California Cancels COVID-19 Test Contract with PerkinElmer

Cancellation letter from state officials provided no details about the Valencia Branch Lab’s future

CALIFORNIA HAS SHED MORE LIGHT ON THE DECISION to terminate PerkinElmer’s valuable contract to run the Valencia Branch Laboratory (VBL). The lab has been embroiled in controversy for much of its existence. 

The state noted that SARS-CoV-2 testing options for the public played a large part in ending the contract. PerkinElmer notified the U.S. Securities and Exchange Commission on March 31 that its $1.7 billion agreement to operate the state-owned lab would soon cease. (See TDR, “PerkinElmer Says California Terminated COVID-19 Contract,” April 4, 2022.) 

The diagnostics company, based in Waltham, Mass., had run the lab since it opened in November 2020. 

Response Pushes Testing 

In February, California rolled out its next phase of COVID-19 response, known as the SMARTER Plan. SMARTER stands for Shots, Masks, Awareness, Readiness, Testing, Education, and Rx. According to the California Department of Public Health (CDPH), ample choices for both polymerase chain reaction and rapid antigen tests allowed state health officials to reassess the need for VBL. 

“As highlighted by the California SMARTER plan, antigen testing is now a major component of our ongoing testing response, and the commercial laboratory capacity has been dramatically increased over the last 18 months with constant changes in testing approaches and capabilities,” Timothy Bow, CDPH’s Contract Officer for COVID Emergency Operations, wrote to PerkinElmer in a March 31 letter. 

“As such, it is time for California to leverage the now-sufficient laboratory capacity of the commercial market and the flexibility it brings,” Bow continued. “Therefore, we are notifying you that we are terminating the contract in 45 days.” 

Under that timeline, PerkinElmer’s oversight of the VBL ended on May 15. 

Lab Operated for 16 Months 

PerkinElmer entered into the agreement to operate the VBL in October 2020. The contract automatically renewed in October 2021. 

However, that renewal was steeped in controversy. A series of clinical laboratory inspections earlier in 2021 revealed dozens of deficiencies, some of which placed patients in immediate jeopardy, according to regulators. (See TDR, “California Agency Problems Deepened Valencia Branch Laboratory Saga,” April 4, 2022.) 

The state’s letter to PerkinElmer praises the company’s work and never mentions the history of deficiencies. That omission may fuel further debate about whether CDPH shrugged off the problems at the lab. It is not clear what the VBL’s role will be going forward. The site performed more than 8.5 million COVID-19 tests from 2021 until now. 

“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,” CDPH’s media office told The Dark Report. 

State of California Terminates Contract with PerkinElmer for COVID-19 Testing Lab 

EFFECTIVE THIS WEEK, THE STATE OF CALIFORNIA ENDS ITS COVID-19 TESTING CONTRACT WITH PERKINELMER. It was in the summer of 2020 when the state government gave PerkinElmer the contract, potentially worth as much as $1.7 billion, to design and construct a new clinical laboratory facility in Valencia, Calif., and then operate the lab. Here is the letter PerkinElmer received from state officials, closing the lab after less than 18 months of operation. (Reproduced from the print version of The Dark Report.)



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