California to get $247M refund as masks face delivery delay

SACRAMENTO, Calif. (AP) — California will be refunded $247 million it paid to a Chinese company under a major deal for protective masks after the company failed to meet a deadline for federal certification of the masks, Gov. Gavin Newsom's administration said Wednesday.

Newsom announced the contract last month to fanfare, saying California had inked a nearly $1 billion deal for 200 million protective masks per month amid the coronavirus pandemic. Most were set to be tight-fitting N-95 respirator masks, while the rest would be looser-fitting surgical masks. Millions of the surgical masks already arrived, but the company missed an April 30 deadline outlined in the contract for certification of the N95 masks by the National Institute for Occupational Safety and Health.

The respirator masks were set to start arriving this month, with tens of millions planned for shipment in May. The governor’s office provided no details on what caused the certification delay.

The $247 million is half of an up-front payment the state made for the contract in April in an unusual move of making a payment before goods were delivered. The state could've clawed back all of its up-front payment under the original agreement, but an amendment signed Wednesday gives the company another month to meet the certification. If the masks aren't certified by May 31, California can get the rest of the payment back in early June.

The state paid $3.30 per N95 and 55 cents per surgical mask under the contract. The state made a seperate $104.7 million payment last week for the delivery of the surgical masks.

While the state initially sought 100 million surgical masks through the deal, it now plans to buy even more, according to the amendment, though it didn't include a specific number. The state and BYD must set an updated delivery schedule for the...