In a obtained by CapRadio, dated March 31, the California Department of Public Health notified the company that it would terminate the contract in 45 days, as allowed under the agreement. The letter thanked PerkinElmer for its partnership and noted the increased availability of antigen testing and expanded commercial testing options as the reasons for terminating the contract.
The state did not mention the PerkinElmer faced since opening the facility, known as the Valencia Branch Laboratory, in October 2020. The issues were severe enough to threaten the lab鈥檚 license status.
The termination marks an unceremonious end to a partnership that Gov. Gavin Newsom as keeping California 鈥渙n the leading and cutting edge鈥� of COVID-19 response. At the facility鈥檚 ribbon cutting, Newsom expressed hopes of expanding on the laboratory鈥檚 mission to meet the long term needs of communicable disease response and research.
The contract was set to last after the state it late last year, despite criticism of the company鈥檚 performance. The laboratory 鈥� which the state spent $25 million to build out 鈥� will be defunct by mid-May, and its future beyond that is uncertain.
As of November, California paid PerkinElmer $716 million under the agreement, with the Federal Emergency Management Agency reimbursing the state $684 million. CDPH did not respond to CapRadio鈥檚 request for updated figures.
The state plans to transition away from its centralized test processing through the Valencia Lab and instead use 鈥渁 network of commercial testing lab partners,鈥� according to an email, obtained by CapRadio, from CDPH to a testing contractor. Details on this substitute network remain scant.
CDPH declined an interview request and instead provided an emailed statement.
鈥淭his laboratory was opened in 2020 to rapidly expand the state鈥檚 testing capacity, drive down costs, and bridge equity gaps,鈥� the statement reads. 鈥淣ow, at this point in the pandemic and as part of the SMARTER Plan, testing capacity will be provided through a network of commercial partners rather than the Valencia Branch Laboratory.鈥�
The 鈥溾�� is the state鈥檚 roadmap for emerging from the pandemic.
Chet Murray, spokesperson for PerkinElmer, declined CapRadio鈥檚 interview request but provided a written statement.
鈥淕iven the decrease in COVID-19 cases and need for testing, [California] intends to end its contract鈥� with PerkinElmer, the statement read.
But the state鈥檚 rationale 鈥� in its letter to PerkinElmer and in its statement to CapRadio 鈥� did not cite a drop in cases or testing demand. Murray did not respond to follow-up questions seeking clarity on this matter.
California鈥檚 positivity rate more than doubled since mid-March to 2.6%, according to the state鈥檚 . Cases per 100,000 increased from 5.2 to 6.9 during that time.
鈥淪ignificant deficiencies鈥�
PerkinElmer struggled right away with obligations laid out in the contract. Inspectors 鈥渟ignificant deficiencies鈥� during a routine inspection in December 2020, only a couple months after the lab opened.
A series of investigations from CBS13 in Sacramento found laboratory technicians were literally and staff failed to receive adequate training.
In November 2021, the state released a detailing its efforts to get the laboratory into compliance after inspections found 鈥渕ultiple deficiencies related to documentation, record keeping, process, and training.鈥� The state notified the company of its intent to impose sanctions on the lab late last year, but ultimately did not pursue the penalties.
The report also said it could not substantiate the findings from CBS13; in response, the station claimed its revelations had been by inspectors.
Rick Greenwood, external affairs officer for the California Association of Public Health Laboratory Directors, said the contract cancellation didn鈥檛 surprise him.
鈥淚 always felt that the resources that were put into that laboratory would have been much better assigned to the local county public health labs,鈥� he said. 鈥淭he county labs were already set up, and with the additional resources, they could have expanded their testing.鈥�
Public health advocates have for local public health departments 鈥� a pattern that continued even during the pandemic.
In recent months, the Valencia Lab continued to struggle, as the omicron variant surged and people clamored to get tested. In mid-January, for example, fewer than 1 in 5 people received their test results within two days, to CBS13.
That stands in stark contrast to commitments Newsom made about the partnership when the laboratory opened.
鈥淭his lab also promises to get results back within 48 hours, but [with] a stated goal within 24 hours,鈥� Newsom said at the ribbon cutting. 鈥淣ever more than 48.鈥�
What鈥檚 next for the laboratory is unclear. CDPH did not answer emailed questions about what the state plans to do with the specialized building it spent tens of millions of dollars to build out.
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