Investigation Uncovers Waste, Abuse in Essex County’s $40 Million COVID-19 Vaccination Program

TRENTON-An investigation of Essex County's $40 million COVID-19 vaccination program found widespread deficiencies, including lax oversight of spending and multiple violations of federal, state, and local procurement rules, the Office of the State Comptroller announced today.

OSC's COVID-19 Compliance and Oversight Project initiated the investigation after receiving an anonymous tip alleging fraud, waste, and abuse in the Essex County program. OSC's 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 County Commissioners review and publicly approve each contract.

Additionally, the County spent $17 million on staffing costs but failed to implement an effective time-tracking system to verify that the workers were working the hours they logged. OSC 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 government's obligation to protect taxpayer funds doesn't go away during an emergency," said Acting State Comptroller Kevin Walsh. "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."

Essex County's COVID-19 vaccination program was launched in December 2020 and administered a total of 622,016 doses through August 2023. OSC reviewed nearly $10 million in payments made to 21 business vendors and about $4.6 million in payments made to 63 independent contractors and interviewed multiple county officials and staff. OSC found that even in 2022, the County continued to use emergency contracts without competitive, public bidding. Additionally, the County improperly used multi-year "emergency" contracts in several cases. Emergency procurement rules allow for a non-competitive bidding process when health and safety are at immediate risk but clearly prohibit multi-year contracts because of the lack of transparency and competition.

OSC also found that 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.

Essex County also failed to properly oversee its vendors. For instance, OSC 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.

OSC 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.

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. OSC subsequently found numerous irregularities, such as individuals who held full-time jobs while working the same hours for the vaccination program.

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. OSC found that the County conducted an inadequate review to determine that all of the workers were contractors. OSC referred the matter to the NJ Department of Labor and Workforce Development.

OSC is also making referrals to appropriate agencies to address other findings from this report.

Read the full report.

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To report government fraud, waste, mismanagement, or corruption, file a complaint with OSC or call 1-855-OSC-TIPS.

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