Orange County Health Care Agency officials set aside warnings from a former consultant to a nonprofit – whose concerns are shared by two of its board members — that the organization lacks proper financial oversight to handle a proposed $15 million contract.

Instead, agency officials recommended the contract for county supervisors’ approval at their Tuesday meeting, despite the contract being rejected by the nonprofit’s board.

Then, without explanation, late last week health officials switched the proposed $15 million no-bid contract from Multi-Ethnic Collaborative of Community Agencies (MECCA) to Orange County United Way.

To justify the lack of bidding, health officials had written that MECCA was the only vendor who could do the job. In last week’s change, they wrote that United Way is the only group that can do the job.The concerns about MECCA were raised in a letter to the county Health Care Agency by Michael Arnot, a former consultant to the nonprofit who resigned in September.

In his Oct. 27 letter to the agency’s chief compliance officer, Arnot wrote that MECCA’s executive director is two years behind in getting an independent financial audit and has no chief financial officer.

Arnot also wrote the group doesn’t have a strong team to oversee the $15 million contract and MECCA’s board members “were being kept in the dark about what funding was being secured, what it was intended for, and how it was being managed.”

[Click here to read Arnot’s letter, which Health Care Agency officials released in response to a Public Records Act request from Voice of OC.]

[Read: OC Nonprofit Rejects $15 Million Health Grant from County, Citing Transparency Concerns]

The $15 million grant from the CDC — administered by the county — is aimed at closing numerous health gaps throughout the county.

The pandemic has laid bare the health disparities facing underserved communities, with Latino communities in particular facing disproportionately high COVID-19 caseloads and deaths among county residents. Latinos also face a stark vaccination gap.

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On Nov. 1, MECCA’s board of directors voted against taking on the $15 million contract and two board members echoed Arnot’s concerns in interviews with Voice of OC.

In their written response to Arnot’s letter, county officials said it’s not their job to check the qualifications of a contractor they want to award millions in federal grants.

“The County does not monitor the professional background of any vendor’s finance management team or any individuals employed by the vendor,” wrote the Health Care Agency’s chief compliance officer, Chi Rajalingam.

“While you have raised concerns related to the internal workings of MECCA, the issues raised do not seem to preclude HCA from contracting with this vendor at this point in time.”

[Click here to read the Health Care Agency’s response to Arnot’s letter.]

Arnot says the health agency is abdicating its responsibility to oversee the federal grant dollars, which are from the Centers for Disease Control and Prevention and meant to reduce health disparities from COVID-19.

“I think the [chief compliance officer] had to go through real contortions to essentially say that they wash their hands of any responsibility for the federal funds they’re entrusted with,” Arnot said in a text message last week to Voice of OC.

“I’m not sure CDC and [the U.S. Department of Health and Human Services] would appreciate that they’re taking that position.”

He also claimed the Health Care Agency Director, Dr. Clayton Chau, is paving the way for MECCA to get the contract, regardless of the numerous concerns raised.

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Chau didn’t respond to messages for comment, though the Health Care Agency’s chief compliance officer did.

“HCA does not run MECCA’s business and many of the issues that Mr. Arnot raises relate to MECCA’s internal affairs,” wrote Chi Rajalingam, in a statement provided through an agency spokesperson.

“Had this contract gone forward, HCA monitors contracts via Contract and Procurement Services and they would have overseen this contract as they do all other contracts with each of our current vendors including MECCA.”

Under the proposed no-bid county contract, the nonprofit group MECCA was supposed to receive $15 million in federal CDC health grant funds and distribute the vast majority of it to other, yet-to-be named organizations in an effort to close various health gaps throughout OC.

Community outreach groups like Latino Health Access and the Coalition of Orange County Community Health Centers have been critical in getting testing, education and isolation resources to residents throughout the hard hit communities of Orange County.

But the funding for such work often falls short of the need.

To help address that gap, county health officials got a $23 million grant from the CDC – which the county calls Equity in OC – to reduce health disparities among Asian-Pacific Islanders, Blacks, Latinos, people with disabilities, LGBTQ people and seniors.

County Health Care Agency executives are looking to diversify service delivery, working with smaller community groups to address things like food insecurity, the digital divide, safety, access to green space and participation in society.

But the contracts for that grant have been postponed multiple times since September amid questions about how the county went about selecting vendors, like MECCA, without competitive bidding.

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Meanwhile, MECCA’s board president said she’s satisfied with the county’s response.

“I have no control over Mr. Arnot’s continued suppositions. As a board member of MECCA, I am committed to protecting our staff and MECCA’s good standing in the community,” said Gloria Reyes, who formerly served as president and CEO of the health outreach nonprofit Abrazar Inc.

MECCA’s executive director, Iliana Soto Welty, said MECCA has a track record of doing successful work for the county.

“I applaud the County’s vision of bringing the county and community together to partner and collectively address health disparities.  We have a lot of work to do to come together, recover and heal from this pandemic,” she said in a text message to Voice of OC last week.

As for concerns about the board being kept out of the loop on the details, Welty said she told most board members about the grant in August.

“The majority of the board members were informed of the opportunity for MECCA to be a contractor for the CDC grant in August and were supportive at that time,” Welty wrote in a recent statement.

But the MECCA board’s vice president, Dr. Reza Karkia, says he was not kept in the loop.

“It didn’t come before the board. And all of a sudden, you know, I heard that such a thing is going on,” he said in a recent interview, adding he has no idea who’s getting the money.

“I personally didn’t feel that our apparatus is strong enough to handle a $15 million contract.”

MECCA board member Nahla Kayali also expressed similar concerns in a phone interview.

“Even when they explained [the $15 million contract], it wasn’t really clear to us,” said Kayali, executive director and founder of Access California Services, a nonprofit focusing on health and human services in OC’s Arab-American and Muslim-American communities.

Among the MECCA board members who voted to decline the contract was Sheriff Don Barnes.

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The Health Care Agency’s response to Arnot, and the statement from MECCA’s executive director, didn’t address one of his central allegations – that county health officials were colluding with Welty to not spend all of the grant funds.

“HCA staff indicated to MECCA’s Executive Director that they do not plan to have MECCA spend all the money in the proposed contract which seemed to be completely acceptable to her,” Arnot wrote.

“These funds were intended to reduce infections and deaths due to the pandemic and prepare communities to respond to future crises,” he added. “For a non-profit executive director to collude with HCA to intentionally not spend these critically needed resources when they are desperately needed is inexcusable.”

That struck a chord with MECCA’s vice president.

“That was a concern to me,” Karkia said. “When a line item gets approved by the legislative body, no portion of that money should be saved. Everything must be spent on what it has meant to go for.”

Correction: A previous version of the headline indicated officials were still moving to issue the contract. It has been updated. We regret the error. A previous version of the article also incorrectly identified Gloria Reyes as the current CEO of Abrazar Inc., based on MECCA’s website. Reyes is retired from Abrazar.

Nick Gerda covers county government for Voice of OC. You can contact him at ngerda@voiceofoc.org.


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