Dems: Snyder fundraiser fueled contract hike

Chad Livengood
Detroit News Lansing Bureau

Lansing — A Wixom medical supply company received a nearly $400,000 increase to its state contract for incontinent supplies in June, one day after the company’s executives threw a lavish fundraiser for Gov. Rick Snyder in Bloomfield Hills.

With the general election two weeks away, the Michigan Democratic Party on Monday attempted to make political hay out of the timing of the contract increase and two no-bid multimillion-dollar increases in mail order medical supplies for Medicaid patients.

“These documents raise serious questions about whether pay-to-play is standard operating procedure in Gov. Snyder’s administration,” said Lon Johnson, chairman of the Michigan Democratic Party.

But a Snyder administration official said the timing “was a coincidence” as the contract increase had been in the works for more than a month before the governor’s fundraise at the Muslim Unity Center.

State records show J & B Medical Supply Inc. has had a contract with the Department of Community Health that began during former Gov. Jennifer Granholm’s administration and has been twice extended by Snyder’s administration without new bidding, as the contract allows.

On June 10, the State Administrative Board approved buying up to $390,598 from J & B Medical for adult-size diapers. The added cost was needed to handle an extra 18,000 Medicaid recipients who recently enrolled through Snyder’s expansion of the health care program for low-income residents, said Caleb Buhs, spokesman for the Department of Technology, Management and Budget.

Campaign finance records show the Shaya family, which owns and operates the J & B Medical Supply, has donated more than $65,000 to Snyder’s campaign over two election cycles. On June 9, the family threw a fundraiser for Snyder that cost more than $19,000 — the most expensive shindig for the governor this election cycle — and generated nearly $74,000 in campaign cash, records show.

The event’s upscale meal and table settings was recorded in a video the Shaya family apparently had produced by a Sterling Heights videographer, which Democrats found on the Internet video website Vimeo.

After the Michigan Democratic Party publicized the video Monday morning, it was quickly removed, but Democrats preserved a copy on YouTube.

J & B Medical’s chief financial officer, Abu-Bakar Sheikh, and co-founders Dr. Fawzi and Mary Shaya were listed as the fundraiser’s hosts on a welcome sign in the video.

Donors included former state Sen. Loren Bennett, contract manager for J & B Medical. Bennett and two other company officials did not return messages Monday seeking comment.

Funds requested May 5

Health department officials requested the additional funding May 5 and a finance committee for the State Administrative Board approved it on June 3. The expanded Medicaid program began April 1 and has added nearly 425,000 Michigan recipients, 102,000 more than expected in its first year.

After exercising the original contract’s two one-year extensions, the State Administrative Board has since granted two no-bid extensions totaling $26 million from July 2013 through Dec. 31 of this year.

Buhs said the last extension was necessary because “unknown volumes” of medical supplies for an ongoing project to integrate Medicaid and Medicare services for individuals eligible for both programs in the state.

“With uncertainty about future purchase needs, it did not make sense to bid out a multi-year contract at that time,” Buhs told The Detroit News.

Since 2008, J & B Medical has done more than $113 million in business with the state, according to contract records.

Johnson argued a competitive bidding process may have saved taxpayers money, suggesting Snyder’s administration bent the rules to help a donor.

“This is the precisely the kind of abuse that laws requiring competitive bidding are designed to address,” Johnson said.

Gov. Rick Snyder dismissed the Democrats’ claims Monday after an unrelated event in Southgate.

“People are trying to make something out of it,” Snyder said. “Basically, they’ve had an agreement with the state going back to before when I was governor. Healthy Michigan (Medicaid expansion) has been going so well, we needed to keep things going.”

The State Administrative Board includes Snyder, the lieutenant governor, the attorney general, secretary of state, treasurer, the Transportation Department director, the superintendent of public instruction or their representatives. The board can bypass a bidding process if it’s deemed “not appropriate,” according to state law.

With J & B Medical’s latest contract set to expire Dec. 31, state health and budget officials have not initiated a new bidding process, Buhs said.

“It is our practice to use an extension only as a temporary measure and not as a permanent alternative to bidding,” Buhs said.

Staff Writer Charles E. Ramirez contributed.