wind down, with the county awarding emergency contracts without competitive public bidding into 2022, the report alleges.

Other allegations in the report include:

FORMAL CONTRACTS – “The county failed to enter into formal contracts with business vendors that laid out the terms required by the federal grants. This deficiency, coupled with the failure to follow state and local emergency procurement rules, potentially exposes these funds to recoupment by the federal government.”

VENDOR OVERSIGHT – “Essex County also failed to properly oversee its vendors. For instance, [investigators] found that 15 payments amounting to $871,211 were made to vendors without invoices, making it difficult to validate what goods or services were provided. From May 2020 through August 2021, the county also paid $1.29 million to the East Orange-based Dunton Consulting firm for robocall services. OSC found many of the firm’s invoices were riddled with errors and used a fee structure that varied wildly, without explanation—all of the invoices were nonetheless paid. When the county finally put the contract out for competitive, public bidding, the winning bidder’s fee structure was less than one cent per minute call. Dunton’s rate was four times as much. Based on Dunton’s last bill, the county could have saved $90,000 on that bill alone if it had contracted with the winning vendor one month earlier. [Investigators] discovered the county also paid Dunton twice for the same $110,514 in 2021. Instead of demanding immediate repayment of the federal funds, the county negotiated repayment with Dunton's accountant and entered into an agreement that amounts to a zero-interest loan. The generous terms of the agreement allow Dunton to repay less than the full amount of the improper payment over the next five years. The agreement was not signed by any county official, and it’s not clear how the county would monitor this long-term agreement.”

WORKER OVERSIGHT – “The county’s oversight of more than 800 individuals working in the vaccination program also was deficient. Workers were able to log their hours remotely, from any device, and there was no enforcement of the sign-in sheets which could have provided a paper trail showing workers were on-site as required. Even after the county investigated and dismissed three workers who were found to be logging in hours when they were not at the vaccination sites, the county didn’t change its timekeeping system to close this loophole, nor did it initiate a broader investigation at that time. [Investigators] subsequently found numerous irregularities, such as individuals who held full-time jobs while working the same hours for the vaccination program.”

UNEMPLOYMENT/BENEFITS – “The county also classified all of the workers as independent contractors, which meant that the county did not pay into unemployment funds or provide any benefits for those workers. [Investigators] found that the county conducted an inadequate review to determine that all of the workers were contractors. [Investigators] referred the matter to the New Jersey Department of Labor and Workforce Development.”

Essex County’s vaccination program was funded with federal COVID-19 assistance from the Coronavirus Relief Fund (CRF) pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and Local Fiscal Recovery Fund (LFRF) provided for by the American Rescue Plan Act (ARPA).

The comptroller’s office noted that Essex County provided it a written response to the allegations contained in the report. In particular, the county “took issue” with the conclusion that it overused the emergency procurement method, arguing that it was cleared under Executive Order 103, which Gov. Phil Murphy issued to declare a public health emergency and state of emergency, as well as the nationwide COVID-19 emergency to “waive” procurement procedures.

The county contends that its continuous use of emergency procurement was not improper because “multi-year de-facto emergency contracts are legal and appropriate so long as the emergency is multi-year which in the case of COVID-19 it clearly was,” the comptroller’s office said.

Essex County officials also took exception to the finding that the county’s excessive use of emergency procurement methods likely increased costs, arguing that increased costs are “speculative” and “not factually supported.” The county cited several policies that it says likely resulted in cost savings, including electing not to charge county employee salaries to the COVID-19 grant funds and hourly wages for nurses and other vaccine center workers that were below market rate.

The comptroller’s office acknowledged that the pandemic put everyone into uncharted waters, including Essex County. And notably, state officials didn’t question the level of care that people received through its vaccination program.

“In reaching these conclusions, the Office of the State Comptroller (OSC) is mindful that the COVID-19 pandemic was a global health crisis that presented officials across government, including county officials, with unprecedented challenges,” the report states.

“The OSC also notes that the county’s vaccination program provided residents of Essex County, who were hard-hit by COVID-19, with much-needed access to life-saving vaccines,” the report continues.

But it is inevitable that public officials in New Jersey will be confronted by future emergencies – including other potential pandemics – and it is important to learn a lesson from the COVID-19 crisis, investigators add.

“The government’s obligation to protect taxpayer funds doesn’t go away during an emergency,” acting state comptroller Kevin Walsh said.

“As we found in Essex County, overusing emergency contracts and failing to monitor vendors and implement basic financial controls increases the likelihood of fraud, waste, and abuse – risks that can and should be avoided,” Walsh added.

• See Related: NJ Not Prepared For Another Crisis, COVID Postmortem Report Claims
• See Related: COVID Lockdown Arrests In NJ Plagued By Racial Gaps, Report Says

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