A Chinese company paid by California to manufacturer hundreds of millions of protective masks missed a Sunday deadline for federal certification, marking the second times its shipments to the state will be delayed.
State officials are deciding whether to give manufacturer BYD more time or seek a refund for about a quarter-billion dollars it already paid up front for the masks, said Brian Ferguson, spokesman for the Office of Emergency Services. The contract requires BYD to repay the money by Friday unless it can reach an agreement with the state.
“The state continues to actively explore what’s in the best interest both of taxpayers and the PPE supply chain alike,” Ferguson said.
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It’s the latest setback in the contract Gov. Gavin Newsom announced with fanfare on a nightly cable news show in early April, calling it a “bold and big” expression of California’s economic power.
California signed the nearly $1 billion contract with BYD, a Chinese-based electric vehicle manufacturer with offices in California, to manufacture 200 million masks a month. The company has already sent more than 60 million looser-fitting surgical masks to the state.
The rest of the order is for tight-fitting N95 masks that must be certified by the National Institute for Occupational Safety and Health. The masks failed certification in April, prompting BYD to refund the state $247 million, half of what it paid up-front. It had until Sunday to try again or be required to send the rest back.
It wasn’t immediately clear why the masks haven’t been certified. The company said in May that it failed the first time due to a paperwork issue and not because of the quality of the masks. Katie Shahan, a NIOSH spokeswoman, said in mid-May the masks were denied “based on a number of factors” and that the company was given a corrective action plan. She said about 30% of mask approval applications fail.
Representatives for BYD did not immediately respond to emails and a phone call seeking comment.
Newsom has touted the contract as a success because the state has already received surgical masks he says are key to its efforts to reopen business, restaurants and other parts of the economy.
“We have not spent one penny on anything we haven’t received,” he said at a Friday news conference. “If they do not get the certification that’s required in the contract, we won’t be out $1, and we’ll find other ways of procuring those masks.”
After Newsom announced the deal in April, skepticism grew as his administration refused for weeks to release details of the contract. It released the contract in May, at the same time it announced the first partial refund. It’s one of several contracts the state executed that ultimately fell apart. Administration officials say taxpayers didn’t lose any money in the deals.
Newsom enacted a statewide stay-at-home order on March 19 in response to the pandemic and the state began scrambling for personal protective equipment, competing against other states and countries for access to limited gear. He’s now lifting parts of the order, allowing counties to reopen restaurants, churches and other facilities where people gather, but with limitations.
The state has distributed masks to health care workers, schools and other essential services.