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State signs $42M contract with COVID-19 testing company under scrutiny


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The state of Michigan signed a $42 million contract in July with a COVID-19 testing company that is under scrutiny in Texas for returning test results too slowly, and is accused of providing unreliable test results to a South Dakota native American tribe. 

Washington state-based Honu Management Group also may have overstated the scope of its work when it negotiated its Dallas coronavirus testing contract, and claimed to have White House approval it did not have, according to a Dallas Morning News investigation.

Michigan’s contract with Honu, which took effect July 1, stipulates that the company must provide COVID-19 specimen collection, testing and reporting for high-risk populations in Michigan through Jan. 31, 2021. 

Honu is expected to ramp up its testing capability, and be able to perform anywhere from 1,000-4,000 tests statewide per day in places like nursing homes and long-term care facilities, adult foster care homes as well as prisons, jails and homeless shelters, food processing facilities and housing for migrant workers.

It wasn’t until six weeks into its contract with the state of Michigan, that Honu began testing people here. 

“Honu shadowed the National Guard at some testing events in early August,” said Lynn Sutfin, a spokeswoman for the Michigan Department of Health and Human Services. “They began testing on their own on Aug. 14 at a skilled nursing facility in Detroit. They collected 36 samples. They will be phased in as needed as the National Guard is still providing testing assistance.”

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In the last week, Honu also conducted coronavirus testing at HealthSource Saginaw, Sutfin said. HealthSource Saginaw is a medical rehabilitation and recovery hospital. 

Devin Thornton, CEO and founder of Honu Management Group, said the company doesn’t take its contract with Michigan lightly and has worked with the state for the last month “to plan for a successful launch.”

“As this virus has continued to spread and adapt so have we as a company and community health service provider,” Thornton wrote in an email message to the Free Press. “We have encountered and overcome challenges along the way.”

The company, he said, is conducting COVID-19 tests for both the city and county of Dallas as well as other communities in Texas and Missouri, and, as of Friday, had conducted 80,000 tests at more than 70 sites. 

It is able to provide test results in an average of 3.52 days.

“Compliance, reliability and transparency are only a few of our guiding principles,” Thornton said. “We welcome the audits as an opportunity to affirm who we are as a company.” 

But last week, Dallas County canceled its contract with Honu for COVID-19 testing because officials said test results were taking as long as seven days to come back.

Sutfin said the state will “carefully monitor Honu’s performance, including its timeliness, and take action if problems arise.

“All state contracts include clauses that allow for separation for cause or convenience,” she said, “and MDHHS will carefully monitor Honu’s performance, including its timeliness, and take action if problems arise.”

Honu won the contract through a competitive bidding process run through the state Department of Technology, Management and Budget, Sutfin said.

Honu beat out four other companies for the deal: CVS Pharmacy, Inc.; AKESOgen, Inc.; Premier Medical Laboratory Services, Inc., and ATC Healthcare Services, LLC.

“Honu scored the highest during a Joint Evaluation Committee evaluation of proposals from the five bidders and it was determined that they met the requirements,” Sutfin said. 

The state’s contract stipulates that Honu can use either polymerase chain reaction (PCR) tests or rapid point-of-care tests that have gotten emergency use authorization from the U.S. Food and Drug Administration. 

Honu also would be “responsible for rapid response … when outbreaks occur.”

Thornton told the Free Press the tests the company is using, PCR nasopharyngeal and PCR saliva-based testing, can detect SARS-COV-2 at least 95% of the time.

“Because Honu has only conducted one testing event so far, it’s too soon to say how quickly their results are coming back as a general matter,” Sutfin said, or to get a picture of the percentage of positive tests. The company is using California-based Nova DX to process its tests.

Sutfin said the state “closely monitors lab turnaround time and will do so in this case as well, as testing with Honu ramps up.”

The bid process, she explained, included questions about Honu’s past performance and asked the company to disclose previous problems that had reached a final conclusion. Among them:

  • Has bidder ever been debarred, suspended, or disqualified from bidding or contracting with any entity, including the state of Michigan? If yes, provide the date, the entity, and details about the situation.
  • Has your company been a party to litigation against the state of Michigan? If the answer is yes, then state the date of initial filing, case name and court number, and jurisdiction.
  • Within the last five years, has your company or any of its related business entities defaulted on a contract or had a contract terminated for cause? If yes, provide the date, contracting entity, type of contract, and details about the termination or default.

But because the concerns raised in Texas hadn’t reached a conclusion at the time the project was bid out, Honu didn’t have to disclose it. 

“The vendor was not required to comment on events that were pending,” Sutfin said. 

Thornton said the company’s “guiding principles” are compliance, reliability and transparency. 

“We welcome the audits as an opportunity to affirm who we are as a company,” he said.

Contact Kristen Jordan Shamus: 313-222-5997 or [email protected] Follow her on Twitter @kristenshamus.  

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